Today we see exactly what is meant by a "bifurcated" market. The Nasdaq 100 Index (QQQ) 50-day EMA crossed up through the 200-day EMA (Golden Cross), generating an LT Trend Model BUY Signal. The Technology sector which primarily makes up the QQQ, has been pushing higher and outperforming the overall market.
On the flip side, the S&P 600 Small-Cap Index ETF (IJR) 50-day EMA crossed down through the 200-day EMA (Death Cross), generating an LT Trend Model SELL Signal. A comparison of the PMOs tells the story of the strength still found in tech. Price on IJR has been trending lower with no real breakouts from declining trends. Lower lows and lower highs plague the chart. If the overall market sees strength moving forward, this area should reverse, but for now, small-caps are taking it on the chin.
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.
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: The market finished positively, but formed a bearish filled black candlestick. It is bearish because price closed below the open. However, we did see a higher low and higher high today. The short-term rising trend is intact using Friday's low and the March low. The PMO triggered a crossover BUY signal which is very encouraging. After the initial thrust out of the March low, price has really been moving sideways.
Stochastics accelerated higher today in positive territory. The VIX is now hovering above its moving average on the inverted scale. Both suggest new internal strength.
Here is the latest recording (3/24):
S&P 500 New 52-Week Highs/Lows: For the first time in over a month, there were no New Lows. The 10-DMA of the High-Low Differential is rising again.
Climax* Analysis: Only the NYSE UP/DOWN Volume Ratio had a climax reading today. With Total Volume not confirming, we will call this a no climax day.
*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.
The STOs are continuing to rise and both are now in positive territory. We are seeing a healthy expansion in participation with a bullish 61% of stocks showing rising momentum. We do want to see more stocks above their 20-day EMA as the reading at is not at our 50% bullish threshold.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERSOLD.
IT indicators are confirming what we are seeing on short-term indicators. Both the ITBM and ITVM are rising and are still in oversold territory. %PMO BUY Signals expanded nicely, but we do want to see a 50%+ reading as that can more easily sustain a rally.
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.
We've added the thumbnail to this chart so that you can see that the Silver Cross Index has turned up today. 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: While the market hasn't made much headway this past week, indicators are maturing bullishly with all of our primary indicators rising. Internal strength is now visible on Stochastics and the VIX. The PMO triggered a BUY Signal today and participation is beginning to expand. While price still has some work to do, the short-term bias is bullish so we are expecting a modest rally continuation.
Erin is 15% long, 2% short.
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BITCOIN
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
Rates have begun to rebound off December and January lows. We appear to be entering a bull phase for 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
$TNX breached support on Friday but managed to close above it. It didn't get above the 200-day EMA so we did expect a breakdown. However, today's reversal alongside a newly rising PMO, suggests a bullish triple-bottom may be in the works.
DOLLAR (UUP)
IT Trend Model: BUY as of 2/27/2023
LT Trend Model: BUY as of 2/24/2023
UUP Daily Chart: The Dollar hasn't done much and consequently it is nearing a "Dark Cross" of the 20/50-day EMAs. Support is holding and Stochastics have reversed higher. We'd like to see the PMO rising. It does appear ready to bottom, but the RSI has topped in negative territory. 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 softened its rising trend once, but as Carl noted previously, it was still too steep. Today price breached the short-term rising bottoms trendline, but formed a bullish hollow red candlestick. The PMO is still rising and the RSI is in positive territory. Stochastics remain firmly above 80. $GOLD is a problem though...
GOLD Daily Chart: The price pattern doesn't look too good on $GOLD. We see a clear double-top formation. The minimum downside target tells us to look for Gold to move to the early March top. We know that price is pushing against all-time highs and the psychological 2,000 level. A pullback makes sense.
GOLD MINERS Golden and Silver Cross Indexes: If Gold begins to weaken further, Gold Miners will likely follow. However, a bull market rally in the market should help GDX. Participation is about as good as you can get with 100% above their 20-day EMAs with 86% and 97% holding above their 50-day EMAs and 200-day EMAs respectively. The one detractor is the deceleration of the Silver Cross Index (SCI) which does suggest it is time for this group to cool.
CRUDE OIL (USO)
IT Trend Model: SELL as of 2/2/2023
LT Trend Model: SELL as of 12/6/2022
USO Daily Chart: After reaching long-term support at 58.00, Crude Oil has been rallying. We are finally seeing the indicators confirm this rally. The RSI is nearly in positive territory and Stochastics are rising out of oversold territory. Best news is the PMO turning up today. 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: We see TLT has broken the short-term rising bottoms trendline that formed the bottom of a symmetrical triangle. Given these patterns are continuation patterns, we should've seen an upside breakout. Indicators are topping and after reviewing the yield charts, we would look for Bonds to lose support at 104.00 and continue lower. The flight to safety is over which bodes well for the market.
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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Price Momentum Oscillator (PMO)
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