Gold triggered an Intermediate-Term Trend Model "Silver Cross" BUY signal today as the 20-day EMA crossed above the 50-day EMA on both GLD and $GOLD. Our signals are generated by GLD, but we have the one-year chart of $GOLD below. The indicators are still mostly positive. Stochastics did turn down, but they remain above 80. $GOLD was lower on the day, but we have a bullish hammer candlestick. These are one-day patterns so we should look for a positive close on Gold tomorrow. Although with the way Gold has been acting, it might be muted.
The DecisionPoint Alert Weekly Wrap presents an end-of-week assessment of the trend and condition of the Stock Market, the U.S. Dollar, Gold, Crude Oil, and Bonds. The DecisionPoint Alert daily report (Monday through Thursday) is abbreviated and gives updates on the Weekly Wrap assessments.
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MAJOR MARKET INDEXES
SECTORS
Each S&P 500 Index component stock is assigned to one, and only one, of 11 major sectors. This is a snapshot of the Intermediate-Term (Silver Cross) and Long-Term (Golden Cross) Trend Model signal status for those sectors.
RRG® Chart: Defensive sectors are still in the Leading quadrant except for XLU which has now hit Weakening. XLB is the newcomer to the Leading quadrant and looks bullish. XLC is still seeing some improvement and is headed toward Leading. XLF has reversed into the bearish southwest direction. XLI and XLE look very bullish as they hook around and are on their way to the Improving quadrant. I had numerous Diamond Scan results in XLI and hardly any in XLE. XLY is headed toward Improving, but be careful here. XLK is beginning to turn back toward Leading which is bullish.
RRG® charts show you the relative strength and momentum for a group of stocks. Stocks with strong relative strength and momentum appear in the green Leading quadrant. As relative momentum fades, they typically move into the yellow Weakening quadrant. If relative strength then fades, they move into the red Lagging quadrant. Finally, when momentum starts to pick up again, they shift into the blue Improving quadrant.
CLICK HERE for an animated version of the RRG chart.
CLICK HERE for Carl's annotated Sector charts.
THE MARKET (S&P 500)
IT Trend Model: BUY as of 10/18/2021
LT Trend Model: BUY as of 6/8/2020
SPY Daily Chart: The market finished higher, but set a lower intraday high and lower intraday low. It looks toppy. However, the indicators are still positive with a PMO BUY signal and positive RSI. The VIX is rising on our inverted scale suggesting investors are bullish.
Stochastics are staying above zero. The problem we see now is that price turned back down before testing the top of the rising trend channel and we have a strong OBV negative divergence with price.
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PARTICIPATION: The following chart objectively shows the depth and trend of participation in two time frames.
- Intermediate-Term - the Silver Cross Index (SCI) shows the percentage of SPX stocks on IT Trend Model BUY signals (20-EMA > 50-EMA). The opposite of the Silver Cross is a "Dark Cross" -- those stocks are, at the very least, in a correction.
- Long-Term - the Golden Cross Index (GCI) shows the percentage of SPX stocks on LT Trend Model BUY signals (50-EMA > 200-EMA). The opposite of a Golden Cross is the "Death Cross" -- those stocks are in a bear market.
The SCI has now reached above 60%. It's rising which is bullish, but there is still a negative divergence with price. The GCI is also continuing to rise and today crossed above its signal line. This is bullish for the long term.
S&P 500 New 52-Week Highs/Lows: New Highs are near-term overbought, but we don't see a negative divergence. The 10-day SMA of the High-Low Differential is rising which is bullish for the market.
Climax* Analysis: Readings were nearly identical to yesterday's. No climax.
*A climax is a one-day event when market action generates very high readings in, primarily, breadth and volume indicators. We also include the VIX, watching for it to penetrate outside the Bollinger Band envelope. The vertical dotted lines mark climax days -- red for downside climaxes, and green for upside. Climaxes indicate either initiation or exhaustion.
Short-Term Market Indicators: The short-term market trend is UP and the condition is EXTREMELY OVERBOUGHT.
STOs are now EXTREMELY overbought and so are %PMOs Rising. %Stocks > 20-day EMA is overbought and tipped over today in overbought territory. Those conditions can be relieved in one of two ways: price declines or price consolidates.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT.
We're listing these indicators as overbought now. Granted we've seen higher readings on both the ITBM and ITVM so they could accommodate more upside should price consolidate or rally.
Bias Assessment: There is a strong bullish bias in the short term given participation is much higher than the SCI, but we do note that %Stocks > 20/50-day EMAs have topped in overbought territory. We would read a neutral to bullish bias in the intermediate term based on the SCI rising but not yet above 70%. The long-term bias is bullish as the GCI is above 70% and there are slightly more stocks above their 200-day EMAs.
CONCLUSION: Our expectation is that the market will begin to consolidate above prior all-time highs around $470 for the SPY based on current Santa seasonality. Consolidation could begin to relieve overbought conditions, but if it doesn't, the market will be particularly vulnerable going into next week.
Erin is 10% exposed to the market. She notified Diamond subscribers that she will be considering opening up my exposure in the Industrials sector based on my timing methodology that she presents in my trading rooms.
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BITCOIN
Yesterday's comments still apply:
"Bitcoin was finally beginning to look bullish as it had formed a short-term flag and was maintaining above the 20-day EMA. Add to that the positive indicators yesterday and we expected it to make a run at $52,500. Instead it plunged over 6%, causing the PMO to top beneath the zero line and preventing the RSI from reaching positive territory. It appears we will see a test of the December lows."
INTEREST RATES
Rates are moving mostly sideways with a slight rising trend.
10-YEAR T-BOND YIELD
$TNX finally broke out from the rounded top and key moving averages. The RSI is now positive and Stochastics are rising. Most importantly, the PMO triggered a crossover BUY signal.
DOLLAR (UUP)
IT Trend Model: BUY as of 6/22/2021
LT Trend Model: BUY as of 8/19/2021
UUP Daily Chart: The Dollar finally broke down from the symmetrical triangle. It was supposed to breakout given the formation is a "continuation" pattern and the prior trend was rising.
Indicators are configured negatively although Stochastics saw a positive crossover in very oversold territory. This could mean that while it broke down from the triangle, it could find purchase along the November lows and the 50-day EMA.
GOLD
IT Trend Model: BUY as of 12/29/2021
LT Trend Model: SELL as of 12/3/2021
GLD Daily Chart: Gold started the day strongly down, but reversed up to close only slightly down. The close at the day's high allowed the 20-day EMA to cross up through the 50-day EMA, giving us a new IT Trend Model BUY signal. Nevertheless, the flat configuration of the moving averages doesn't make the new signal too compelling.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners rallied but were unable to close above the 50-day EMA. There is still a bullish bias given percentage of stocks above their 20/50-day EMAs is greater than the SCI. The SCI is rising after a positive crossover in oversold territory. There is deterioration on participation and Stochastics did turn down.
CRUDE OIL (USO)
IT Trend Model: NEUTRAL as of 11/30/2021
LT Trend Model: BUY as of 3/9/2021
USO Daily Chart: Yesterday's comments still apply:
"Crude Oil continued to rally. The indicators look excellent. Stochastics have turned down, but they had almost reached 100. It's a bounded indicator so as long as it stays above 80 like it did in September and October, there is still internal strength."
BONDS (TLT)
IT Trend Model: BUY as of 11/8/2021
LT Trend Model: BUY as of 11/5/2021
TLT Daily Chart: TLT dropped significantly today landing it right on top of the intermediate-term rising trendline and the 200-day EMA. The indicators are very negative so we're looking for a drop to $144.
Happy Charting!
-Carl & Erin Swenlin
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"Technical Analysis is a windsock, not a crystal ball." -Carl Swenlin
Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
NOTE: The signal status reported herein is based upon mechanical trading model signals, specifically, the DecisionPoint Trend Model. They define the implied bias of the price index based upon moving average relationships, but they do not necessarily call for a specific action. They are information flags that should prompt chart review. Further, they do not call for continuous buying or selling during the life of the signal. For example, a BUY signal will probably (but not necessarily) return the best results if action is taken soon after the signal is generated. Additional opportunities for buying may be found as price zigzags higher, but the trader must look for optimum entry points. Conversely, exit points to preserve gains (or minimize losses) may be evident before the model mechanically closes the signal.
Helpful DecisionPoint Links:
DecisionPoint Alert Chart List
DecisionPoint Golden Cross/Silver Cross Index Chart List
DecisionPoint Sector Chart List
Price Momentum Oscillator (PMO)
Swenlin Trading Oscillators (STO-B and STO-V)
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