A question posted to Monday's TV show page: "What's your take on silver?"
We don't follow silver on a regular basis, but we believe, generally speaking, that its outlook should be similar to that of gold. (See below.) On the chart below we can see that it is positively correlated to gold, but we are aware that silver tends to be much more volatile than gold. Sentiment in silver is bearish, indicated by the fact that Sprott Physical Gold and Silver Trust (CEF) is trading at a discount. (CEF holds roughly equal amounts of gold and silver.)
Note that the daily PMO is just about to turn up, which is a potential short-term entry point for a long position; however, that is the only positive note on the chart.
On a weekly basis, there are no positive signs. The weekly PMO is falling and oversold. The weekly correlation has silver departing from the positive side of the chart panel, indicating that sometimes silver has a mind of its own.
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
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.
RRG® Chart: $ONE Benchmark
Daily: Big changes on the RRG chart today. Aggressive sectors XLC, XLK and XLY now have bullish northeast headings. XLRE is now making its way toward the Leading quadrant.
XLU just entered the Leading quadrant, but XLU, XLV and XLP (defensive sectors) do not have bullish headings. They are all headed toward the Weakening quadrant.
XLB also managed to switch to a bullish northeast heading, while XLE has turned back into a bearish southwest heading.
Overall the daily RRG is showing improvement.
Weekly: Yesterday's comments still apply:
"In the longer term, the RRG is improving, although we should note that no sector is in the Improving or Leading quadrants. This is a good sign given this weekly RRG has been very bearish for some time. XLE is one of the weakest with its bearish southwest heading and distance from all of the others. "
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: While the market dropped, we do have a bullish hollow red candlestick. The PMO is flat, but looking toppy. The RSI is negative and falling. We still have a bearish double-top as well. If price manages to bounces off the confirmation line we will be able to scrap it.
Total Volume on today's selling was small and less than it was on yesterday's decline. While the VIX remains above its moving average on our inverted scale, it topped beneath the upper Bollinger Band. Overbought tops on the VIX generally leads to short-term decline. Stochastics are falling in negative territory.
Here is the latest recording:
Replays are now available on YouTube! Here is the link to Monday's trading room!
S&P 500 New 52-Week Highs/Lows: The 10-DMA of the High-Low Differential topped today and we saw a large expansion in New Lows.
Climax* Analysis: There were no climax readings today.
*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 DOWN and the condition is NEUTRAL.
Both STOs continued lower and we saw a lot of damage to participation.
Intermediate-Term Market Indicators: The intermediate-term market trend is DOWN and the condition is NEUTRAL.
The ITBM and ITVM continue to move lower and we saw a top in %PMO BUY signals. Given the ITBM/ITVM started lower before reaching positive territory, we see this as a very bearish sign, particularly for the intermediate term.
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 long-term bias remains bearish. The GCI is flat and currently with a lower percentage of stocks above their 50/200-day EMAs, the GCI will not be able to improve.
The intermediate-term bias is bearish. The SCI stalled today at a very low 14.4% reading.
The short-term bias is getting bearish, but isn't completely bearish given we have a higher percentage of stocks above their 20/50-day EMAs.
CONCLUSION: A few pieces of good news today--a hollow red candlestick, an improved daily RRG and the VIX remaining above its moving average on our inverted scale. Unfortunately the rest of the news is not encouraging. Indicators remain in decline and participation is thinning. We don't like the setup. Price has a chance of bouncing as it hones in on support at the confirmation line of the short-term bearish double-top, but it doesn't look good right now. Keep stops in play.
Erin is 45% exposed to the market.
Have you subscribed the DecisionPoint Diamonds yet? DP does the work for you by providing handpicked stocks/ETFs from exclusive DP scans! Add it with a discount! Contact support@decisionpoint.com for more information!
BITCOIN
The "magical" $20,000 support level was again lost. Bitcoin traded mostly below that level despite closing higher on the day. The PMO did turn back up today and the RSI is rising. Still the negative OBV divergence and the inability to close above 20,000 doesn't inspire confidence.
This chart shows us where support/resistance originates.
INTEREST RATES
After breaking through the short-term declining trend, long-term rates have topped. Short-term rates continue to rocket higher. The yield curve is inverting even more.
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
$TNX failed to reverse its declining trend. We continue to look for it to reach 2.7%.
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 has a bearish engulfing candlestick today. The indicators are still strong, but we may see a test of $28.50 before it reverses back up.
GOLD
IT Trend Model: NEUTRAL as of 5/3/2022
LT Trend Model: SELL as of 6/30/2022
GLD Daily Chart: Gold had a pretty good day. GLD formed a bullish engulfing candlestick on today's rebound. The indicators are still negative overall. Discounts are high still which tells us that investors are still bearish on Gold, just not bearish enough to look for a reversal based on sentiment.
GOLD Daily Chart: This is an important support level for Gold to hold. It traded below support at $1725, but managed to close comfortably above it. Stochastics look a bit healthier on $GOLD, but not enough to get excited.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners had an excellent day which is good given they sit on long-term support at $26. The PMO did turn up, as did the RSI, but Stochastics still look weak and we continue to see zero participation.
CRUDE OIL (USO)
IT Trend Model: NEUTRAL as of 7/8/2022
LT Trend Model: BUY as of 3/9/2021
USO Daily Chart: Yesterday's comments still apply:
"Crude Oil is forming a bullish falling wedge. This suggests higher prices and a likely upside breakout from the wedge. However, indicators remain very bearish and we need to see the April lows hold as support."
BONDS (TLT)
IT Trend Model: NEUTRALas of 1/5/2022
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: We have a bullish engulfing candlestick on TLT. Indicators are strong and we had a close above the 20/50-day EMAs. The RSI moved into positive territory and the PMO is rising strongly. Stochastics turned up in positive territory indicating internal strength. Given the bearish $TNX chart and the overall declining trend in long-term rates, we expect TLT to continue a bit higher.
Good Luck & Good Trading!
Erin Swenlin and Carl Swenlin
Thank you for your patience as we care for Carl's wife/Erin's mom in the hospital. Comments will remain abbreviated and publishing will be irregular at least through Friday.
Technical Analysis is a windsock, not a crystal ball. --Carl Swenlin
(c) Copyright 2022 DecisionPoint.com
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)
DecisionPoint is not a registered investment advisor. Investment and trading decisions are solely your responsibility. DecisionPoint newsletters, blogs or website materials should NOT be interpreted as a recommendation or solicitation to buy or sell any security or to take any specific action.