With the S&P 500 within one percent of the June lows, we can consider that a retest is in progress. More on the market later. In the meantime, the Consumer Discretionary Sector (XLY) 20-day EMA crossed down through the 50-day EMA (Dark Cross) below the 200-day EMA, generating an IT Trend Model SELL signal. Only Energy and Utilities remain on IT BUY signals, but they are close to failing.
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 ($ONE Benchmark):
Can't get much more bearish than what we are seeing, but the sectors are likely to move even further into the Lagging quadrant given the forcefulness of the reversals into bearish southwest headings. This chart shouldn't surprise you.
RRG® Weekly Chart ($ONE Benchmark):
The weekly RRG is deteriorating but isn't as bearish as the daily version. Still, this week we saw the deterioration of XLC, XLV (now in Lagging quadrant) and XLP. All three have bearish southwest headings.
That doesn't mean that the other sectors are bullish. We have three in the Leading quadrant and although XLU has tipped over southward, it should stay in Leading for a bit longer. XLE is the only sector with a bullish northeast heading and it managed to work its way into the Leading quadrant. XLY also managed to move into the Leading quadrant and despite a southward component to its heading, it looks safe from the negative Weakening and Lagging quadrants.
The rest are starting to add southward components to their headings that could put most of them in the Lagging quadrant. XLI has an opportunity to peek into the Leading quadrant, but with that hook it is making, it wouldn't likely last long.
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 8/2/2022
LT Trend Model: SELL as of 5/5/2022
SPY Daily Chart: Price has now sunk below support at the July lows and we are seeing a retest of support at the June lows. The RSI is now in oversold territory as it was in June.
The PMO is falling and isn't oversold yet when you compare it to June. Stochastics are oversold and could turn back up. For now they are flat. The VIX punctured its lower Bollinger Band on our inverted scale, but as we have been harping on, these readings are no where near as high as they were in May and June. Where is the fear?
SPY Weekly Chart: We are now looking at an over 24% decline. We believe we have another 25% to go given the current economic environment. The weekly PMO has now printed a crossover SELL signal on the weekly chart. These signals generally result in price moving even lower.
New 52-Week Highs/Lows: New lows are now competing with the readings from June, although they aren't as oversold. The 10-DMA of the High-Low Differential continues to accelerate lower. We really need to see this indicator bottom.
Climax Analysis: We got a fourth consecutive downside climax, and it is a downside exhaustion climax (the third in a row). It is possible that the decline is finally, actually exhausted -- today's candlestick is a hammer, which commonly marks a short-term bottom, and SPX Total Volume is approaching blowout levels.
*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 OVERSOLD.
%PMOs Rising can't get much more oversold, but we did have readings near 0% in June. STOs are certainly oversold and are competing with June readings. Still, they aren't as low.
Intermediate-Term Market Indicators: The intermediate-term market trend is DOWN and the condition is OVERSOLD.
The ITBM/ITVM are now reading the same or slightly lower than June. Unfortunately they are accelerating downward. Only 3% of the SPX have PMO BUY signals visible on their charts. Certainly oversold, but showing no signs of recovering just yet.
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 most damage was done to XLB this week lost 25 percentage points. XLP and XLF aren't far behind.
This table is sorted by SCI values. This gives a clear picture of strongest to weakest index/sector in terms of participation.
Although Utilities (XLU) and Energy (XLE) have the highest SCI readings, they are deteriorating given their IT bias lost -14 and -23 percentage points.
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 bias remains bearish in all three timeframes.
Short term: We have a very low number of stocks above their 20/50-day EMAs. While the readings did tick up today, it wasn't enough to change the short-term bias.
Intermediate term: The SCI is at a low 27.2% which in and of itself is bearish, but we also see lower percentage of stocks above their 20/50-day EMAs. This implies that the SCI won't be able to move higher. A silver cross can only be generated if the 20-day EMA moves above the 50-day EMA. EMAs will move in the direction of price so price must be above both the 20/50-day EMAs in order to create a new silver cross.
Long term: The GCI is flat and reading only 35.2%. This means that almost 2/3rds of the market is in the midst of a correction or bear market.
CONCLUSION: The market is about to retest the June lows. Indicators are very oversold, albeit not as oversold as they were in June. There is a high likelihood we will finally see a downside exhaustion climax return a day or two of higher prices. The VIX is confirming this as well. Total Volume is at blowout levels. This is the time for the market to show us what it's got, conditions couldn't be that much more conducive for an upside reversal. Just don't count on it. Best to play it safe with hard stops or simply limit exposure or add a hedge as Erin currently has.
Erin is 15% exposed with a 5% hedge.
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BITCOIN
Bitcoin spent most of the week consolidating. It held support which is positive. Unfortunately the indicators haven't gotten positive yet. They aren't bearish enough to call for a breakdown, but we know how weekend trading can go for Bitcoin.
This chart is to show where some of the support/resistance lines come from.
INTEREST RATES
With the FOMC raising rates 75 basis points, it wasn't a surprise to see rates continue higher. We are now seeing rates at multi-year highs and we're in 1970's territory.
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 busted through the top of a bearish rising wedge this week. Bullish conclusions to bearish chart patterns are especially bullish. The RSI is very overbought, but it can maintain those conditions easily. Stochastics are strong and the PMO is accelerating higher. We think $TNX will continue to march higher.
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 rose from 6.02 to 6.29.
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 is rallying strongly because of rising interest rates. The result is downside pressure on gold and other commodities. As with $TNX, we have a bullish conclusion to a bearish chart pattern. That suggests we will see the Dollar rise even further. The RSI is overbought, but one look at it from April/May and we know these conditions can persist.
The PMO is accelerating higher and Stochastics are now above 80. More upside is likely.
UUP Weekly Chart: With this week's leap forward, the advance is clearly parabolic. We can't project exactly when, but price is most likely getting closer to a parabolic collapse.
GOLD
IT Trend Model: NEUTRAL as of 5/3/2022
LT Trend Model: SELL as of 6/30/2022
GOLD Daily Chart: Gold managed to avert a breakdown until today. With the big rally in the Dollar, it was inevitable.
Indicators are very negative, but we note that discounts are at historic levels. We have supreme bearishness and that should lead to an upside reversal, so far it hasn't resulted in higher prices. We expect discounts to get even larger. We don't have the new discount for today, but we expect an even higher reading than we had yesterday.
GOLD Weekly Chart: This week's breakdown is troubling. Major long-term support, as well as the rising trend line have been violated.
GOLD MINERS Golden and Silver Cross Indexes: It really looked like Gold Miners would rebound here but the rising Dollar was just too much. Indicators are extremely bearish and we no Miner with price above the 20/50/200-day EMAs. The PMO finally gave us a crossover SELL signal. Guess we have to wait a bit longer for a reversal.
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 have a bullish falling wedge on USO, but we now have a breakdown below it. A bearish conclusion to a bullish chart pattern is especially bearish. Indicators are terrible. The OVX is now below its moving average suggesting internal weakness, but I don't think we need to look at that to know this.
We do have a bit of a tail on today candlestick and OHLC bar which could be a sign of a bottom ahead, but given the RSI, Stochastics and the PMO are so negative, we wouldn't count on that.
USO/$WTIC Weekly Chart: We have quite a topping pattern on the weekly chart and a drop below the 43-week EMA. The PMO is not oversold yet and is continuing lower. Time for a test of the 2021 high and gap support from early 2020.
BONDS (TLT)
IT Trend Model: SELLas of 8/19/2022
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: Rising rates are decimating Bonds. They were up somewhat today given the 20-year yield moved slightly lower, but this declining trend is completely intact and support was lost this week.
Stochastics are on the rise, but it's the only indicator that has any positive aspect.
TLT Weekly Chart: The weekly chart shows TLT is now at multi-year lows. A peek at the monthly chart below the weekly chart shows us that the next level of support lies at about $85. We believe it will easily hit that level and break the long-term rising trend.
Good Luck & Good Trading!
Erin Swenlin And Carl Swenlin
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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