Today the 20-day EMA crossed above the 50-day EMA or a "Silver Cross" on the Biotechnology ETF (IBB). We also saw a "Golden Cross" as the 50-day EMA crossed above the 200-day EMA. The EMAs are braiding and price isn't that far away from dropping below these key moving averages. %Stocks above their 20/50/200-day EMAs are dwindling. Both the Silver Cross Index and Golden Cross Index turned lower today. These signals today are far from solid.
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 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: Today was the last trading day before end-of-quarter options expiration. We normally expect low volatility on the last two days, and we saw a trading range of less than two percent. We also expect high SPX Total Volume, which we always make a point of mentioning because we don't want our readers to mistake the high volume as being a confirmation of some other market event.
Also, we have mentioned the parabolic advance that is taking place. Parabolic advances beg for correction, and a -50% pullback is not unusual. That sounds like a lot, and it is on a monthly chart. But this is a daily chart, and the correction would be measured back to the base of the move. In this case that would be the support formed in April and May. That would give us a decline of around -5% from today's highs -- not a big deal. Of course we don't know if today's high will be the short-term top yet. Stay tuned.
Today's small decline moved the RSI lower, but it does remain overbought. The PMO is rising nicely, but is definitely overbought. Stochastics are above 80 although angling down. The VIX popped higher on our inverted scale so internal strength is still available.
Here is the recording from 6/12/2023:
SPY Weekly Chart: This week the SPY broke out of a bearish rising wedge. Bullish conclusions to bearish chart patterns are especially bullish. The weekly PMO is rising strongly and isn't overbought yet.
SPY Monthly Chart: The monthly chart is not final until the end of the month, but we thought it worth mentioning that the monthly PMO has turned up. This has long-term bullish implications, but remember, we don't know how it will look by the end of the month.
New 52-Week Highs/Lows: New Highs popped even higher which concerns us that this looks like an exhaustive move. The 10-DMA of the High-Low Differential moved much higher this week, but is now sitting in overbought territory.
Climax Analysis: There were no climax readings today. Yesterday's upside exhaustion climax appears to have resolved with today's decline, but this could be the beginning of the digestion period we have been waiting for.
*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.
Swenlin Trading Oscillators (STOs) were mixed today with the STO-B moving higher and the STO-V moving lower. We also see that the negative divergences on these indicators have not cleared. Participation is overbought but robust. With 84% holding rising momentum, this rally could extend.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT.
We are listing all of these indicators as overbought. We want to see a high number of PMO Crossover BUY Signals, but the reading is higher than the amount of rising PMOs so it is vulnerable to decline.
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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 INDUSTRY GROUPS ADDED! We have begun collecting SCI and GCI data for four new industry groups: Biotechnology (IBB), Regional Banking (KRE), Retail (XRT), and Semiconductor (SMH).
Our IT Bias chart shows nearly all positive numbers with the exception of a few. The highest bias goes to Real Estate (XLRE) which continues to see improvement on its SCI and GCI. Internal strength is building in this sector. The lowest bias belongs to Gold Miners (GDX). GDX has struggled with Gold not rallying and a strong market hasn't helped as it should. The SCI is losing more ground and the GCI is stagnant.
This table is sorted by SCI values. This gives a clear picture of strongest to weakest index/sector in terms of intermediate-term participation.
Semiconductors are still clicking with 100% of them holding a 20-day EMA above their 50-day EMA. That percentage improved by 16 points this week. We will likely see the GCI gain momentum again soon. Energy (XLE) holds the worst SCI reading. Regional Banks (KRE) has held the bottom spot for some time, but that group is seeing big improvement with the SCI gaining 17 percentage points.
This table is sorted by GCI values. This gives a clear picture of strongest to weakest index/sector in terms of long-term participation.
Not a surprise to see Semiconductors (SMH) in the lead on the GCI. They have held the top spot for some time. In second is Gold Miners (GDX) but we know that will not last based on the loss of participation in the intermediate term based on the SCI. While Regional Banks (KRE) are improving in the intermediate term, no improvements have been made on the GCI. It moves very slowly so it will take time to move KRE out of the bottom position.
The following chart objectively shows the depth and trend of participation in three time frames.
The market bias is BULLISH in all timeframes.
Participation has improved greatly across the board, erasing declining trends. As Carl noted in his free article yesterday, the SCI is above our 50% threshold but is not overbought. This tells us more upside is possible. All readings are above our 50% threshold and the GCI had a Bullish "Shift" above the signal line this week.
CONCLUSION: The bias remains bullish in all timeframes, but a period of digestion or a pullback is sorely needed to bring indicators out of overbought territory. The parabolic rise in the SPY will end soon, likely with a swift pullback. The stumble of the STO-V and negative divergences tell us that decline isn't too far off so we need to prepare. Yesterday we discussed using loose stops. We still believe that is a good way to go if you don't want to turn off any positions too quickly, but profit taking wouldn't be a bad idea with the intention of reentering when the digestion period is finished.
Erin is 40% long, 0% short.
Calendar: The market will be closed Monday for the Juneteenth holiday.
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BITCOIN
Bitcoin had a good week overall. The declining trend hasn't been broken yet and the rounded top is still in force, but indicators are improving. We wouldn't bet big on Bitcoin punching out of this rounded top, but the rise in Stochastics tells us this rally could get legs. We do need to hearken back to the last time Stochastics turned up similarly and we see it didn't result in a big rally, it was sideways action. The PMO is still rather flat. We expect more sideways movement above 25,000.
This chart is to show where some of the support/resistance lines come from.
INTEREST RATES
Most yields finished the week higher with most higher on the day. Bonds are still under pressure.
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 had expected we would see an upside breakout from the bullish falling wedge this week as $TNX tapped the top of it, but ultimately the declining trend held. The PMO has topped again and Stochastics turned lower so we should look for support to be tested at 3.6%.
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 changed from 6.71 to 6.69.
BONDS (TLT)
IT Trend Model: SELL as of 5/16/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: We see what could be a bullish double-bottom on TLT and with the 20-year yield holding mostly stagnant, we think TLT has a good chance at a breakout next week. The RSI is neutral but in positive territory. The PMO is rising and Stochastics are rising. We are looking for an upside breakout.
TLT Weekly Chart: TLT has essentially been in a trading range all year. We expect it to test the top of the range. The weekly PMO is rising again which means we have a "Surge" above the signal line which we find especially bullish. The weekly RSI is negative, but it is rising toward positive territory.
DOLLAR (UUP)
IT Trend Model: BUY as of 5/18/2023
LT Trend Model: SELL as of 4/12/2023
UUP Daily Chart: UUP had a terrible week and we don't think this decline is over. We have a bearish double-top which was confirmed with yesterday's decline. Today rally didn't improve the chart. We have a lower low and a lower high. The RSI is negative and the PMO is falling out of overbought territory on a SELL Signal. We would look for support to be tested at 27.60.
A drop to 27.60 would mean a breakdown from a large bearish rising wedge and that would imply even lower prices.
UUP Weekly Chart: The weekly PMO has topped and could see a Crossover SELL Signal next week if the decline continues. The Dollar looks especially weak right now.
GOLD
IT Trend Model: NEUTRAL as of 6/8/2023
LT Trend Model: BUY as of 1/5/2023
GOLD Daily Chart: Gold has a very bearish rounded top, but support continues to hold. We noticed a big increase in discounts on PHYS which tells us that traders are very bearish on Gold. That typically is a good thing as sentiment is contrarian. We also see that $GVZ is holding above its moving average on the inverted scale. While that suggests internal strength, it hasn't improved things at all.
With the Dollar looking so bearish, we should expect Gold to do well. One problem with that. The inverse correlation that these two share has fallen apart. They have now decoupled. This means a decline in the Dollar may not result in higher prices for Gold. This needs to be corrected so Gold can enjoy a nice rally while the Dollar declines. Right now, it could still stay stagnant above support.
GOLD Weekly Chart: This week the bearish rising wedge was nearly confirmed, but price managed to climb back inside the formation. Given the new weekly PMO Crossover SELL Signal, there is lots of downside pressure on Gold. Even a weak Dollar may not help Gold.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners rallied today, but no real improvements were seen in %Stocks > 20/50-day EMAs. The majority of Miners are configured negatively. Only 28.6% have a 20-day EMA above the 50-day EMA. This suggests most of them are still in pullback or correction mode. We don't expect much out of GDX, particularly if Gold doesn't get going again.
CRUDE OIL (USO)
IT Trend Model: SELL as of 5/3/2023
LT Trend Model: SELL as of 12/6/2022
USO Daily Chart: The daily Crude Oil chart is messy, but ultimately price is in a trading range. Indicators have improved on this second day of rally with the RSI moving back into positive territory and the PMO triggering a Crossover BUY Signal. Stochastics are rising strongly in positive territory. Certainly the picture is bullish, but we believe this trading range will persist. Look for a rally to test the top of the short-term range at 66.00.
USO/$WTIC Weekly Chart: Support is solid right now but the rising bottoms trendline is in jeopardy. However, it appears we will just get a drift sideways out of that trend rather than a deep decline. $WTIC is also holding strong support. The weekly RSI is negative and the weekly PMO is flat. Again, we would look for Crude to keep to its trading range.
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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