Good morning and welcome to this week’s Flight Path. The equity trend remains in place for another week but after a high early we saw some weakness with a few weaker aqua bars. Treasury bond prices likewise remained in a “Go” trend but painted an entire week of weaker aqua bars. U.S. commodities saw strength return as GoNoGo Trend painted strong blue bars at the end of the week. The dollar was able to regain “Go” colors after more chop and an amber “Go Fish” bar of uncertainty and so we see all major asset classes in “Go” trends this week.
$SPY “Go” Trend Weakens Slightly
The GoNoGo chart below shows that the “Go” trend weakened at the end of last week after price hit another higher high. We saw a Go Countertrend Correction Icon (red arrow) at the last high and this signaled to us that price may struggle to go higher in the short term. If we turn our attention to the lower panel we can see that GoNoGo Oscillator has fallen to test the zero line on heavy volume. We will watch closely to see if the oscillator finds support at this level. If it rallies back into positive territory then we will know that momentum is resurgent in the direction of the “Go” trend.
The weekly chart shows that the strong “Go” trend is unfazed on the larger time frame. We do see that there is waning momentum and that has triggered a Go Countertrend Correction Icon (red arrow) to appear on the chart. This tells us that perhaps there will be some struggles to go higher in the short term. We will watch to see if momentum continues to fall and pay close attention should GoNoGo Oscillator approach the zero line.
Treasury Rates Rally Further but Remain In “NoGo”
GoNoGo Trend shows that the “NoGo” trend survives another week but as rates continue to climb the indicator paints more pink bars reflecting weakness in the trend. In the lower panel, GoNoGo Oscillator has clearly broken into positive territory after spending little time at zero. We now know therefore that momentum is out of step with the trend and we will watch to see if this leads to trend change in the panel above.
Dollar in Weak “Go” Trend
The trend has changed for the dollar. After one new low in a short-lived “NoGo” trend, we see that GoNoGo Trend painted another amber “Go Fish” bar before the “Go” trend returned with weaker aqua colors. We can see that GoNoGo Oscillator in the lower panel has burst into positive territory on heavy volume at a value of 3. We will watch to see if that helps the new trend find its feet and potentially move higher this week.
Oil Sees New “Go” Trend as Price Hits New High
GoNoGo Trend shows that after some chop and a few amber “Go Fish” bars of uncertainty the indicator has found strength after a few weaker aqua bars as it paints a strong blue bar on Friday. GoNoGo Oscillator had been at or above the zero line for several weeks and we saw it break out of multiple GoNoGo Squeeze’s and now is rising further into positive territory at a value of 3 on heavy volume.
Gold Has Strong Week at Highs
The chart below shows that price remained in a strong “Go” trend with the indicator painting nothing but bright blue bars as price remains close to the highs. We saw barely a pause after the Go Countertrend Correction Icon (red arrow) as price rallied back quickly and set off to paint another higher high. GoNoGo Oscillator shows that momentum returned to overbought levels immediately after dipping last week and volume remains heavy. This shows strong market participation in the “Go” trend.
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, $XLY, $XLC, and $XLE 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 new out-performer of the base index painting relative blue “Go” bars. When we look at the below RelMap we can see that the exploration and production index in the 2nd panel is a new out-performer on a relative basis painting aqua bars.
$CRC Looks for Support in “Go” Trend
GoNoGo Trend shows the “Go” trend has been in place since the beginning of the summer. We have seen a series of higher highs and higher lows and GoNoGo Oscillator has been primarily at or above the zero line throughout. This shows that momentum has supported the “Go” trend thus far. Last week we saw a Go Countertrend Correction Icon (red arrow) indicating that price may struggle to go higher in the short term and indeed GoNoGo Trend painted a succession of weaker aqua bars. If we turn our attention to the oscillator panel we see that once again it found support at zero and this triggered a Go Trend Continuation Icon (green circle) under price. This tells us momentum is aligned with the “Go” Trend and we will watch to see if price can climb this week.
$VLO Soars in “Go” Trend on Strong Momentum
The chart below shows that $VLO has raced higher all week and is currently at a new high. GoNoGo Oscillator has climbed into overbought territory on heavy volume after finding support at zero a few weeks ago. This shows strong market enthusiasm and confirms the strong trend we see in price. We will watch to see if price can consolidate at these higher levels and whether GoNoGo Oscillator remains elevated.
