The Real Estate sector (XLRE) woke up this week after declining for almost two months. The Price Momentum Oscillator (PMO) crossed above its signal line which generated a crossover BUY Signal. Today, Erin wrote about Real Estate in DP Diamonds so we will include her excerpt here:
"After reviewing the sector charts I felt that Real Estate (XLRE) is the "Sector to Watch". We're seeing new momentum and tremendous upside potential given how beat down that sector has been. I reviewed all of the industry groups within. Of the nine groups, one didn't look very healthy, but the other eight all had potential. This looks like an interesting place to drop a fishing line next week.
I noted the rally occurring today on XLRE, but I don't believe it had overcome resistance at the 50-day EMA during the trading room. It did end up closing above which put it on my radar. A review under the hood shows bullish participation of stocks above their 20/50-day EMA and while %Stocks > 200-day EMA is small, it is improving. The Silver Cross Index has turned up. The RSI is positive and the PMO triggered a crossover BUY signal today. I also note that it is outperforming the SPY, something a lot of sectors can't say."
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:
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: After yesterday's continuation gap, price gapped up for a third time. We're concerned this time it is an exhaustion gap. We'll explain later. The breakout was strong. The RSI is positive and not overbought and the PMO is rising above the zero line on a crossover BUY signal.
Stochastics are rising strongly above 80 and the VIX is well above its moving average on the inverted scale. This means there is internal strength.
SPY Weekly Chart: This week's rally finally pushed price back above the rising bottoms trendline drawn from the 2022 low. The weekly PMO has bullishly bottomed above its signal line.
SPY Monthly Chart: This looks like a solid breakout from the bear market declining trend and gives us evidence that the bear may have departed for a time. The monthly PMO hasn't turned up so there is still some work to do.
New 52-Week Highs/Lows: New Highs spiked today. The 10-DMA of the High-Low Differential is almost in positive territory.
Climax Analysis: Today there were strong, unanimous climaxes on the four relevant indicators, giving us an upside exhaustion climax. SPX Total Volume was strong, but not at blowoff levels. THIS is why we believe today's gap up was likely an exhaustion gap.
*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.
It is rather unfortunate that our short-term indicators have all moved into very overbought territory. While these readings could persist, they tell us that a pullback is likely ahead. Our best guess would be a move to overhead resistance and a pause or pullback that would decompress some of these very overbought indicators.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
When momentum starts to build, we see %PMO BUY Signals move almost vertically. That indicator isn't that overbought and could continue higher. The ITBM/ITVM are right on neutral. The ITBM has finally recaptured positive territory. All of this bodes well for the intermediate term.
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PARTICIPATION and BIAS Assessment: The following table 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. There are three groups: Major Market Indexes, Miscellaneous Sectors, and the eleven S&P 500 Sectors.
NEW SECTORS ADDED! We have begun collecting SCI and GCI data for four new sectors: Biotechnology (IBB), Regional Banking (KRE), Retail (XRT), and Semiconductor (SMH).
We still have mostly negative IT Bias readings. This means that the GCI is higher than the SCI. That could mean that the sector, index or group is deteriorating. However, it can also mean that they are digging themselves out. That can be determined by looking at the 1-week change on the SCI. Notice every index, sector and group with the exception of Transports (IYT) are improving. This is a good sign for the market.
This table is sorted by SCI values. This gives a clear picture of strongest to weakest index/sector in terms of intermediate-term participation.
Gold Miners (GDX) is leading the charge having gained 21 percentage points this week on the SCI. The group remains very bullish. Soon, the GCI will begin to move higher as well and eventually if all goes well, the IT Bias will move closer to zero as the SCI and GCI begin holding the same values.
Regional Banks (KRE) is completely beat down and saw very little improvement this week.
This table is sorted by GCI values. This gives a clear picture of strongest to weakest index/sector in terms of long-term participation.
Long-term strength belongs to the Semiconductors (SMH) which hold the highest GCI value. Internals are continuing to improve for SMH given the SCI gained four percentage points this week. Not surprisingly, KRE is in the basement.
We talked Real Estate at the beginning of today's report. It has been completely abandoned over time, but we are seeing a little bit of action with the SCI finally improving. It will take a long time for XLRE to rebuild its internal strength but it is lined up to do so.
The following chart objectively shows the depth and trend of participation in three time frames.
The market bias is BULLISH.
The short-term bias is BULLISH.
The intermediate-term bias is BULLISH.
The long-term bias is BULLISH.
All three timeframes moved to BULLISH biases this week. We have %Stocks > 20/50/200-day EMAs reading above 50% and reading above both the Silver Cross Index and Golden Cross Index. Both the Silver Cross and Golden Cross Indexes have turned up.
CONCLUSION: The market is humming, but today's exhaustion gap accompanied by an upside exhaustion climax tell us next week may have a slightly rough start. Overall the market bias is bullish and primary indicators are all rising or reading above 50%. We do note that overhead resistance is nearing at the 2023 high. That is where we would expect the market to pause or possibly pullback to relieve extremely overbought short-term indicators. Expansion of your portfolio can be done carefully, particularly if the market pauses or pulls back and offers good entries. This market has not been kind to intermediate-term traders so consider all trades short-term in nature.
Erin is 28% long, 2% short.
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BITCOIN
Bitcoin formed an ominous rounded top last week, but this week it managed to rally. It is struggling against overhead resistance which you can see is quite strong based on the longer-term daily chart. Flat indicators aren't helping with direction determination. They are leaning bullish given the RSI is positive and the PMO is beginning to rise slightly. Stochastics look healthy. We expect Bitcoin to build internal strength as it attempts to get over resistance. An upside breakout seems likely.
This chart is to show where some of the support/resistance lines come from.
INTEREST RATES
Very short-term interest rates continued higher this week, but longer-term rates have begun to top again. This looks like a triple-bottom forming. Rates may be stabilizing somewhat.
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
The 10-year yield failed at the 20-day EMA. The RSI topped in negative territory and the PMO topped beneath the signal line. Stochastics are still rising so we expect support to hold near 3.4%.
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 has been shrinking, home prices have come under pressure.
--
This week the 30-Year Fixed Rate fell from 6.42 to 6.32.
DOLLAR (UUP)
IT Trend Model: NEUTRAL as of 3/28/2023
LT Trend Model: BUY as of 2/24/2023
UUP Daily Chart: The Dollar has spent the week digesting the decline from the week prior. Indicators aren't too revealing, but we do note a Death Cross of the 50/200-day EMAs on tap. Also we can see a probable bearish descending triangle (flat bottom, declining tops). We see the Dollar continuing to gyrate in the current trading range between 27.75 and 28.75.
UUP Weekly Chart: The weekly chart has a distinct bearish bias. The weekly RSI is negative and the weekly PMO has topped beneath the signal line. Support is strong here, however, which is why we don't expect a breakdown just yet. As noted above, we aren't looking for much out of the Dollar.
UUP Monthly Chart: The monthly chart is mixed. The monthly RSI is positive, but the monthly PMO is clearly descending out of overbought territory. We did see a higher low and higher high this month which is positive. With the bias on the weekly chart negative and the bias on the monthly chart somewhat bullish, our neutral position on the Dollar fits.
GOLD
IT Trend Model: BUY as of 3/7/2023
LT Trend Model: BUY as of 1/5/2023
GOLD Daily Chart: With the Dollar hitting the pause button, Gold mostly did too. It needed to digest the strong rally out of the March lows. Based on relative strength against the Dollar being mostly flat now, we expect Gold to stay in a bit of holding pattern as well. Indicators are positive, but the PMO is trying to top.
Yesterday we did point out a possible pennant formation on a flag pole. Price tried to breakout, but closed back within the pennant. We ultimately expect Gold to push higher. Only the PMO looks iffy. The gold volatility index ($GVZ) is now above its moving average on the inverted scale which speaks to the internal strength of Gold right now. Based on sentiment, traders are more bullish on Gold, but not exceedingly so or basically not enough to look for a downside reversal. When we see premiums on PHYS, then we worry.
GOLD Weekly Chart: Gold is above overhead resistance at the 2023 early top. The weekly RSI is positive and not quite overbought. The weekly PMO is rising strongly. Notice the big pullback in discounts. As mentioned above that means that investors are more bullish on Gold.
GOLD Monthly Chart: The monthly chart is encouraging. The monthly RSI is positive and rising and the monthly PMO is nearing a crossover BUY signal. It appears the handle on this cup is getting ever longer. Price is clearly in a very long-term trading range between 1650 and 2100. We expect it to test all-time highs again.
GOLD MINERS Golden and Silver Cross Indexes: There's nothing not to like on this chart. There is the issue of overhead resistance having been met so a pause or pullback would make sense here, but overall the industry group remains exceptionally bullish given participation. 100% of stocks have price above both their 20/50-day EMAs. 93% are above their 200-day EMAs. The SCI is strong. One might be worried about these overbought readings. Don't be, you can see that when this group gets going, it can maintain overbought conditions for weeks.
CRUDE OIL (USO)
IT Trend Model: SELL as of 2/2/2023
LT Trend Model: SELL as of 12/6/2022
USO Daily Chart: Crude Oil continues to march higher after bottoming on strong long-term support. Indicators are getting better and better. Stochastics are now above 80, the RSI is positive and not overbought, and the PMO is rising on an oversold BUY signal. USO has been range bound and we expect this to continue. Enjoy the ride. When overhead resistance is hit, we will likely see USO head back down.
USO/$WTIC Weekly Chart: This last bottom came at a fortuitous time as price had just landed on gap support and at the 2021 high. The weekly RSI is negative and the weekly PMO is flat. This is another reason we expect the trading range to hold true.
WTIC Monthly Chart: The monthly chart for Crude Oil looks terrible. The monthly RSI has dropped below net neutral (50) and the monthly PMO is dropping perilously out of overbought territory on a failure to hold support at the 2018 high. While USO may look good right now, keep it in context as the overall long-term picture is quite bearish.
BONDS (TLT)
IT Trend Model: SELLas of 2/21/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: Just when you thought Bonds were down for the count... Today saw a strong rally as the 20-year yield dove lower. The short-term declining trend has not been broken and given flat bottoms with declining tops, we would read this as a bearish descending triangle with a high likelihood of breaking down. The indicators are starting to look decent, but if the market continues to rally, Bonds will likely see investors retreat and move back into the market. We expect a breakdown.
TLT Weekly Chart: The weekly chart is breaking down. The weekly RSI while positive, is in decline. The weekly PMO while rising, is beginning to decelerate. Price has been in a trading range all year and it is due for a move back to the bottom of the range.
TLT Monthly Chart: The monthly chart is trying to improve. The monthly RSI is negative, but rising. The monthly PMO is falling but decelerating slightly. Strongest support (most touches) is at 100.00, but we see TLT vulnerable to a decline to 90.00. If the market turns tail and breaks the current rising trend, then we will likely see that monthly PMO turn back up in response to a flight to safety.
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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DecisionPoint Golden Cross/Silver Cross Index Chart List
DecisionPoint Sector Chart List
Price Momentum Oscillator (PMO)
Swenlin Trading Oscillators (STO-B and STO-V)
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