Good morning and welcome to this week’s Flight Path. The equity trend remained a “NoGo” but we do see the indicator painting weaker pink bars as price rallies off the latest low. Treasury bond prices remained in a “NoGo” trend as well but also show that the trend is weakening which could suggest rates are cooling off. U.S. commodities are in a strong “Go” trend and we see a full week of uninterrupted bright blue bars. The dollar hangs on to its “Go” trend but we do see some weakness with paler aqua bars.
$SPY Rallies Off Lows
The GoNoGo chart below shows that the “NoGo” survives but we see weakness this week as the indicator paints pink bars. Price has bounced off the lows following a NoGo Countertrend Correction Icon (green arrow). Now, with price rising we see that GoNoGo Oscillator has risen to test the zero line from below. We will watch to see if it gets rejected at this level. Should that happen then we will expect further downside pressure on price.
The weekly chart shows another amber “Go Fish” bar as price seems to have set a new low. We see green arrow, this indicates waning negative momentum and suggests that price may struggle to go lower in the short term. Now, with GoNoGo Oscillator rallying back towards the zero line it will be important to note what direction it takes when it gets there. Should it stay at or below zero, we can expect a potentially deeper correction.
Treasury Rates See Weakness in “Go” Trend
GoNoGo Trend shows that the “Go” trend remains in place but we see weaker aqua bars this past week after the higher high was set. With GoNoGo Trend painting aqua bars, we turn our eye to the GoNoGo Oscillator and see that it is riding the zero line. We see the beginnings of a GoNoGo Squeeze building and we will observe the tug of war at this level. Should the oscillator find support and rally back into positive territory, we can expect rates to rise further in the coming days.
Dollar Remains in “Go” Trend
The chart below shows that the dollar remained in a “Go” trend this past week and indeed we saw another higher high on strong blue bars. After this high, GoNoGo Trend painted weaker aqua bars as price fell. However, GoNoGo Oscillator continues to find support at the zero line suggesting momentum remains in line with the trend. This has triggered a Go Trend Continuation Icon (green circle) under price. With momentum on side, we will watch to see if the dollar will climb further this week.
No Stopping Oil as it Hits Higher High
GoNoGo Trend shows that the “Go” trend remains in full force for oil. On bright blue bars, we see that price gapped to another high. This comes after GoNoGo Oscillator found support at the zero line and has since climbed through positive territory and is not at an extreme overbought level. We will watch to see if momentum can remain at these elevated levels. If it cools, we may see price take a pause to consolidate these new highs.
Gold Remains in “NoGo” Trend but Paints Weakness
Gold remains in the new “NoGo” trend but we do see that GoNoGo Trend is painting weaker pink bars as price has rallied off the previous lows. We will watch to see if this becomes a lower high in the new “NoGo” trend or a more constructive rally back to a “Go” trend. Importantly, GoNoGo Oscillator is testing the zero line from below. We will watch carefully to see if the zero line acts as resistance for the oscillator. If it does, and we see the oscillator turned back into negative territory then we can expect more downside pressure on price.
Sector RelMap
Below is the GoNoGo Sector RelMap. This GoNoGo RelMap applies the GoNoGo Trend to the relative strength ratios of the sectors to the base index. With this view we can get a sense of the relative out performance and relative underperformance of the sectors. 3 sectors are in relative “Go” trends. $XLK, $XLE, and $XLU are painting relative “Go” bars.
Energy Sub-Group RelMap
The chart below shows a relative trend breakdown of the sub groups within the energy sector this week. The Sub-Group RelMap plots the GoNoGo Trend of each sub index to the $XLE. We saw in the above GoNoGo Sector RelMap that $XLE is a consistent out-performer and paints relative “Go” bars. When we look at the below RelMap we can see that the exploration and production index in the second panel is painting “Go” bars on a relative basis.
$VLO Looks for Support in “Go” Trend
GoNoGo Trend shows that $VLO has been in a strong “Go” trend since early this year. We have seen a series of higher highs and higher lows and GoNoGo Trend has painted predominantly strong blue “Go” bars. During this time, GoNoGo Oscillator has been at or above the zero line, finding support each time that level is tested. At the last higher high, we see a Go Countertrend Correction Icon (red arrow) indicating that price may struggle to go higher in the short term. Indeed, price has fallen slightly with the indicator painting weaker aqua bars. GoNoGo Oscillator is back at zero, testing that level from above. We will watch to see if it finds support. If it does, then we will know that momentum is resurgent in the direction of the trend and will look for price to make an attack on a new higher high.
$TPL Breaks Trend and Enters “NoGo”
$TPL has fallen out of its “Go” trend and is now painting strong purple “NoGo” bars. While the majority of securities in this space are in “Go” trends and looking for support, we see that $TPL has changed trend after seeing GoNoGo Oscillator fall through the zero line after a Max GoNoGo Squeeze. Now, GoNoGo Oscillator is at an overbought value of -5 which is in line with the new trend. We will pay close attention to see if this trend persists as currently it one of the lonely “NoGo” trends in the exploration and production space.
