Good morning and welcome to this week’s Flight Path. The equity trend continued this week and we saw strength return with bright blue “Go” bars as price settled after last week’s drop. Treasury bond prices remain in a strong “Go” trend with an uninterrupted week of bright blue bars. U.S. commodities faltered this week and we saw a weak pink “NoGo” bar creep in to end the week. The dollar hung on to its “Go” trend as we saw pale aqua bars in the second half of the week.
$SPY Settles After Finding Support
The GoNoGo chart below shows that the “Go” trend survived the drop we saw last week and GoNoGo Trend painted strong blue bars at the end of the week. GoNoGo Oscillator has found itself riding the zero line and we see the beginnings of a GoNoGo Squeeze building. We will watch closely to see if the oscillator can break out of the Squeeze into positive territory. This would be a good sign for the “Go” trend and would signal trend continuation as momentum returns in the direction of the “Go” trend.
The weekly chart shows a recovery this week. GoNoGo Trend continues to paint strong blue bars and we see a higher weekly close this week after the shake out last week. GoNoGo Oscillator is no longer overbought but remains in positive territory at a value of 3. We see that volume is heavy suggesting strong market participation. We will watch to see if the oscillator approaches the zero line in the coming days.
Treasury Rates Fall Further in “NoGo”
GoNoGo Trend continues to paint strong purple “NoGo” bars as rates continue to fall this week. We will watch to see if they fall further than the prior low from April and ultimately we will look to see if they take out the lows from late in the summer. GoNoGo Oscillator is in negative territory, confirming the “NoGo” trend but is not yet oversold at a value of -3.
Dollar Sees “Go” Trend Weaken
The chart below shows that the dollar remains in a “Go” trend but we do see weakness as the indicator paints weaker aqua bars as price falls from the recent high. We see that GoNoGo Oscillator has fallen to test the zero line from above. We will watch to see if it finds support at this level. If it does, then we would see a Go Trend Continuation Icon (green circle) appear under price suggesting momentum resurgence in the direction of the “Go” trend. If it fails to find support at zero, that would be a concern for the trend.
Oil Falls Further on Strong “NoGo” Bars
GoNoGo Trend shows that the “NoGo” trend is in full effect as we see more strong purple bars and price falls to new lows this week. GoNoGo Oscillator is in negative territory at a value of -4 and yet is not oversold. Volume is heavy reflecting strong market participation in the move lower in price.
Gold Takes a Pause at High
The chart below shows that the price trend remains elevated as we see nothing but strong blue “Go” bars. The last bar of the week was a sharp drop from the previous day’s high. We will watch to see if this is merely a shake out before higher prices or whether we will see price struggle to go higher in the short term. GoNoGo Oscillator is overbought and on heavy volume and has been this way for several weeks. Will this be the week that momentum wanes?
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, $XLV, and $XLU are painting relative “Go” bars.
Utilities Sub-Group RelMap
The chart below shows a relative trend breakdown of the sub groups within the utilities sector this week. The Sub-Group RelMap plots the GoNoGo Trend of each sub index to the $XLV. We saw in the above GoNoGo Sector RelMap that $XLU is out-performing the base index and paints strong relative “Go” bars. When we look at the below RelMap we can see that the conventional electricity index in the top panel is a consistent leader and is again painting strong blue “Go” bars on a relative basis.
$EBR/B Looks for Support in “Go” Trend
GoNoGo Trend shows the “Go” trend continues but price has moved mostly sideways since the high at the end of September. We saw a Go Countertrend Correction Icon (red arrow) after the last high telling us that price might struggle to go higher in the short term and indeed GoNoGo Trend mixed in several weaker aqua bars. During this time, GoNoGo Oscillator fell to test the zero line from above and we see an extended Max GoNoGo Squeeze as the oscillator has remained at that level. We will look for the oscillator to break out of the GoNoGo Squeeze into positive territory which would signal Go Trend Continuation (green circle).
$XEL Looks for a Quick Bounce
The chart below shows that $XEK is in a “Go” Trend and has enjoyed a strong run to new highs in the last month. However, after the last high, we see a Go Countertrend Correction Icon (red arrow) indicating the possibility that price may struggle to go higher in the short term due to waning momentum. We turn our eye to the oscillator panel and we see that it GoNoGo Oscillator is testing the zero line from above. We will look to see if it can regain positive territory quickly and if so trigger a Go Trend Continuation Icon (green circle) under price. This would tell us that momentum is resurgent in the direction of the “Go” trend and we would look for price to make an attempt at a new higher high.
