Today the Communications Sector 50-day EMA crossed up through the 200-day EMA (Golden Cross), generating an LT Trend Model BUY Signal. We think this looks like a "good" signal, meaning it is the result of price rising steadily out of a solid-looking bottom. We would not expect it to reverse any time soon.
Also, the Utilities Sector 20-day EMA crossed up through the 50-day EMA (Silver Cross), generating an IT Trend Model BUY Signal. This signal also looks to be solid and not likely to reverse.
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:
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've opted to use today's low to annotate a new rising trendline. It isn't "official" until we actually get a higher low. At this point it seems a reasonable assumption. Indicators are still positive with the RSI firmly within positive territory above net neutral (50) and the PMO rising. Notice that the SPY is gaining strength against equal-weight RSP. This suggests that larger-cap stocks are helping to push this rally along.
On the longer-term daily chart we spy a possible bull flag forming. A breakout from the flag portion would suggest price would rise the length of the current flagpole. That would easily push price above 430. Stochastics did top, but they remain above 80. With the VIX also staying above its moving average on the inverted scale, internal strength is present.
SPY Weekly Chart: The SPY finished nearly unchanged this week. The prior rising bottoms trendline was cleared by price last week and price was above it this week. The weekly PMO is rising and not at all overbought.
New 52-Week Highs/Lows: New Highs continue to contract, but it isn't a divergence given price has been declining as well. We definitely like the look of the 10-DMA of the High-Low Differential moving above the zero line and rising steadily higher.
Climax Analysis: There were no climax readings today. This week there was one climax event, a downside initiation climax on Tuesday. We did see a decline off that signal, but price is already back on its way up. This reaction suggests to us that we are in a bull market.
*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.
STOs are still in decline, but they have already reached neutral territory which affords them the opportunity to rise again without getting overbought too quickly. This is starting to look more like the indicators tending back toward zero rather than identifying problems under the surface. However, we still need to assume there are problems given their decline. Today's rally didn't help participation. In fact, we lost more rising PMOs.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is SOMEWHAT OVERBOUGHT.
One reason we believe STOs may just be decompressing is that our ITBM/ITVM are still rising. We did lose more PMO BUY Signals. Given we have only 69% with rising PMOs, that indicator will continue to decline.
_______
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 INDUSTRY GROUPS ADDED! We have begun collecting SCI and GCI data for four new sectors: Biotechnology (IBB), Regional Banking (KRE), Retail (XRT), and Semiconductor (SMH).
Not surprisingly, Gold Miners (GDX) holds the highest IT Bias. You'll note that both the SCI and GCI gained even more percentage points for GDX this week. The lowest IT Bias belongs to Energy (XLE). This is because the GCI is so low. We see the SCI for XLE gaining percentage points, so this sector is on the mend.
This table is sorted by SCI values. This gives a clear picture of strongest to weakest index/sector in terms of intermediate-term participation.
The highest SCI value goes to GDX and incredibly it managed to gain even more points on both the SCI and GCI. This group has incredible internal strength right now and it continues to improve. The lowest, also not surprising, is Regional Banks (KRE). With the plummeting of Banks on the recent crisis, it makes sense. We do note the incredible improvement to Utilities (XLU) which saw a 26 point increase in its SCI. XLU is building internal strength.
This table is sorted by GCI values. This gives a clear picture of strongest to weakest index/sector in terms of long-term participation.
Semiconductors (SMH) holds the highest GCI value. No changes occurred to either the SCI or GCI for SMH so its internal strength is holding steady. Again, the lowest value goes to KRE.
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.
We have over 50% of stocks above their 20/50-day EMAs which is bullish for the short term. The SCI isn't above 50% but it is rising on a recent crossover its signal line. There are more than 50% of stocks above their 50/200-day EMAs and those percentages are above the GCI still so the long-term bias is also bullish.
CONCLUSION: We are seeing some problems in spite of the recent rally. The STOs are declining and participation thinned on today's rally. We won't read too much into volume due to tomorrow's holiday, but it was low on the rally. There are still bullish indications. The RSI and PMO are rising and most importantly, the ITBM/ITVM are rising. We would still look for some decline next week, but internal strength and the bullish bias tell us the decline shouldn't be painful and the rally will resume. Stay vigilant next week. If IT indicators turnover, we need to be able to pivot quickly.
Erin is 26% long, 2% short.
Have you subscribed the DecisionPoint Diamonds yet? DP does the work for you by providing handpicked stocks/ETFs from exclusive DP scans! Add it with a discount! Contact support@decisionpoint.com for more information!
BITCOIN
Bitcoin is forming another rounded top or double-top depending on how you look at it. Both patterns are bearish. The previous rounded top in late March didn't result in lower prices, but now we have a PMO SELL signal. The RSI and Stochastics are still positive, but the PMO suggests more downside.
This chart is to show where some of the support/resistance lines come from. It isn't surprising that Bitcoin is struggling here given long-term overhead resistance.
INTEREST RATES
Interest rates spent the week moving lower. Today a few of them managed to turn up. Longer-term rates are in declining trends so we do expect them to move lower.
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 managed a positive close, but the low today compromised the bottom of the bullish falling wedge we just annotated. Indicators are about as negative as you can get so we do expect $TNX to move lower this coming week.
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 didn't do much this week and we don't expect much out of it next week given the bearish bias of the indicators. UUP is about to get a "death cross" of the 50/200-day EMAs. The RSI is negative and the PMO is falling. Stochastics are giving us a glimmer of hope, but they are beneath 20. Today saw a bearish filled black candlestick suggesting lower prices on Monday.
UUP Weekly Chart: This week UUP managed to close one support, but it did drop below. The weekly RSI is in decline and the PMO is declining after a very bearish top beneath the signal line. The Dollar has a clear bearish bias in the short and intermediate terms.
GOLD
IT Trend Model: BUY as of 3/7/2023
LT Trend Model: BUY as of 1/5/2023
GOLD Daily Chart: Gold pulled back today, but didn't take away the gains on the week. We are concerned about the formation of a bearish rising wedge. Indicators are still quite positive with the RSI above net neutral (50) and Stochastics oscillating above 80. The PMO is rising and isn't entirely overbought yet.
Relative strength to the Dollar is increasing. If the Dollar continues in a holding pattern, Gold should still be able to eke out more gains. Discounts popped higher this week which tells us that investors are beginning to get more bearish on Gold. Sentiment is contrarian so bearish investors isn't a bad thing. What we don't want to see is highly bullish discounts or even premiums.
GOLD Weekly Chart: Gold is about to reach new all-time highs. This has been a problem in the past so we would expect Gold to stall there; however, a weak Dollar will give Gold an easy opportunity to breakout. The Dollar is weak, but really not that weak which is why we would look for Gold to take a breather before it reaches above 2100.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners continue their magnificent run. Internals are incredibly strong and at this point we don't see any signs of weakness. A pullback to support would offer a nice opportunity to take advantage of this strength if you haven't already exploited this industry group.
CRUDE OIL (USO)
IT Trend Model: SELL as of 2/2/2023
LT Trend Model: SELL as of 12/6/2022
USO Daily Chart: We saw what appeared to be a breakaway gap on Monday, but since then price has been consolidating. The chart is still strong, but vulnerable to a reverse island which would mean a gap down, leaving price in an "island". While indicators are very strong, this isn't out of the question given $OVX is flirting with the upper Bollinger Band on the inverted scale.
USO/$WTIC Weekly Chart: The long-term rising trend could be recaptured. The rally of support at the 2021 high has pulled the weekly RSI into positive territory and the weekly PMO upward. The weekly PMO is still on a SELL signal. The improvement to the weekly chart has us less bothered by the possibility of a reverse island. Overall, we expect USO to continue higher next week.
BONDS (TLT)
IT Trend Model: SELLas of 2/21/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: TLT is stuck beneath overhead resistance. With yields falling this week, TLT has taken advantage. We can see the 20-year yield is holding support. Based on the declining trend of the yield, we would expect a breakout on Bonds. TLT's indicators are strong enough. The RSI is positive and the PMO is rising. Additionally Stochastics are above 80.
There is a long-term bullish ascending triangle (rising bottoms, flat top) that suggests the breakout will occur as well.
TLT Weekly Chart: The weekly chart also suggests a breakout ahead. The weekly RSI is rising in positive territory and is not overbought. The weekly PMO is rising strongly.
Good Luck & Good Trading!
Erin Swenlin And Carl Swenlin
Technical Analysis is a windsock, not a crystal ball. --Carl Swenlin
(c) Copyright 2023 DecisionPoint.com
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.
Helpful DecisionPoint Links:
DecisionPoint Alert Chart List
DecisionPoint Golden Cross/Silver Cross Index Chart List
DecisionPoint Sector Chart List
Price Momentum Oscillator (PMO)
Swenlin Trading Oscillators (STO-B and STO-V)
DecisionPoint is not a registered investment advisor. Investment and trading decisions are solely your responsibility. DecisionPoint newsletters, blogs or website materials should NOT be interpreted as a recommendation or solicitation to buy or sell any security or to take any specific action.