Today the Dollar Index (UUP) 20-day EMA crossed down through the 50-day EMA (Dark Cross), generating an IT Trend Model NEUTRAL Signal. This reverses the BUY Signal from exactly one month ago. The notable feature on this chart is that price has been in a narrow range for five months, and the moving averages are extremely close together. We frequently remind readers that our signals are information flags, which urge further assessment. In this case, the new signal doesn't resolve anything, because a sharp up move could quickly reverse the signal. There is currently a slight downward bias, but nothing to incite any action.
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 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.
CLICK HERE for Carl's annotated Sector charts.
THE MARKET (S&P 500)
IT Trend Model: NEUTRAL as of 3/13/2023
LT Trend Model: SELL as of 3/23/2023
SPY Daily Chart: Price closed right on the 50-day EMA today. It has a hammer-like candlestick that would imply the short-term rising trend will hold up. The short-term declining tops trendlines are both holding. Total Volume was very low. The PMO BUY Signal remains intact.
Stochastics are continuing higher and the VIX is comfortably above its moving average on the inverted scale. Both imply internal strength.
Here is the latest recording (3/24):
S&P 500 New 52-Week Highs/Lows: No New Lows again today, but we did see a slight contraction in New Highs. Given the 10-DMA of the High-Low Differential is rising, we don't see the contraction as a problem. It was also miniscule.
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 UP and the condition is NEUTRAL.
Bad news on the short-term indicator chart. Both STOs moved lower today with the STO-V landing back in negative territory. This is somewhat perplexing given the expansion in participation. 2/3rds of the index have rising momentum. That should fuel this rally.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERSOLD.
IT indicators look good. They continue to rise out of oversold territory. We now have over 1/3rd of the index with PMO BUY Signals. While that is encouraging, we like to see that percentage above 50%.
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 short-term bias is BULLISH.
The intermediate-term bias is NEUTRAL.
The long-term bias is BEARISH.
While we don't have over 50% above their 20/50-day EMAs, the percentages are expanding which is bullish for the short term. Given there are more stocks above their 20/50-day EMAs than those with "Silver Crosses", the intermediate-term bias has improved to NEUTRAL. The GCI continues to fall and is below 50%. Additionally, we have fewer stocks above their 50/200-day EMAs as compared to those with "Golden Crosses" so the long-term bias remains bearish.
CONCLUSION: It was a rather quiet trading day as investors sorted through higher interest rates with many opting not to trade today (below average Total Volume). We have evidence the market will continue higher. The short-term rising trend is intact, participation is expanding and IT indicators continue to rise. We do need to be careful given both STOs turned down today. It could warn of a hiccup ahead, so evaluate your stops. If you do expand your exposure, think short-term, not intermediate-term. While the bias is improving in the intermediate term, it isn't bullish yet.
Erin is 23% long, 2% short.
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BITCOIN
Yesterday's comments still apply:
"Bitcoin has formed a bearish rounded top. The PMO is topping and Stochastics dropped below 80. While the RSI is still positive above net neutral (50), it is trending lower. We expect to see Bitcoin test the February top."
It makes sense that Bitcoin would begin to fail here. Major overhead resistance has been met.
INTEREST RATES
Higher interest rates put a damper on the market. We do see rates continuing to rise and that will certainly put Bonds at a disadvantage and could mean more downside pressure on the market.
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 higher. We now have a loose triple bottom pattern developing which is bullish. The PMO has flattened out of its decline and Stochastics are rising again. The RSI remains negative, but a break above the 20/50-day EMAs will fix that. That seems likely given the improving indicators.
DOLLAR (UUP)
IT Trend Model: NEUTRAL as of 3/28/2023
LT Trend Model: BUY as of 2/24/2023
UUP Daily Chart: We agree with yesterday's conclusion regarding the Dollar:
"More than likely we will continue to see more sideways consolidation. This support level is strong so we don't expect a big breakdown. Likewise, we don't see a big rally either."
GOLD
IT Trend Model: BUY as of 3/7/2023
LT Trend Model: BUY as of 1/5/2023
GLD Daily Chart: Gold rallied. While we are still bullish on Gold, we may see another pullback on the way up given the bearish rising wedge formation. These patterns imply a breakdown, but they don't really tell us how deep a decline might be. Indicators are still quite strong and clearly investors are still bullish on Gold given the decline in discounts on PHYS so we wouldn't expect a deep decline. A test of the early March high seems reasonable, but with sentiment bullish, it may only require a test of the 50-day EMA, if that.
GOLD Daily Chart: $GOLD saw the PMO move higher today. The RSI is positive, but unlike GLD, Stochastics have topped and are below 80. Still, given the continued strength of Gold to the Dollar and bullish sentiment, we still are looking for Gold to test all-time highs, it looks like it is still digesting the rally.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners rallied strongly. They are about to hit overhead resistance, but given incredibly strong participation readings and positive and not overbought RSI and PMO, we expect a breakout.
CRUDE OIL (USO)
IT Trend Model: SELL as of 2/2/2023
LT Trend Model: SELL as of 12/6/2022
USO Daily Chart: Indicators are finally confirming this rally. The RSI is in positive territory and Stochastics are rising out of oversold territory. Best news is the PMO nearing a crossover BUY signal. We would look for a rally to test the previous two price tops.
BONDS (TLT)
IT Trend Model: BUY as of 3/17/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: The pressure is now on Bonds with yields rising. We have spotted a bearish descending triangle pattern (flat bottom, declining tops). TLT managed to hold support today, but this pattern implies a breakdown ahead. Indicators are looking more bearish too. The PMO has topped and Stochastics are falling out of positive territory above net neutral (50).
Good Luck & Good Trading!
Erin Swenlin and Carl 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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