Today the S&P 600 Small-Cap Index (IJR) 50-day EMA crossed up through the 200-day EMA (Golden Cross), generating an LT Trend Model BUY Signal. Participation continues to expand with both the Silver Cross Index and Golden Cross Index rising. Unfortunately price has been moving in a trading range, so this could be just another whipsaw signal change with slightly bullish implications.
The Energy Sector (XLE) has been in such a narrow range that today's advance caused the 20-day EMA to cross up through the 50-day EMA (Silver Cross), generating an IT Trend Model BUY Signal. Also, the 50-day EMA crossed up through the 200day EMA (Golden Cross), generating an LT Trend Model BUY Signal. 100% of stocks have price above their 20-day EMA. The Silver Cross Index and Golden Cross Index continue to expand. We see the potential for price to move up to about 92.50, which is the top of the one-year range.
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: The short-term double-top has not yet busted, but we are starting to see this as more of a cup with handle pattern which is bullish. The PMO is still moving down so this rally hasn't been confirmed by momentum.
The VIX moved back within the Bollinger Bands but is below the moving average on the inverted scale so there is some weakness, but it is certainly positive to see it moving back up. Stochastics turned up in positive territory so this rally could get legs.
Here is the latest recording from 7/10:
S&P 500 New 52-Week Highs/Lows: New Highs expanded greatly as we'd expect on a positive day, but we believe they are getting a bit overbought. The 10-DMA of the High-Low Differential is rising again, but is near-term overbought. Notice where it was last August.
We do note that the 10-DMA of the High-Low Differential has seen much higher readings historically, but of late this has been overbought.
Climax* Analysis: Today there were unanimous climax readings on the relevant indicators, giving us an upside initiation climax. SPX Total Volume was light and did not confirm.
*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.
Swenlin Trading Oscillators (STOs) were mixed today. The STO-B did tick up slightly, but wasn't confirmed by the STO-V which continued to slide. We won't read too much into the STO-B's rise, but it is encouraging. Over three fourths of the index now hold rising momentum. That isn't overbought and could fuel higher prices.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT.
Both the ITBM and ITVM inched higher today which does tell us the bull market should be safe. However, we still have two negative divergences on the chart. %PMO BUY Signals are bounded by the number of rising PMOs. 77% are rising with 72% having BUY Signals. These are healthy readings. %PMOs Rising will likely continue to expand.
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 bias is BULLISH in all timeframes.
Based on percentages, the bias is bullish in all three timeframes. We have healthy readings on participation of stocks above their 20/50-day EMAs. Those percentages are high enough to keep the Silver Cross Index rising. The Golden Cross Index is rising and we do have a higher percentage of stocks above their 200-day EMAs in comparison to the GCI, so we should expect it to move higher. If we had one thing to complain about, it is that %Stocks indicators are overbought or getting overbought.
CONCLUSION: We saw a nice follow-through rally that did reverse the STO-B higher. Both the ITBM/ITVM reversed upward. While today's upside initiation climax wasn't confirmed by total volume, it goes well with the bullish bias in all three timeframes. The double-top is beginning to look like a bullish cup with handle now. We would expect to see some follow-through. It is good news that IJR has moved to a bullish bias. The rally needs to stay broad to remain strong.
Erin is 50% long, 0% short. Erin's exposure may lighten as she begins her European vacation on Friday given she can't watch her positions closely. IT exposure will remain.
VACATION for Erin: Erin will be in Europe July 14 - July 28. Carl will be picking up the DP Alert during that time.
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BITCOIN
Yesterday's comments still apply:
"Bitcoin rallied today but it didn't prevent yesterday's PMO Crossover SELL Signal. We do see the possibility of more consolidation primarily because momentum has stalled, but Stochastics are rising. Mixed indicators suggest more sideways movement. This is a very strong area of resistance long-term for Bitcoin. Positive momentum will be a necessary ingredient for a breakout."
INTEREST RATES
Yields continued to pullback today, but rising trends remain intact.
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
Yesterday's comments still apply:
"$TNX has been stopped by overhead resistance. We don't think the rally is over yet. This pause has given the RSI to move out of overbought territory and the PMO is still rising. Stochastics did top, but remain above 80. We're looking for a breakout."
BONDS (TLT)
IT Trend Model: SELL as of 5/16/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: I guess we shouldn't count Bonds completely out yet, but we still don't see much in the way of upside potential. The PMO is still in decline and the RSI is negative. Stochastics flattened out.
DOLLAR (UUP)
IT Trend Model: BUY as of 5/18/2023
LT Trend Model: SELL as of 4/12/2023
UUP Daily Chart: The Dollar has formed another bearish double-top and today's decline technically confirmed the pattern given it dropped below the June low. Indicators are very bearish. As Erin expected, right before she leaves for Europe, the Euro is gaining strength.
GOLD
IT Trend Model: NEUTRAL as of 6/8/2023
LT Trend Model: BUY as of 1/5/2023
GLD Daily Chart: Gold broke from a long-term declining trend with today's rally. This is the best Gold has looked in a very long time. Indicators are now firming up. The RSI should get above net neutral (50) soon. It hasn't happened on $GOLD, but GLD saw a PMO Crossover BUY Signal today. Stochastics are rising in positive territory.
GOLD Daily Chart: $GOLD also saw a tiny breakout today from a bullish falling wedge. While the PMO didn't cross above its signal line, Stochastics moved into positive territory. We note that Gold is beginning to show relative strength against the Dollar.
GOLD MINERS Golden and Silver Cross Indexes: We like the look of Gold Miners right now especially given today's new PMO Crossover BUY Signal. The Silver Cross Index didn't move today, but it does have a very faint pulse. Participation is expanding but aren't quite to the levels we saw on the previous tiny rally. We want higher readings, but this may not be a bad place to fish.
CRUDE OIL (USO)
IT Trend Model: SELL as of 5/3/2023
LT Trend Model: SELL as of 12/6/2022
USO Daily Chart: Crude Oil changed character today on a breakout from the intermediate-term trading range. Price also closed above the 200-day EMA for the first time since the April slide. The PMO is back in positive territory and a Silver Cross of the 20/50-day EMAs is on tap. Stochastics are oscillating above 80. The Energy sector looks very good right now and this Crude Oil chart explains why.
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.
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