Signal Scoreboard As Good As It Gets
At DecisionPoint, we track intermediate-term and long-term BUY/SELL signals on twenty-six market, sector, and industry group indexes. The long-term BUY signals are based upon the famous Golden Cross, which is when the 50-day moving average crosses up through the 200-day moving average. (We use exponential moving averages -- EMAs.) Intermediate-term BUY signals are based upon the 20-day moving average crossing up through the 50-day moving average, which we call a Silver Cross. On the McDonalds (MCD) chart below, you can see examples of each.
A caveat that comes with the signals is that they are information flags, not action commands. A new signal tells us to look at the chart and decide if any action is appropriate. In the case of these two crossovers, they were healthy-looking signals, with price showing clear changes of direction within each timeframe.
Next we have the DecisionPoint Market Scoreboard, which we publish daily in the DecisionPoint ALERT. It is current as of the close on October 17, 2024, and it is as good as it can get. This is good news and bad news. The good news is that the stock market is looking very healthy in terms of raw price action. The bad news is that the signal status is as good as it gets, and the pendulum will be swinging the other way, probably sooner than later.
Along with the signal tracking, we have created the Silver Cross Index (SCI) and Golden Cross Index (GCI) for each of the market/sector indexes above. The Silver Cross Index shows the percentage of index components that are on a Silver Cross BUY signal. The Golden Cross Index shows the percentage of index components that are on a Golden Cross BUY signal.
The chart below is for the S&P 500 Index. Note that both the GCI and SCI show 80 percent of S&P 500 component stocks are on BUY Signals in both time frames. This is not as strong as in 2021, but it is very solid and partially backs up what we see on the DecisionPoint Market Scoreboard.
Conclusion: We check these charts every day, and are always aware of developing weakness and potential for signals to change. In the last few weeks, I found the picture to be unusually stable, and currently with no immediately impending signal changes. This, of course, could change in a heartbeat, but, for the moment, calm prevails. As I said, when things are as good as they can get, we should be alert for conditions to start deteriorating, but so far, so good.
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Technical Analysis is a windsock, not a crystal ball. --Carl Swenlin(c) Copyright 2024 DecisionPoint.com
Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
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