Is Natural Gas (UNG) coming back to life? On this 6-month chart we can see that a saucer has formed, and today there was a breakout through a line of resistance.
On the weekly chart a line drawn across the 2020 low provides a long-term version of resistance, which was reached today. A break above that line would be most encouraging. Note that the weekly PMO is rising.
Conclusion: After a severe beat down in 2022, and making all-time lows this year, UNG looks to be getting off the canvas and preparing to take off.
Note: Carl and Erin have long positions in UNG.
(P.S. Erin presented UNG as a "Diamond in the Rough" in today's DP Diamonds Report.)
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: Support continues to hold. The RSI has now moved into negative territory and the PMO continues to make its way lower. We don't believe this support level will hold for much longer.
The VIX continues to puncture the lower Bollinger Band as it continues to widen. Many times these punctures lead to upside reversals. Given Stochastics are so low and other indicators are bearish, we wouldn't count on a reversal yet.
It was a rough day for the "Magnificent 7" + TSLA today and that likely contributed to the overall decline, particularly in the cap-weighted indexes like the SPY. Overbought conditions are slowly being relieved.
Here is the latest recording:
S&P 500 New 52-Week Highs/Lows: New Highs actually expanded somewhat on today's decline, but as always we do remind that these are intraday readings. Basically, the highest number logged for the day is what appears on the chart. The 10-DMA of the High-Low Differential continues lower giving us a bearish bias for the indicator.
Climax* Analysis: There were no climax readings today. So much for Monday's upside initiation climax.
*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.
In an interesting turn of events, both STOs moved higher today. Given the poor participation of stocks as evidenced by %Stocks > 20EMA and the low amount of stocks with rising momentum, we wouldn't read too much into it.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT.
IT indicators are not confirming the now rising STOs as the ITBM and ITVM continue lower. While %PMO Cover BUY Signals is near-term oversold, we are still expecting the indicator to move lower given only 23% have rising momentum.
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 BEARISH in the short and intermediate terms.
The market bias is NEUTRAL in the long term.
%SPX Stocks > 20/50/200EMAs Readings are not oversold yet and continue to decline. The Silver Cross Index continues lower after a "BEAR SHIFT" on the cross below its signal line. We are leaving the long-term bias NEUTRAL given the Golden Cross Index is rising. We do expect the GCI will begin to decline now that there are fewer stocks with price above their 200-day EMA versus the GCI.
CONCLUSION: Mega-caps suffered heavy losses today and took the broad market down with them. While the STOs were up, IT indicators and participation are not confirming them yet. This could indicate short-term support will hold a bit longer. We are still expecting more decline especially given the weakness in mega-caps and declining PMOs across all of the sectors (minus Healthcare (XLV) and Energy (XLE). A small hedge could serve you well, particularly if you aren't interested in limiting your exposure. Stops are a must.
Erin is 20% long, 4% short.
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BITCOIN
Bitcoin pulled back today, but it didn't affect the mostly bullish indicators. The RSI is iffy as it is moving lower in negative territory, but the PMO and Stochastics are bullish enough to at least hold this support level. Upside potential is rather limited given the strength of overhead resistance.
INTEREST RATES
Long-term yields were lower on the day, but short-term rates rose slightly in most cases. We still believe rates will continue to 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 is holding support at the 20-day EMA, but we see a possible decline to the 50-day EMA ahead based on the topping PMO and falling Stochastics.
BONDS (TLT)
IT Trend Model: SELL as of 5/16/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: Yesterday's comments still apply:
"TLT looks to be forming a bearish flag. Indicators are attempting to reverse, but we don't see enough evidence to look for a longer-term rally. Overhead resistance will likely turn price away."
The next level of strong support lies at 90.00.
DOLLAR (UUP)
IT Trend Model: BUY as of 8/3/2023
LT Trend Model: BUY as of 5/25/2023
UUP Daily Chart: Yesterday's bearish filled black candlestick resulted in a lower high and lower low, but ultimately price finished slightly higher on the close. Indicators, particularly Stochastics are bullish so look for a breakout ahead for UUP.
GOLD
IT Trend Model: NEUTRAL as of 8/2/2023
LT Trend Model: BUY as of 1/5/2023
GLD Daily Chart: As we expected, GLD is testing support at the 200-day EMA. Indicators are very bearish so we would look for a test of the June low. It's time for Gold to reawaken, but we don't see enough evidence to look for the reversal yet.
GOLD Daily Chart: $GOLD saw a PMO Crossover SELL Signal today. This looks like a tiny bearish head and shoulders pattern. Given the weakness in Gold against the Dollar and negative indicators, we should see the June low tested. There is still hope for Gold as this symmetrical triangle suggests an eventual upside breakout. Why? Symmetrical triangles are continuation patterns and the prior trend was UP.
GOLD MINERS Golden and Silver Cross Indexes: Yesterday's comments still apply:
"Gold Miners are holding support in spite of negative indicators. We aren't seeing any expansion in participation under the surface so more than likely a breakdown is ahead for GDX. Support looks strong at 26.00, but we wouldn't look to reenter this group until participation gets back to where it was before."
CRUDE OIL (USO)
IT Trend Model: BUY as of 7/12/2023
LT Trend Model: BUY as of 8/3/2023
USO Daily Chart: Crude Oil had another upside breakout from the bearish rising wedge. Last time it led to a small decline. Still, we consider bullish conclusions to bearish chart patterns to be especially bullish. We could see a little consolidation. That would be good given the RSI is overbought. We believe Crude Oil isn't finished rallying, it just may need a small rest.
Based on the one-year chart we see 78.00 as the next stop for USO should the rally continue as we expect it to.
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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Price Momentum Oscillator (PMO)
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