Good morning and welcome to this week’s Flight Path. The equity “Go” trend continued again this week as we saw bright blue “Go” bars as price tries to move to new highs. Treasury bond prices painted weaker aqua bars after a few uncertain “Go Fish” bars earlier in the week. U.S. commodity index saw a complete week of uninterrupted blue bars as the “Go” trend remained strong. The dollar saw a significant change this week as it entered a “NoGo” and we see the indicator painting strong purple bars.
$SPY Tries Again to Break to New Highs
The GoNoGo chart below shows that the “Go” trend stays strong for another week and in fact we saw GoNoGo Trend paint a majority of strong blue “Go” bars. If we turn our attention to the lower panel we can see that GoNoGo Oscillator has broken out of a Max GoNoGo Squeeze into positive territory. With momentum resurgent in the direction of the “Go” trend we will look to see if price can break to new higher highs in the coming days and weeks.
The “Go” trend remains strong on the longer term chart. We can see successive strong blue bars as price tries to edge higher. GoNoGo Oscillator has been supported by the zero line multiple times over the last several months and we see the same thing in its most recent history. This last Go Trend Continuation Icon (green circle) told us that price would likely try to continue higher.
Treasury Rates Re-enter “NoGo” After Some Uncertainty
GoNoGo Trend shows that the market was not sure of the new “NoGo”. We saw 3 amber “Go Fish” bars that threatened to take rates back into a “Go” trend however the “NoGo” has returned. We will pay close attention to the GoNoGo Oscillator as it is retesting the zero line this time from below. If it is turned away, back into negative territory then it would be likely for us to see rates move lower and the “NoGo” trend continue. If we see the oscillator recover positive territory then that would suggest enthusiastic buying.
The Dollar Sees a Change in Trend to “NoGo”
Last week we noted that the dollar was looking for momentum support in the “Go” trend. We saw the Max GoNoGo Squeeze get quite extend before ultimately the oscillator failed to move into positive territory. This break down into negative territory told us that the “Go” trend was not healthy and it was immediately followed by GoNoGo Trend painting the first “NoGo” bars for several months. With momentum now in negative territory, confirming the new “NoGo” we will look to see if the dollar moves to a new lower low.
$USO Paints More “NoGo” Bars
$USO tried hard to recover “Go” bars but ultimately we saw it fall back into a “NoGo” trend over the past several days. Unable to yet make a new lower low it will be important to watch this week to see if the “NoGo” will hold. GoNoGo Oscillator shows us that we are at a critical juncture as it retests the zero line from below. If it is rejected again here, that would indicate downward pressure on prices. If it is able to recover positive territory then we may see price try to rally again.
There is No Taking the Sheen off $GLD!
Another week of “Go” bars, another higher high. Gold prices continue to climb and we see yet another new high. After one weaker aqua bar we see the trend return to full strength with a strong blue “Go” bar. If we look at the oscillator panel, we can see that momentum dipped into neutral territory but has returned to overbought levels at a value of 5 and volume remains heavy.
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. 4 sectors are in relative “Go” trends. $XLC, $XLF, $XLB, and $XLU are painting relative “Go” bars.
Materials Sub-Group RelMap
The chart below shows a relative trend breakdown of the sub groups within the materials sector this week. The Sub-Group RelMap plots the GoNoGo Trend of each sub index to the $XLB. We saw in the above GoNoGo Sector RelMap that $XLB is strong relatively speaking as it paints bright blue relative “Go” bars to the S&P 500. If we look at the breakdown of the groups in the map below we can see where that outperformance is coming from. We see strong blue “Go” bars in the 7th and 8th panel. It comes as no surprise that these are the mining and specifically the gold mining sub groups.
$USAU Consolidates at Higher Prices
GoNoGo Trend paints a weaker aqua bar for the first time in several weeks as price moves mostly sideways after the last higher high. In the lower panel we see that momentum is approaching the zero line on heavy volume. It will be very important to watch what happens as the oscillator reaches this level. Should it find support, and bounce back into positive territory then we would see a Go Trend Continuation Icon (green circle) indicating resurgent momentum in the direction of the “Go” trend. We would then expect price to make an attempt at new highs. If the oscillator doesn’t find support at zero, that would be a threat to the trend.
$OR Tries to Deal with Overhead Resistance
$OR is in a “Go” trend and we see GoNoGo Trend painting bright blue bars. However, we do see Go Countertrend Correction Icons at the most recent high which suggested price may struggle to go higher in the short term. We will watch the lower panel now as it shows GoNoGo Oscillator testing the zero line from above. If it finds support here, and bounces into positive territory then we will be able to say that momentum is once again resurgent in the direction of the “Go” trend. We would then look for price to make an attack on the horizontal resistance we see in the chart from prior highs.
