Comments on USO and UUP will be in the appropriate sections below.
We've been waiting for earnings reports for AMZN and AAPL:
Amazon's (AMZN) AWS sales rose more than +13% (better than expected). It is trading up +9.31% in after hours trading. The chart does not reflect after hours trading, but it looks as if the rising trend line held, and that the advance should continue tomorrow.
Apple (AAPL) sales fell -1%, and it is trading down -2.50% in after hours trading. The chart does not reflect after hours trading, but we note that the rising trend line was violated today.
Assuming follow through at tomorrow's open, the net effect of AAPL and AMZN should be positive for the markets.
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
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: After resolving the bearish rising wedge as expected, price is now getting close to short-term support. The PMO is accelerating lower which suggests that support level won't hold.
Volatility has been reintroduced into the market as we saw yet another puncture of the lower Bollinger Band on the inverted scale. Stochastics are tumbling lower in negative territory. Both of these indicators are flashing 'internal weakness'.
Here is the latest recording:
S&P 500 New 52-Week Highs/Lows: The declining trend continues for New Highs, but interestingly today saw a slight expansion. New Lows also expanded. The 10-DMA of the High-Low Differential suggests internal weakness.
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 DOWN and the condition is NEUTRAL.
STOs continue lower in negative territory. Participation of stocks above their 20-day EMA is shrinking quickly. We did see an additional percentage point gain of %Rising PMOs, but it remains at a bearish 25%.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT.
All IT indicators moved lower today as expected. We lost a slew of PMO BUY Signals on today's decline.
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 BEARISH.
The intermediate-term market bias is BEARISH.
The long-term market bias is BEARISH.
The bias is bearish in the ST and IT primarily due to the steep loss in participation of stocks > 20/50-day EMAs. The Silver Cross Index has topped and is nearing a Crossover or "Bearish Shift". We are moving the bias to BEARISH in the long term given %Stocks above the 50-day EMA is below the Golden Cross Index percentage. It is also declining. Technically we could see more Golden Crosses as there is a slightly higher percentage of stocks with price above their 200-day EMAs--highly doubtful it will occur.
CONCLUSION: Yesterday's downside initiation climax was prescient as we saw a continuation of the decline. The short-term rising trend has been broken and indicators are falling in all three timeframes. The bias is bearish in all three timeframes. While a bump in Amazon on earnings is likely, the question is whether it will be enough to overcome Apple's likely decline. We could see Technology (XLK) struggle with Consumer Discretionary (XLY) getting a rally. Even if the market rallies overall, internals are exceptionally weak so we would expect more downside next week. Placing stops will provide protection in the short term.
Erin is 20% long, 0% short.
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BITCOIN
Bitcoin is standing its ground. In the meantime, Stochastics have turned back up. The PMO is decelerating its decline. With the RSI still negative, we expect to see this consolidation zone hold up a bit longer.
INTEREST RATES
Yields rose sharply in the longer term timeframe with prior highs being overcome. We expect the rising rate environment to continue.
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
Our expectation was met with today's breakout. We don't think it is done rising. The PMO is on a BUY Signal and is not overbought yet. Stochastics are now above 80 which suggests internal strength. The RSI is about to be overbought, but given this strong base, it will likely remain so as it did back in September.
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 experiencing a waterfall decline as the 20-year yield flies higher. We don't believe it will get any better for TLT. The one plus on the chart is that the RSI is oversold, but given the fierce decline of the PMO and Stochastics sitting in negative territory, we would look for more downside.
Real support doesn't arrive until well below 90.00.
DOLLAR (UUP)
IT Trend Model: BUY 8/3/2023
LT Trend Model: BUY as of 5/25/2023
UUP Daily Chart: Today the U.S. Dollar (UUP) 20-day EMA crossed up through the 50-day EMA (Silver Cross), generating an IT Trend Model BUY Signal. The Dollar paused today; we don't see it as the beginning of a top. The PMO is back in positive territory, the RSI is positive and Stochastics are oscillating above 80. There is plenty of internal strength to push the Dollar higher.
In a longer-term context, the dominant pattern is a trading range. Maybe this time price will break out of the range, or maybe not.
GOLD
IT Trend Model: NEUTRAL as of 8/2/2023
LT Trend Model: BUY as of 1/5/2023
GLD Daily Chart: The handle on the cup is getting long in the tooth. The PMO triggered a Crossover SELL Signal on GLD. The RSI is negative and Stochastics are still falling.
GOLD Daily Chart: $GOLD doesn't look as bearish as GLD and gives us some hope that it will reverse. The RSI is still positive and the PMO is still holding a Crossover BUY Signal. However, Stochastics and the falling relative strength line against the Dollar (UUP) do suggest the longer-term rising bottoms trendline will be tested.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners have now hit support but given the lack of participation and the steady decline of the Silver Cross Index, we would look for a breakdown.
CRUDE OIL (USO)
IT Trend Model: BUY as of 7/12/2023
LT Trend Model: BUY as of 8/3/2023
USO Daily Chart: Today the Crude Oil (USO) 50-day EMA crossed up through the 200-day EMA (Golden Cross), generating an LT Trend Model BUY Signal. USO is currently fighting with the top of a trading range. The PMO is rising, but is overbought. The RSI isn't overbought yet and Stochastics are oscillating above 80. We would look for a breakout.
On the one-year chart the pattern looks like a rounded bottom, which we would expect to resolve bullishly.
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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