Equity Markets Struggle to Hold onto “Go” trend as Industrials Try to Lead | Apr 15 2024

Good morning and welcome to this week’s Flight Path. The equity “Go” trend continued this week but we saw some weakness as GoNoGo Trend paints a string of weaker aqua bars to close out the week. We haven’t seen a new high in a few weeks and so we will watch this week to see if the “Go” trend can hold. Treasury bond prices maintained the “NoGo” strength that we spotted last week as we saw a string of uninterrupted dark purple bars. The commodity index continued to shows strength this week as blue “Go” bars reigned supreme. The dollar also had a very strong week as it regained bright blue bars and hit new highs.

Equities Hanging on by a Thread to “Go” Trend

Since the last Go Countertrend Correction Icon (red arrow) have seen price struggle to go higher. Indeed, we have fallen from those highs and started to paint a more weaker aqua bars of late. This is the strongest threat to the “Go” trend we have seen in several months. GoNoGo Oscillator fell to the zero line and it has struggled to regain positive territory. In fact, we have seen it dip into negative territory and even a quick retest of that level. The oscillator was turned away by zero back into negative territory which means that momentum is out of step with the “Go” trend. We will want to see the oscillator regain positive territory if the “Go” trend is to survive.

We see a first crack in the armor of the weekly “Go” trend. Another lower close was painted a weaker aqua color by GoNoGo Trend. As GoNoGo Oscillator falls from overbought territory we see a Go Countertrend Correction Icon (red arrow) telling us that price may struggle to go higher in the short term. If we turn our eye to the lower panel we can see that GoNoGo Oscillator is falling sharply. We will watch closely as the oscillator approaches the zero line. We will need to see the oscillator find support at that level as we know that in a healthy “Go” trend the oscillator should stay at or above zero.

Rates Set Another Higher High

A week of uninterrupted strong blue “Go” bars sees price set another higher high this week on the daily chart of U.S. treasury rates. We do see a Go Countertrend Correction Icon (red arrow) which indicates price may struggle in the short term to go higher. Perhaps a pause then, as GoNoGo Oscillator turns around and heads for the zero line. As price momentum cools, and price falls from its recent high, we will watch to see if the oscillator finds support as it drops to the zero line.

Dollar Soars this Week as Price Jumps to New Highs

What a bounce for the dollar in the second half of the week. It was no surprise that price pulled back after the Go Countertrend Correction Icon (red arrow) and so as we identified a little trend weakness due to the aqua “Go” bars. It was then important to watch the oscillator panel as it tested the zero line on heavy volume (darker blue oscillator line). Quickly finding support, it rallied back into positive territory and that gave price the push it needed to gap higher twice in 3 days and cement new highs.

The longer term chart shows that we have clearly broken above a strong resistance level that has been on the chart since October of 2023. With open skies ahead, and momentum surging in the direction of the “Go” trend we will look for price to consolidate at these levels and potentially move higher. GoNoGo Trend is painting strong blue “Go” bars for a 4th consecutive week.