(This is an excerpt from the February 7, 2012 blog for Decision Point subscribers.)
The market had a small drop in the morning in sympathy with European market, but it bounced back quickly and traded at a miniscule gain the rest of the day.
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STOCKS: Based upon a 12/05/2011 Thrust/Trend Model BUY signal, our current intermediate-term market posture for the S&P 500 is bullish . The long-term component of the Trend Model is on a BUY signal as of 1/5/2012, so our long-term posture is bullish.
Price is still dealing with the top of the rising wedge and feeling the weight of overhead resistance. We should note that the PMO has reached the overbought side of the normal range -- +2.0 to -2.0.
Short-term indicators are overbought.
Intermediate-term indicators are overbought.
Bottom Line: We keep repeating the same message. The market is up against significant resistance, and it is overbought in the short and intermediate time frames. A correction seems very likely, but not guaranteed.
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DOLLAR: As of 2/3/2012 the US Dollar Index ETF (UUP) is on a Trend Model NEUTRAL signal. After a questionable breakout yesterday, UUP broke below support today. I have adjusted the short-term declining tops line to enclose yeaterday's high.
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GOLD: As of 1/27/2012 Gold is on a Trend Model BUY signal. Gold bounced off the short-term rising trend line today, but last week's high is the next hurdle to keep the trend going. The trend line is a bit steep, but it is certainly sustainable if gold gets on an upside tear.
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BONDS (TLT): As of 4/26/2011 The 20+ Year T-Bonds ETF (TLT) is on a Trend Model BUY signal. The 20/50-EMA picture continues to deteriorate, but the trading range is still intact.
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Technical analysis is a windsock, not a crystal ball.
