Good morning and welcome to this week’s Flight Path. The “Go” trend in equities continues this week and we saw an uninterrupted week of strong blue bars. Treasury bond prices have seen a return to a “Go” trend with a pale aqua bar at the end of the week. U.S. commodities have shown strength with a string of bright blue “Go” bars. The dollar, which has been such a strong performer of late remained in a “Go” trend but demonstrated a little weakness with a couple of aqua bars.
$SPY Sees Continued Strength at New Highs
The GoNoGo chart below shows that price continued to rally this week and GoNoGo Trend painted a week of bright blue “Go” bars. Price has edged to new highs and we will look to see if it can consolidate at these levels. This came after GoNoGo Oscillator found support at the zero line on heavy volume. We know therefore that momentum is confirming trend direction. As long as momentum stays at or above zero we can say that the trend is healthy.
On the longer term chart, we can see that the trend is strong. We see a third consecutive strong blue bar as price creeps higher. GoNoGo Oscillator is in positive territory but not yet overbought. Perhaps there remains room to run. We will watch to see if the oscillator continues its upward trajectory or if it falls to test the zero line.
Treasury Rates Remain in Weak “Go” Trend
Treasury bond yields continue to fall and we saw a new lower low on pale aqua “Go” bars. This comes as GoNoGo Oscillator was unable to find support at the zero level. After breaking through that level into negative territory the oscillator quickly re-tested that level but was sharply rejected, falling quickly further into negative territory. Now, at a value of -3, momentum is negative but not oversold. We will watch to see if rates move lower from here.
The Dollar Takes a Breather in “Go” Trend
After weeks of strong blue “Go” bars we saw some weakness creep in at the end of the week. This was not before another new higher high was hit however. After that high, a Go Countertrend Correction Icon (red arrow) told us that price may struggle to go higher in the short term and indeed as it fell from the high we saw weakness in the trend. GoNoGo Oscillator is at an inflection point as it tests the zero line from above. We will watch to see if it finds support at this level. If it does, then we can look for price to make an attempt at a new high.
USO Remains in “NoGo” Trend
After amber “Go Fish” bars at the beginning of the week the trend remained a “NoGo”. The weight of the evidence points lower for $USO. However, we can see how price is trading in a smaller and smaller range. This is demonstrated by GoNoGo Oscillator being unable to move far from the zero line. Back at that level again, it will be important to note which way it ultimately moves. A move back into negative territory would confirm the “NoGo” trend and we could expect further price deterioration.
“NoGo” Remains in Place For $GLD
Again, after a few bars of uncertain amber “Go Fish” bars, the “NoGo” trend returned. We will watch to see if this recent high on the “Go Fish” bar is a lower high in a stronger move down. With GoNoGo Trend painting strong purple bars the weight of the evidence remains pointing lower. GoNoGo Oscillator has been stuck at the zero level for some time now and we see a Max GoNoGo Squeeze. The direction of the break of the Squeeze will of course be all important. If the Squeeze is broken into negative territory we will know that momentum is resurgent in the direction of the “NoGo” 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. 5 sectors are in relative “Go” trends. $XLY, $XLC, $XLE, $XLF, and $XLI, are painting relative “Go” bars.
Financials Sub-Group RelMap
The chart below shows a relative trend breakdown of the sub groups within the financials sector again this week. The Sub-Group RelMap plots the GoNoGo Trend of each sub index to the $XLF. We saw in the above GoNoGo Sector RelMap that $XLF is the has been relatively outperforming the $SPY for the longest, with GoNoGo Trend painting strong blue “Go” bars. If we look at the breakdown of the groups in the map below we can see where that outperformance is coming from. Painting strong “Go” bars in the top panel and having outperformed for some weeks now is the investment services sub group.
$PIPR Looks for New High
The chart below shows that $PIPR has been in a “Go” trend for several months. During that time, GoNoGo Oscillator has been at or above the zero line as momentum has largely stayed on the side of the trend. Now, as price moves mostly sideways since the gap higher earlier this month, GoNoGo Oscillator shows that momentum has waned and is now testing the zero line from above. If this trend is to remain healthy, and we are to get a shot at new higher highs, the oscillator will need to find support and rally back into positive territory. If it does, then we will know that momentum is resurgent in the direction of the underlying “Go” trend and we will look for new highs.
$PJT Breaks To New Highs
$PJT has also been in a “Go” trend for several months and we saw GoNoGo Oscillator find support at zero several times as the trend made higher highs and higher lows. Recently, we saw GoNoGo Oscillator find support yet again at the zero level and this gave price the push it needed to conquer the resistance we saw on the chart. Now, we will watch to see if price can consolidate at these levels and use prior highs as support going forward.
