The Silver Cross Index had a Bearish Shift as it crossed below its signal line just as the index began to top. It is almost below our 50% bullish threshold. It is highly likely to drop below that threshold soon given the continued bleeding off of stocks above their 20/50-day EMAs. Those percentages are well below the 50% threshold. Even the Golden Cross Index will likely lose percentage points given %Stocks > 50/200EMAs are below the Golden Cross Index percentage.
Price has dropped below the 50-day EMA and support now lies at 51.00 for ONEQ. Indicators are also very negative with the RSI below 50, the PMO declining and nearing the zero line and Stochastics holding below 20. Relative strength to the SPY is declining. While the SPY looks bearish, the Nasdaq looks even more bearish.
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: Support was lost at the June tops, but the 50-day EMA is there to possibly hold things together. We doubt we will see a big bounce off that level, particularly given the very negative RSI and falling PMO.
The VIX is staying beneath its moving average on our inverted scale and Stochastics are below 20. Internal weakness abounds.
Here is the latest recording (8/14):
S&P 500 New 52-Week Highs/Lows: New Lows are picking up as the market makes its way lower. The 10-DMA of the High-Low Differential is confirming the downtrend as it declines.
Climax* Analysis: There were unanimous and very strong climax readings today, giving us a downside initiation climax. This would imply more downside to come, but the last climax day of this magnitude was in early-July, and that proved to be the end of a very short decline. Not to minimize the potential downside consequence of today's climaxes, but just a reminder not to take anything for granted.
*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.
Swenlin Trading Oscillators (STOs) turned down yesterday on the rally so we sensed that the rally would not see follow-through. The index is very sickly given only 11% have rising momentum. This is an oversold reading and STOs are near-term oversold. Participation is not oversold yet as nearly 1/3rd are still holding above their 20-day EMAs.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
The ITVM hit negative territory today but is not even near-term oversold yet. Both indicators can accommodate further downside. %PMO BUY Signals are declining rapidly, but the indicator isn't oversold yet.
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 all three timeframes.
We continue to see deterioration in participation of stocks above their 20/50/200-day EMAs. The Silver Cross Index is declining quickly leaving the IT with a bearish bias. The Golden Cross Index did tick upward today, but given so many stocks are below their 50/200-day EMAs, we should expect to see the Golden Cross Index angle lower soon. It certainly looks toppy if nothing else. We read the bias as bearish across the board.
CONCLUSION: The market resumed the decline in earnest today, setting up a downside initiation climax. We do note that the market has been in decline and this climax could mark a possible turning point, particularly given STOs are near-term oversold. However, one look at participation tells us a solid bottom isn't likely in. Only about 10% of stocks show rising momentum so where is the strength going to come from? The Nasdaq looks particularly weak as noted in the opening. We wouldn't count on a reversal; it's far better to play defense right now and keep a tight leash on your portfolio.
Erin is 15% long, 4% short.
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BITCOIN
Bitcoin indicators are looking more weak. The RSI hasn't moved much given price hasn't moved much. The PMO, however, has moved below the zero line and Stochastics are now in negative territory. While support is currently holding, we now see Bitcoin vulnerable to a breakdown.
INTEREST RATES
Yields are on the rise again and based on the strong push upward, we don't expect them to pull back yet.
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 about to test overhead resistance at the October top. The RSI is not overbought yet so a breakout isn't out of the question. The PMO and Stochastics are bullish so we would prepare 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: TLT continued to decline as the 20-year yield is beginning to break above the August high. While this would be a good place for a reversal to set up a double bottom, indicators simply don't support a rally. Prepare for lower prices.
There really isn't any longer-term support at this price level so we do see lower prices ahead.
DOLLAR (UUP)
IT Trend Model: BUY as of 8/3/2023
LT Trend Model: BUY as of 5/25/2023
UUP Daily Chart: The Dollar was up slightly but put in a lower low and lower high after a bearish filled black candlestick. The rally doesn't seem in jeopardy, it may be that overhead resistance is tricky right now. The rising trend is solid and the indicators are very positive. We favor a breakout.
GOLD
IT Trend Model: NEUTRAL as of 8/2/2023
LT Trend Model: BUY as of 1/5/2023
GLD Daily Chart: GLD is now approaching support at the June low. We doubt it will hold. The RSI is negative and not yet oversold. The PMO is declining and Stochastics are reading below 5.0 which is highly bearish.
GOLD Daily Chart: Gold has yet to improve its relative strength to the Dollar so it is punishing it nearly every day. It is clearly not the safe haven it once was given it has been declining alongside the market. The PMO for $GOLD has now dropped beneath the zero line. 1900 will likely be tested soon.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners finally broke down. They couldn't withstand falling Gold prices and a falling market. Participation has told us that this group is internally weak and today it got weaker. The Silver Cross Index topped beneath its signal line. Prepare for more downside to the next level of support. If Gold doesn't get going soon, GDX will likely struggle to hold the next level of support at 26.00.
CRUDE OIL (USO)
IT Trend Model: BUY as of 7/12/2023
LT Trend Model: BUY as of 8/3/2023
USO Daily Chart: USO has finally broken down out of the bearish rising wedge. It also closed beneath support at the April high. The chart is looking very bearish right now so we expect Energy positions should likely be closed for the time being should price drop below the 20-day EMA. The PMO is overbought and nearing a Crossover SELL Signal. If it's going to rally, it needs to do so quickly.
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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