In spite of the various strikes in Hollywood, Communication Services (XLC) is short-term bullish. Today the Price Momentum Oscillator (PMO) crossed above its signal line to give us a Crossover BUY Signal. Granted the PMO has been mostly flat and has whipsawed quite a bit, but given it is holding above the zero line and price has been in a steady rising trend, we see it as bullish.
Notice that the Silver Cross Index (SCI) saw a Bullish Shift as it crossed over its signal line. It is reading at a bullish 68%, not overbought. What we like short-term is the rise in stocks above their 20-day EMA. It shows near-term strength. However, we aren't completely convinced this will hold up in the intermediate term. Currently there are fewer stocks above their 50-day EMA than those with Silver Crosses. This means that while the SCI is rising, it is still vulnerable as long as %Stocks > 50-day EMA are lower. This should clear if we continue to see %Stocks > 20-day EMA expand.
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: Price still hasn't reached the intraday high from last week even though we've seen two days of rally. The PMO is currently clinging to a Crossover BUY Signal and we see a bearish rising wedge on price. The bottom of the wedge hasn't been tested since early July so this rally likely will continue for a little while longer.
The VIX is at a strong 'complacency' level as investors ride the tide higher. Stochastics have topped, but they remain above 80 which implies there is internal strength available in the very short term.
Here is the latest recording:
S&P 500 New 52-Week Highs/Lows: We're noticing some problems on the NH/NL chart. First we have a clear negative divergence between price and New Highs. We have an overbought 10-DMA of the High-Low Differential and it is now in decline.
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 NEUTRAL.
STOs are trending lower, setting up negative divergences in the short term. We now have less than half of the index showing rising momentum. Mega-caps appear to be carrying the weight again as the broader market loses steam.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT.
The ITBM continued lower today and while the ITVM did turn up, we see overall deterioration of the internals. Only 55% of the index have PMO BUY Signals. That number will be shaved given only 47% have rising PMOs. Eventually those declining PMOs will take out some of the remaining BUY Signals.
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 market bias is NEUTRAL.
We are seeing more deterioration of participation of stocks above their 20/50-day EMAs. Those percentages are both lower than the SCI which implies it will begin topping in overbought territory. The GCI is rising and will likely continue to as long as the %Stocks > 50/200-day EMAs are higher than the GCI.
CONCLUSION: The market is clicking in the short term, but we are beginning to see deterioration under the surface at least in the broader market. We may be starting another period where mega-caps carry the index higher while participation thins among the rest. We see the short term as bullish for now, but the slow bleeding on %Stocks indicators and the loss of PMO BUY Signals combined with negative divergences tell us to keep stops in play. The market is begging for a correction, but near-term strength cannot be ignored.
Erin is 50% long, 0% short.
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BITCOIN
Bitcoin is in consolidation mode but vulnerable to a breakdown. So far it has avoided it, but Stochastics topped today and the PMO is nearing the zero line. We're expecting a break below current support with a likely test of the rising trend.
INTEREST RATES
Yields backed off today, but remain in rising trends.
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 have a strong basing pattern in the saucer. It suggests an upcoming breakout for $TNX. The new PMO Crossover BUY Signal and rising Stochastics bolster that case.
BONDS (TLT)
IT Trend Model: SELL as of 5/16/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: TLT is stuck in a trading range with weak internals. While we aren't looking for a big breakdown, we don't see much as far as upside potential. We will say that a rally continuation would set up a bullish double-bottom.
DOLLAR (UUP)
IT Trend Model: NEUTRAL as of 7/13/2023
LT Trend Model: BUY as of 5/25/2023
UUP Daily Chart: The Dollar is making a comeback and the PMO as well as Stochastics suggest this rally will test overhead resistance at the May/June tops.
GOLD
IT Trend Model: BUY as of 7/26/2023
LT Trend Model: BUY as of 1/5/2023
GLD Daily Chart: The handle continues to form on the bullish cup with handle chart pattern. A strong Dollar isn't helping Gold, but it hasn't fallen apart, instead it is holding support.
GOLD Daily Chart: $GOLD has a more bullish chart. Notice that the PMO is above the zero line and picking up speed. The RSI is positive and Stochastics are rising. This certainly suggests Gold is in good stead and isn't likely to break down.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners broke out of the very short-term declining trend intraday. What we really like here is the complete turnaround of %Stocks above their 20-day EMA. The decimation of that indicator had a concerned that support would not hold. We believe it will and if Gold gets going, this group should continue to rally. We'd definitely like to see the PMO rise more deliberately and Stochastics need to reverse soon. For now, this group appears healthy. Of course, a deep decline will take out support at 20-day EMAs within the group and we could end up right back where we were last week. Tread carefully.
CRUDE OIL (USO)
IT Trend Model: BUY as of 7/12/2023
LT Trend Model: SELL as of 12/6/2022
USO Daily Chart: Today saw a bullish conclusion to a bearish rising wedge. Bullish conclusions on bearish chart patterns can be considered especially bullish. Today's move also took price above overhead resistance. Indicators are strong, but we do note an overbought RSI. We expect overbought conditions to persist given the bullish behavior of price.
The gravity of today's breakout is shown on the 1-year daily chart. The next line of resistance doesn't arrive until USO reaches 78.00.
Good Luck & Good Trading!
Erin Swenlin and Carl Swenlin
Technical Analysis is a windsock, not a crystal ball. --Carl Swenlin
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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)
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