We haven't updated and looked at all four DP Scoreboards for the major market indexes in some time, but we felt it was more powerful seeing them all together on one page. All four indexes saw new PMO BUY signals on the rally with the Dow garnering its first. NOTE that all of the other signals remain bearish. (A Short-Term Trend Model signal is generated by 5/20-day EMA crossovers. We don't favor using them, but it makes the table even. An ST PMO signal is determined on the daily chart, the IT PMO signal is generated on the weekly chart and the LT PMO signals are generated on the monthly chart.)
We are working with our webmaster to get something like this going on our website for subscribers, but it is taking time to get it right.
Below are the charts for you to review. They're self explanatory.
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.
Watch the latest episode of DecisionPoint on StockCharts TV's YouTube channel here!
MAJOR MARKET INDEXES
For Today:
For the Week:
SECTORS
Each S&P 500 Index component stock is assigned to 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.
For Today: 
For the Week:
RRG® Daily Chart ($ONE Benchmark):
The Daily RRG this week shows new strength across the board for all sectors. XLP is the weakest as it catches up from the Target decline. It is still traveling northward toward the Improving quadrant. XLU has just entered the Leading quadrant to join the clear relative strength winner, XLE.
RRG® Weekly Chart ($ONE Benchmark):
On the other hand, the weekly RRG suggests that prior weakness hasn't been cleared. In the intermediate term, most sectors have bearish southwest headings with only XLE holding a bullish northeast heading.
XLB and XLU are still the Leading quadrant, but their southward heading could put them into the Weakening quadrant soon. However, knowing the sector charts as I do, both look very bullish right now.
XLP has a northward component to its heading that could bring it into the Leading quadrant. XLV looks very weak and will likely move into the Lagging quadrant.
All others are sitting in the Lagging quadrant with bearish southwest headings. The damage is still there. This week's short-term rally did improve the outlook for many sectors, but we aren't confident that the rally will continue much longer.
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: NEUTRAL as of 1/21/2022
LT Trend Model: SELL as of 5/5/2022
SPY Daily Chart: SPY moved up through the double bottom confirmation line, so the minimum upside target of 438 is now official.
There is one trading day left in the month, so we will cover the monthly charts today.
Indicators are looking good with RSI moving into positive territory and the new PMO BUY signal. Additionally, Stochastics are rising sharply and should get above 80 soon. Typically when Stochastics stay above 80, the rally continues.
SPY Weekly Chart: This week price bounced off the $380 level. We have been looking for that as a possible reversal point. The weekly RSI is rising, but is still in negative territory. The weekly PMO has slowed in oversold territory. We did see a fake out in March when the weekly PMO turned up. Keep watch for a possible bull trap.
SPY Monthly Chart: The monthly RSI remains positive on this bounce off $380. The problem is the monthly PMO continues lower, completely unperturbed by this week's rally.
New 52-Week Highs/Lows: We had clear positive divergences leading into this rally, although we did consider they were not resolving with the expected rally when we saw the decline earlier in the week. The 10-DMA of the High-Low Differential had gotten very oversold and now we are seeing it rising. We did get a contraction in New Highs which is a very short-term bearish sign.
Climax Analysis: We got the third upside exhaustion climax in a row. Climax readings were strong, but SPX Total Volume was disappointing, but that was probably due to pre-holiday trading. We aren't too shaken by another exhaustion climax given we saw the same set up back in late March where we had three climax days in a row, followed by even higher prices.
*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 are at their core exhaustion events; however, at price pivots they may be initiating a change of trend.
Short-Term Market Indicators: The short-term market trend is UP and the condition is OVERBOUGHT.
The STOs have become very overbought, but with the context being an initial upthrust off a bottom, it is likely that price will not top for a week or more.
Intermediate-Term Market Indicators: The intermediate-term market trend is DOWN and the condition is NEUTRAL.
The ITBM and ITVM have a good distance to go before they become overbought, and we can see a price top in a time frame of a week or more (as with the STOs).
PARTICIPATION and BIAS Assessment: 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 following table summarizes participation for the major market indexes and sectors. The 1-Week Change columns inject a dynamic aspect to the presentation.
The following table summarizes participation for the major market indexes and sectors. The 1-Week Change columns inject a dynamic aspect to the presentation.
The SCIs in general improved this week, although Consumer Staples really lost its grip mainly due to the Target (TGT) debacle.
This table is sorted by SCI values. This gives a clear picture of strongest to weakest index/sector in terms of participation.
All but two SCIs are below 50, and all but four GCIs are below 50 -- in bear markets.
The short-term bias is clearly bullish given the "bull stack" on the %Stocks > 20/50/200-day EMAs. It's a bull stack because percentages are higher in the short term (price above 20-day EMA) v. intermediate term (price above the 50-day EMA) v. long term (price above the 200-day EMA).
The intermediate-term bias is getting bullish given the SCI saw a new positive cross over the signal line. However, given the SCI has a low reading of 26.20%, we have to consider the IT bias Neutral.
The long-term bias is still bearish given the GCI is still in decline and the %Stocks > 200-day EMA is only slightly higher than the GCI reading.
CONCLUSION: There are many reasons why this rally looks to be sustainable:
(1) The SPY double bottom executed (price broke above the confirmation line) today;
(2) There is some version of a double bottom or "V" bottom showing on most of the 21 market and sector indexes on which we keep Silver/Gold Cross Indexes. The exception is the Energy Sector, and it has been in an up trend since 2020;
(3) Numerous indicators have formed positive divergences;
(4) Sentiment has gotten very bearish across a number of sentiment indicators, which, of course, is bullish for the market.
We still believe we're in a bear market, and it is unlikely that we have seen the bottom. Nevertheless, the charts have spoken, and we should expect bullish results for possibly a week or maybe two.
Erin is 10% exposed to the market having lifted her 10% hedge. She is looking to expand that exposure back to 20 or 25% next week.
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BITCOIN
Bitcoin is really struggling to stay above the long-term support line. We believe that, if price drops significantly below this line, it will be the beginning of the end of cryptocurrencies or at the very least, a drop to $10,000 based on the minimum downside target of the reverse flag formation. Note that the "flag" is actually a bearish descending triangle. All signs are currently pointing to a breakdown with the exception of the PMO which had a positive crossover today.
INTEREST RATES
The declining trend continues for long-term yields. There is a double-top on the 1-year yield. The rising trend is intact on 1- and 3-month yields.
The Yield Curve Chart from StockCharts.com shows us the inversions taking place. The red line should move higher from left to right. Inversions are occurring where it moves downward.
10-YEAR T-BOND YIELD
We've been staring at a bearish head and shoulders all week for $TNX, but it refuses to drop below support at the 50-day EMA and mid-April low. The PMO and Stochastics are in decline and the RSI is negative suggesting we will see that breakdown.
MORTGAGE INTEREST RATES (30-Yr)**
**We watch the 30-Year Fixed Mortgage Interest Rate, because, for the most part, people buy homes based upon the maximum monthly payment they can afford. As rates rise, a fixed monthly payment will carry a smaller mortgage amount. As buying power shrinks, home prices will come under pressure.
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This week the 30-Year Fixed Rate fell from 5.25 to 5.10.
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 broke support at the early May low but has been hanging onto the 50-day EMA...so far. The RSI is negative and the PMO is declining. Stochastics are flat and seeing no improvement. More than likely UUP will break down below $27.
UUP Weekly Chart: The weekly chart shows the severity of the past two weeks' declines. However this does give us a possible handle developing on the large "cup" shaped bottom. With the weekly PMO topping and RSI falling fast, we think the "handle" will continue to develop before we get a reversal on UUP.
UUP Monthly Chart: The monthly picture is far more bullish, but we do see the monthly RSI deteriorating. The monthly PMO is healthy and rising. If we do get a sizable decline in the Dollar, this chart tells us that $26 is likely the stopping point.
GOLD
IT Trend Model: BUY as of 5/3/2022
LT Trend Model: BUY as of 1/12/2022
GOLD Daily Chart: Gold didn't do much with the sinking Dollar, but it does appear to be forming a bull flag. The RSI is still weak sitting in negative territory, but the PMO crossover BUY signal garnered this week does suggest a breakout. Stochastics are still rising and are in positive territory.
Discounts are paring back which tells us that investors are less bearish on the shiny metal.
GOLD Weekly Chart: The weekly chart is mixed. The weekly RSI and PMO don't look great, but the rising bottoms trendline drawn from the 2020 low is being preserved.
GOLD Monthly Chart: The monthly Gold chart is worrisome given the monthly PMO is in decline. The monthly RSI tells us that price is still holding up. The double-top does look ominous on this chart, but we also see a possible bullish cup with handle pattern. What is unfortunate is that the long-term correlation with the Dollar is rising. With the Dollar looking vulnerable, we want the correlation to be negative.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners had pretty good week, but participation remains thin. None of the miners have a 20-day EMA above the 50-day EMA (SCI = 0%). Stochastics are rising and the new PMO BUY signal is encouraging. However, the negative RSI and looming resistance at the 20-day EMA and January top is concerning. Be careful with this group.
CRUDE OIL (USO)
IT Trend Model: BUY as of 1/3/2022
LT Trend Model: BUY as of 3/9/2021
USO Daily Chart: We finally got the breakout from the bullish ascending triangle pattern with yesterday's breakout. We had a hunch this would be the time for a breakout given price bottomed before touching the rising bottoms trendline that forms the bottom of the triangle.
Now we have overhead resistance at the March top to contend with. Given the PMO is on a new BUY signal, the RSI is positive and rising, and Stochastics are above 80, we expect to see USO easily break above that resistance level.
USO/$WTIC Weekly Chart: The weekly RSI is a bit overbought, but the weekly PMO is still rising.
WTIC Monthly Chart: By closing above $110 this month, we have a strong long-term breakout. The monthly RSI and PMO are overbought, but they are rising strongly. Next level of resistance is at the 2008 top for $WTIC.
BONDS (TLT)
IT Trend Model: NEUTRAL as of 1/5/2022
LT Trend Model: SELLas of 1/19/2022
TLT Daily Chart: With long-term yields in a declining trend, TLT has benefitted. The rally has been tiny, but we do believe Bonds will continue to rally. The RSI just hit positive territory and the PMO is rising out of oversold territory.
TLT Weekly Chart: TLT is reentering the declining trend channel on the weekly chart. The weekly RSI is rising but is still very negative. The weekly PMO is turning up. A rally to $130 seems possible; however, we do expect yields to reverse to the upside and that will end the party for TLT.
TLT Monthly Chart: The monthly chart is very negative. The monthly RSI is in very negative territory and the weekly PMO is in free fall. The double-top on the monthly chart was confirmed with last month's decline. The 20-year yield is up against resistance. We believe it will breakout soon, putting long-term downward pressure on TLT.
Good Luck and Good Trading,
Carl & Erin Swenlin
Technical Analysis is a windsock, not a crystal ball. --Carl Swenlin
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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.
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