We'll cover the Gold signal change in the Gold section below. Otherwise, today the S&P 400 Md-Cap (MDY) and S&P 600 Small-Cap (IJR) Index 20-day EMAs crossed up through the 50-day EMAs (Silver Cross), generating new IT Trend Model BUY Signals for both indexes.
MDY is seeing an excellent breakout. We should see a Golden Cross of the 50/200-day EMAs soon. Participation is rising to with the Silver Cross Index showing a "Bull Shift" on its recent upside crossover. Stochastics are rising even at the 95 level.
Broader market participation is evident in both of these charts. Both show breakouts from trading ranges. IJR's 50-day EMA still has work to do before a Golden Cross can be logged between the 50/200-day EMAs.
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 Market Index, Sector, and Industry Group 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: Yesterday was a bearish engulfing candlestick and it didn't result in lower prices. Today we have a bullish engulfing candlestick. Price has been flat and given the upcoming Fed announcement next week, we expect to see more of the same with a trickle upward based on broad participation.
The top ten capitalized stocks in the SP500 saw marked improvement today after sinking deeply yesterday, likely this helped lift the SPY.
Price is staying mostly above support at the August top. The Bollinger Bands on the VIX are expanding so no upside puncture today, just internal strength. Stochastics also point to internal strength as they are moving higher well above 80.
Here is the latest recording:
S&P 500 New 52-Week Highs/Lows: There was a new price high, but SPX New Highs contracted setting up a deep negative divergence.
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.
Really surprising to see the STO-V decline today, but participation remains robust so we will dismiss it for now.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
IT indicators continue higher which dispels some of the concern associated with the STO-V dropping today. Rising momentum just keeps building within the index and that should keep prices moving higher.
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 market bias is BULLISH.
The intermediate-term market bias is BULLISH.
The long-term market bias is BULLISH.
We are moving the long-term bias to BULLISH today. The Golden Cross Index is now rising and given there is a higher percentage of stocks above their 50/200-day EMAs, it should continue to rise. The Silver Cross Index isn't above our bullish 50% threshold, but we consider it bullish given the recent "Bull Shift" crossover its signal line. Short-term participation is robust leaving us bullish in the short term.
CONCLUSION: Two cracks appeared in the foundation: a declining STO-V and a negative divergence on New Highs. It was a small decline on the STO-V and the negative divergence has persisted with New Highs. Given IT indicators are rising and participation is robust, we are not attaching too much significance to those cracks. Today also saw a bullish engulfing candlestick which suggests tomorrow will be another rally. Internal strength is visible. We are still comfortable with our bullish stance.
Erin is 30% long, 0% short.
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BITCOIN
Bitcoin is struggling right now. The indicators are weak. The PMO is on a SELL Signal, the RSI topped in negative territory and Stochastics are indecisive. Support looks especially weak right now.
INTEREST RATES
Yields saw declines with the exception of the 1-month yield which did rise.
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 dropped significantly today and the word on the street was this was what lifted stocks today. The rising trend is still mostly intact and the PMO is still technically rising alongside a positive RSI. Stochastics which often give us early warning are suggesting a problem may be developing. It is also interesting this decline occurred right after a test of the top of the bullish falling wedge. We still favor a breakout here, but if Stochastics continue lower with the yield, a short-term double-top will develop. We'll discuss if this comes to fruition.
BONDS (TLT)
IT Trend Model: SELL as of 5/16/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: The cup with handle pattern hasn't quite busted yet as today's rally kept it alive. The indicators are flat and unresponsive so we have to go with just the chart pattern for a slightly bullish bias.
DOLLAR (UUP)
IT Trend Model: BUY as of 5/18/2023
LT Trend Model: SELL as of 4/12/2023
UUP Daily Chart: Today's big decline was a bit of a surprise given indicators had been very positive. This has now set up a bearish double-top in the short term. The PMO also topped today. It appears the Dollar is ready to test the 200-day EMA rather than breakout.
GOLD
IT Trend Model: NEUTRAL as of 6/8/2023
LT Trend Model: BUY as of 1/5/2023
GLD Daily Chart: Today the GLD 20-day EMA crossed down through the 50-day EMA (Dark Cross) above the 200-day EMA, generating an IT Trend Model NEUTRAL Signal. The margin is so thin on this signal change that an up day tomorrow could switch it back to a BUY.
The rounded top implies lower prices, but we think that the signal change could actually signal the end of the decline. For example, look at the February decline, which ended in a 20/50-day EMA downside crossover in March. That crossover actually marked the end of a market "exhale," and the beginning of a market "inhale" leading to the May top. Possibly we're going to see another "inhale" and new rally? The Dollar's newly bearish chart bolsters the case.
GOLD Daily Chart: Price continues to hold a long-term rising trend. While the PMO doesn't look healthy, the RSI is moving into positive territory and Stochastics turned up sharply today.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners may've rallied, but they didn't make any headway. Participation is weak, but trying to improve. The PMO and RSI are no help, but Stochastics do add a bullish spin. We are beginning to feel bullish about Gold and that could help Gold Miners here. Until we see better participation, we will take any rally with a grain of salt.
CRUDE OIL (USO)
IT Trend Model: SELL as of 5/3/2023
LT Trend Model: SELL as of 12/6/2022
USO Daily Chart: The drop in Crude Oil did no favor to the Energy sector today. Crude remains very volatile. Unfortunately, volatility is rarely our friend and indicators are deteriorating. The RSI moved back into negative territory and Stochastics have topped. Our sense is that we will see more sideways movement out of USO along support.
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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