Today the Crude Oil ETF's (USO) 20-day EMA crossed down through the 50-day EMA (Dark Cross), generating an IT Trend Model NEUTRAL signal. Certainly we've seen a nice bounce in Crude yesterday and today, but price appears to be stalling at overhead resistance. It's not obvious, but today saw a filled black candlestick which tells us that while it closed up, it closed below the open. Still, we can't ignore the rising RSI and the PMO turning back up. Stochastics are also looking better. However, overall we don't trust this rally.
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
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 ($ONE Benchmark):
The majority of sectors are in the Improving quadrant. All have a eastern component to their heading so most should hit the Leading quadrant.
XLB, XLE, XLF and XLI have bullish northeast headings, but it so far away from the Leading quadrant. XLE and XLB have a lot of traveling to do in order to reach the Leading quadrant. So while they have a bullish heading, they have more work to do.
The remainder of the sectors have southeast headings which is somewhat neutral. Although we consider XLV and XLP more bullish given their position in the Leading quadrant.
RRG® Weekly Chart ($ONE Benchmark):
We're seeing some improvements on the weekly RRG. For some time we've had all of the sectors with southwest headings, now many have curled upward to move toward the Improving quadrant.
Three sectors still have bearish southwest headings, XLE, XLP and XLB. This makes sense when we step back and look at activity in the longer term. XLE has been smacked down and took away much of its previous gains. XLP had to deal with the Target (TGT) debacle and crash. It is still trying to right the ship. XLB is skewed toward Gold which has put it under pressure in the long term.
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: SPX Total Volume contracted for the third day in a row which could suggest investors are losing enthusiasm for this rally. The VIX is nearing the upper Bollinger Band on our inverted scale. Typically a puncture of the upper Band leads to a short-term market top.
Price is nearing resistance at both the prior June top and the 50-day EMA. Additionally, it is near the top of its declining trend channel. On the bright side, the RSI has moved into positive territory and the PMO is accelerating its rise.
SPY Weekly Chart: We have a large bullish falling wedge. However, given we are in a bear market, we have to temper our bullish expectations of our bullish chart patterns. The weekly PMO is decelerating and looking like it might turn back up in oversold territory.
New 52-Week Highs/Lows: We didn't see any New Lows today, but conversely, we aren't seeing many New Highs. At this point, we look to the 10-DMA of the High-Low Differential. It is rising and that suggests upside potential.
Climax Analysis: There were no climaxes today. Yesterday we didn't name it a climax day, but noting the reaction of price today, we think it was an upside exhaustion 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 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 SOMEWHAT OVERBOUGHT.
STOs are still rising which suggests more upside ahead. %PMOs Rising is overbought, particularly for this bear market, but there is still room for it to rise. With nearly 90% of the SPX with positive momentum, there is fuel for the rally to continue.
Intermediate-Term Market Indicators: The intermediate-term market trend is DOWN and the condition is NEUTRAL.
IT indicators are continuing to rise. The ITBM has reached neutral territory, but the ITVM is still oversold. 77% of the SPX have PMO BUY signals so the picture is beginning to look a little less bearish in 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 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.
This table is sorted by SCI values. This gives a clear picture of strongest to weakest index/sector in terms of participation.
Consumer Staples (XLP) has the most underlying strength given it has the highest SCI. XLP's SCI gained 9 percentage points this week; similarly for the GCI.
Energy (XLE) and Golden Miners (GDX) are the big laggards with 0% of members having 20-day EMAs above their 50-day EMAs.
We have a "bull stack" on the SPY: %Stocks > 20-day EMA is higher than the %Stocks > 50-day EMA which is higher than %Stocks > 200-day EMA. This suggests improvement "under the hood".
The short-term bias is bullish given there are a higher percentage of stocks above their 20/50-day EMAs in comparison to the SCI.
The intermediate-term bias is bearish, but improving. The SCI has begun to rise and today saw a positive crossover its signal line.
The long-term bias is bearish given the low reading on the GCI and the fact that there is a lower percentage of stocks above their 50/200-day EMAs than the GCI. The GCI cannot rise if there are fewer stocks above their 50/200-day EMAs than the GCI.
CONCLUSION: The market had been up today, but ultimately finished down slightly. The declining Total Volume on this rally is a problem as it could reflect a lack of enthusiasm or investors' concern that this rally won't continue. On the other hand, indicators are strengthening, not deteriorating. The bias in the short term is bullish so we are as well. We should stay vigilant and on the look out for any deterioration in our primary indicators as we begin next week.
Calendar: Options expiration is next week, and we expect low volatility on Thursday and Friday. This is not an end-of-quarter expiration, so high volume is not expected.
Wednesday: Consumer Price Index (CPI) and Core CPI Reports
Thursday: Jobs Reports
Friday: Retail Sales, Manufacturing & Production Reports and Consumer Sentiment.
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BITCOIN
Bitcoin is finally rallying. Today price overcame resistance at the prior June top. This has formed a bullish double-bottom. Today's break above the confirmation line suggests we will see more rally from Bitcoin. The RSI is not positive yet, but it is very close. The PMO is rising on a BUY signal. Stochastics are rising and have nearly reached above the bullish value of 80. The OBV is not confirming the rise as we see declining tops matched with rising price tops. Should price confirm this pattern with some follow-through, the upside target of the flag would be at the May low.
This chart is to show where some of the support/resistance lines come from.
INTEREST RATES
Rates have rebounded strongly, breaking their declining trends. It appeared relief was on the way, but this strong rebound suggests we will see those rates continue higher.
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 continued to rally, closing at its high for the day after a strong breakout above the mid-June low and 20-day EMA. The PMO hasn't turned up just yet, but the RSI and Stochastics are rising strongly.
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.
--
This week the 30-Year Fixed Rate fell from 5.70 to 5.30.
DOLLAR (UUP)
IT Trend Model: BUY as of 6/22/2021
LT Trend Model: BUY as of 8/19/2021
UUP Daily Chart: UUP started the week with a bang, gapping up and out of the bearish rising wedge. A bullish conclusion to a bearish chart pattern is especially bullish. The rest of the week UUP digested the initial move up. Indicators are positive so we would look for the Dollar to move higher next week.
There is the possibility this turns into a bearish reverse island, but as noted above, the indicators are awfully bullish to consider that resolution.
UUP Weekly Chart: We also have a bearish rising wedge on the weekly chart. This week's action saw the bearish pattern resolve to the upside which is especially bullish. The weekly RSI is overbought, but still rising. The weekly PMO has accelerated upward but is very overbought. Resistance is arriving at the 2020 top.
GOLD
IT Trend Model: NEUTRAL as of 5/3/2022
LT Trend Model: SELL as of 6/30/2022
GOLD Daily Chart: Gold dropped like a rock to begin the week and is now pausing to digest the decline. Indicators aren't improving yet.
This is a strong support level at $1725, but we thought $1750 was strong. This does seem a natural place for price to continue its consolidation and then bounce. Discounts had been rising and did spike this week. Generally we see price begin rising when discounts get this high, but so far all we've seen is consolidation.
GOLD Weekly Chart: Major support was lost on the weekly chart. The next level available is at $1675 and based on the indicators, we wouldn't be surprised if that level is tested. That would put price right on support and the long-term rising bottoms trendline.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners remain in a declining trend. Participation is completely absent with the exception that 10.3% have a 50-day EMA above the 200-day EMA. With Gold continuing to look bearish, we don't expect to see much upside movement here.
CRUDE OIL (USO)
IT Trend Model: NEUTRAL as of 7/8/2022
LT Trend Model: BUY as of 3/9/2021
USO Daily Chart: We discussed Crude Oil in the opening.
USO/$WTIC Weekly Chart: USO was down -3.83% this week. The weekly RSI is positive, but won't likely stay there given its speedy decline right now. The weekly PMO has triggered a crossover SELL signal. Both USO and $WTIC are holding horizontal support, but the strongest level of horizontal support for USO is at $60 and $85 for $WTIC. Crude Oil is still vulnerable in our estimation.
BONDS (TLT)
IT Trend Model: NEUTRAL as of 1/5/2022
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: It really looked like Bonds were going to make a comeback, but yields thwarted the rally and now they are tumbling quickly. This was the first time since March that price had challenged the 50-day EMA, but as it was then, price failed to hold that level. The short-term rising trend was broken.
Indicators are very ugly, particularly the PMO which is topping well-below the zero line. It appears the June lows will be tested.
TLT Weekly Chart: The June lows align with longer-term support at early 2018 lows. The weekly PMO looks less bearish than the daily, but the weekly RSI is tipping over in negative territory suggesting more downside ahead.
Good Luck & Good Trading!
Erin Swenlin And Carl Swenlin
(P.S. from Erin: Thank you for your well wishes for our family while Mom is in the hospital. Heart surgery is scheduled next week so our publishing schedule will likely continue to be somewhat irregular. Thank you for your patience!)
Erin is 45% exposed to the market.
Technical Analysis is a windsock, not a crystal ball. --Carl Swenlin
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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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