Today SPY, Consumer Discretionary (XLY), and Consumer Staples (XLP) 20-day EMAs crossed up through the 50-day EMAs (Silver Cross), generating new IT Trend Model BUY Signals. As has been the case for a while now, these are pretty skinny crossovers, coming out of narrow trading ranges. Nothing decisive.
The Silver Cross Index has turned up on XLY and participation in the short term is expanding, but the long-term still looks bearish given the descent of the Golden Cross Index.
XLP has been quietly rallying, not getting the same attention as many of the other sectors. Its participation has expanded into the bullish 50%+ level and the Silver Cross Index is rising after a positive crossover its signal line. The Golden Cross Index is above its signal line, but flat. This sector is showing excellent strength in the short and intermediate terms.
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: BUY as of 3/30/2023
LT Trend Model: BUY as of 3/29/2023
SPY Daily Chart: We believe we were correct in calling yesterday's gap a breakaway gap. Today saw another gap which we will identify as a continuation gap. Price has finally broken above the declining tops trendline drawn from the February top. The PMO hit the zero line today and should enter positive territory, barring a big decline tomorrow. Relative strength to the equally weighted RSP shows a flat line. This means that not only large-caps are running show, there is broad strength.
Stochastics are now above 80 and the VIX remains above its moving average on the inverted scale. This suggests very good internal strength, certainly enough to fuel the rally.
Here is the latest recording (3/24):
S&P 500 New 52-Week Highs/Lows: New Highs were modestly higher on the rally, we would like to see that expand more, but the 10-DMA of the High-Low Differential is rising nicely and should be above zero shortly signifying more internal strength.
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 OVERBOUGHT.
STOs shot higher today which unfortunately has landed them in overbought territory. We are also seeing overbought readings on %PMOs Rising. They can certainly rise higher, but they are in dangerous territory.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
We still see confirmation of our short-term indicators as all of these intermediate-term indicators are rising. We now have %PMO BUY Signals in bullish territory 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 BULLISH.
The long-term bias is NEUTRAL.
The short- and intermediate-terms remain bullish given strong participation of stocks above both their 20/50-day EMAs as well as a rising Silver Cross Index. We are moving the long-term bias to "NEUTRAL" given we have more stocks above their 50/200-day EMAs than we have Golden Crosses so the Golden Cross Index should begin to rise soon.
CONCLUSION: We saw a follow-through continuation gap today and a breakout above the intermediate-term declining tops trendline. Indicators are very bullish across the board with the exception of short-term indicators getting overbought. Overbought conditions can persist in a bull market moves and based on new positive EMA crossovers, we see the SPY configured bullishly. Adding to your exposure isn't what we would call "safe", but if done carefully with stops, you should be able to dip your toes in the water. Inflation reports come out Friday so this rally could stumble.
Erin is 28% long, 2% short. (The short is on Financials which she still sees as weak.)
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BITCOIN
Yesterday's comments still apply:
"Surprisingly (or maybe not given we're talking about Bitcoin) Bitcoin reversed course after forming a bearish rounded top and deteriorating indicators. While this was a nice shot in the arm for Bitcoin, the indicators are still less than exciting. The PMO is flat and Stochastics have also flattened, basically revealing very little about what to expect. The RSI is positive. We still believe Bitcoin will have a hard time breaking out here given the very strong overhead resistance at 28,500 on the longer-term chart."
It makes sense that Bitcoin would begin to fail here. Major overhead resistance has been met.
INTEREST RATES
Yields were mixed today with shorter-term rates seeing a move higher with longer-term rates turning down. We still believe we are in a rising rate environment.
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
We are bullish on interest rates, but we do note that $TNX is struggling to get back above its 20-day EMA. Seeing strong Stochastics and a now rising PMO, we do believe a breakout will occur.
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: The Dollar was down which helped GLD rally and maintain support at the February top. Indicators are bullish so we expect Gold will resume its march higher after a period of consolidation.
GOLD Daily Chart: $GOLD reveals a symmetrical triangle or pennant on a flagpole. This is a bullish configuration and begs for a breakout. The RSI is positive and the PMO is rising and isn't really that overbought. Note that discounts continue to pare back which tells us what we already know, investors are more bullish on Gold.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners had the wind at their backs today with Gold rising and the market rallying. They are about to test strong overhead resistance so we could see price stall here, but participation couldn't be much better. 100% have price above both their 20/50-day EMAs. The Silver Cross Index is rising very strongly and is at a very bullish 90%. We don't believe the rally is over for Miners, but resistance could be difficult to overcome right away.
CRUDE OIL (USO)
IT Trend Model: SELL as of 2/2/2023
LT Trend Model: SELL as of 12/6/2022
USO Daily Chart: Crude Oil continues to move higher after testing long-term support at 58.00. We see it moving higher from here even though resistance is upon it at the 50-day EMA. Indicators are configured positively with the RSI above net neutral (50), the PMO on an oversold BUY signal and Stochastics rising in positive territory. We even see that the volatility index for Oil ($OVX) is back above its moving average on the inverted scale, suggesting internal strength. Look for USO to test the 200-day EMA with a likely trip to 72.00.
BONDS (TLT)
IT Trend Model: BUY as of 3/17/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: Long-term rates slumped today giving TLT the opportunity to hold support. We still believe a breakdown is ahead. The PMO is about to generate a crossover SELL signal and Stochastics are falling below 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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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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