Good morning and welcome to this week’s Flight Path. We saw continued weakness this week in U.S. equities although there was a big rebound on Friday’s bar. Treasury bond prices entered a period of uncertainty as we see GoNoGo Trend paint successive amber “Go Fish” bars. The U.S. commodities index flipped back to a weak “NoGo” as the dollar was able to manage to paint more weaker aqua “Go” bars.
$SPY Tries to Halt Fall
After the Go Countertrend Correction Icons we saw over a week ago, price has struggled and that was understandable as those icons tell us that momentum has waned. We will watch now to see if price can set a new higher low which would suggest the “Go” trend will continue for now. Friday’s bar was positive in that regard. We turn our eye to the oscillator panel and we see that the price action has caused GoNoGo Oscillator to fall to test the zero line from above. As it stays there, we see the beginning of a GoNoGo Squeeze. If this level can hold as support and the oscillator can rally back into positive territory then we will see signs of Go Trend Continuation and can expect price to make an attack on the most recent high.
The larger weekly chart shows that we have set what looks to be a slightly higher high and that GoNoGo Trend is still painting strong blue “Go” bars. GoNoGo Oscillator is in positive territory at a value of 3 and is not yet overbought. Perhaps this suggests there is further room to run over this time frame.
Treasury Rates in Period of Uncertainty
GoNoGo Trend painted a string of amber “Go Fish” bars last week. An entire week of “Go Fish” bars is somewhat unusual and so we know that there are not enough criteria being met for GoNoGo Trend to be able to identify a trend in either direction. As the market makes up its mind regarding price direction, we can see that GoNoGo Oscillator is in positive territory having been able to break above the zero line. With positive momentum, it is perhaps more likely that we will see a “Go” trend emerge in the panel above.
Dollar Shows Continued Weakness in “Go” Trend
This week we saw more weakness after a single amber “Go Fish” bar. We can see that price has struggled to go anywhere now for several weeks and it has been some time since we last saw a strong blue “Go” bar. When we look at the oscillator panel, we can see that there is a tug of war happening between buyers and sellers at this level. GoNoGo Oscillator is riding the zero line and we see a Max GoNoGo Squeeze. It will be important to watch for the direction of the Squeeze break to help determine price’s next direction.
The weekly chart shows that perhaps the struggles we see on the daily chart are just investors taking a pause at levels that are above significant prior highs. With price continuing to find support on a weekly basis, GoNoGo Oscillator has fallen to test the zero line from above. We will watch to see if it can find support here. If it does, we will likely see price make an attempt at new highs.
Oil Sees Further Downside Pressure
The “NoGo” trend remains in place and we saw more strong purple “NoGo” bars after a mid week rally. Price is testing lows currently and we look to the oscillator panel and see that it has broken back below the zero line. With resurgent momentum in the direction of the “NoGo” trend, we will watch to see if price falls further to set a new lower low.
Which Way for Gold this Week?
After price fell from the Go Countertrend Correction Icon (red arrow) over a week ago, GoNoGo Trend painted a full week of uncertainty with amber “Go Fish” bars. After a few days stuck at zero, GoNoGo Oscillator broke down through that level and we are now in negative territory. On this daily time frame, we now can say that bearish momentum may take its toll on price and we will watch to see if GoNoGo Trend enters a “NoGo” this week.
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. As the technology sector sees the relative “Go” trend strengthen, only 2 sectors are outperforming the base index this week. $XLK, and $XLU are painting relative “Go” bars.
Utilities Sub-Group RelMap
The utilities sector was the only sector to see its relative “Go” trend strengthen to paint strong blue bars last week. We see that the sector has been in a relative “Go” trend for a couple of months now and the return to strong blue bars informs us that it is displaying strong leadership within the larger index. When we look at the sub group map below, it is interesting to note that it remains only the conventional electricity group that is leading this sector’s out-performance. The other three groups are in strong relative “NoGo” trends.
$CWEN Breaks out of Bull Flag
Within the conventional electricity space, Clearway Energy, Inc, has been in a “Go” trend since early April. After a strong rally in the first part of May, we saw prices fall against the directionof the trend and we were able to draw a flag (slightly downward sloping channel). As is typical with GoNoGo Charts, the right side of the pattern saw weakness in the current trend (a majority of paler aqua bars) and GoNoGo Oscillator fell to test the zero level. It remained there for a few bars and we saw a small GoNoGo Squeeze. Now, on heavy volume (dark blue oscillator) we see price break to new highs and the oscillator break back into positive territory. With momentum resurgent in the direction of the underlying “Go” trend we can expect price to continue higher over the next few weeks. We could take a measured move approach to set a target for the flag pattern.
$ALE Looks For Support in “Go” Trend
Allete Inc, another company in the conventional electricity space, is also in a “Go” trend. Having had a strong move and a gap about a month ago, price has struggled to go higher after a Go Countertrend Correction Icon (red arrow) and has moved mostly sideways. This has caused GoNoGo Oscillator to fall to and ride the zero line. We see a Max GoNoGo Squeeze and it will be important to watch the direction of the squeeze breakout. If we rally back into positive territory in the oscillator panel, we will look for price to move higher and make an attack on that prior high.
