It was ultimately a decent rally today on the SP500 with help from the tech heavy Nasdaq. Interestingly, only the STO-V turned up for the SPY, but another rally will likely push the STO-B up as well. We'll discuss that later.
All other major indexes with the exception of the Nasdaq and SP600 continue to see lower readings. It isn't completely surprising to see the Nasdaq improving given the rally today. Only the STO-B turned up on the Nasdaq. Notice that all the other indicators remain in decline.
We were asked today in the DecisionPoint Trading Room about STOs for the small-caps. The SP600 (IJR) actually looks healthier than both the Nasdaq and SPY given its Swenlin Trading Oscillators began turning up on Friday. We still don't have confirmation from our intermediate-term indicators, but this is a very interesting development, particularly given the lackluster performance today.
Conclusion: Our primary short-term indicators (STOs) are beginning to show a few signs of life. Seeing the broader SP600 improvement under the surface is encouraging for the rest of the market. We would caution this is early and our sense is that we are about to enjoy a pause in the decline, particularly given the NYSE isn't showing signs of improvement.
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: Today's rally was welcomed follow-through on Friday's positive close. It is coming right at short-term support. The rally did not help out the Price Momentum Oscillator (PMO) which continues to decline.
Stochastics are below 20 and the VIX is well below its moving average on the inverted scale which implies internal weakness. Don't look at Stochastics as "oversold". This isn't an overbought/oversold measure, it measures internal strength and weakness. We want Stochastics to stay above 80 and we do NOT want Stochastics to stay below 20.
Here is the latest recording from 8/21:
S&P 500 New 52-Week Highs/Lows: There were negligible New Highs. New Lows are staying consistent in spite of the last two days of rally. The big news is that the 10-DMA of the High-Low Differential has dropped below the zero line. This is a near-term oversold condition, but it has seen far lower readings.
Climax* Analysis: There were no climax readings today. Also, it is notable that SPX Net A-D was negative on a day with a pretty solid price advance.
*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 OVERSOLD.
It was a solid rally today but it only affected the STO-V which turned up slightly. We would have expected to see more participation as far as rising momentum. %Stocks > 20EMA is holding a declining trend despite a small increase today.
Intermediate-Term Market Indicators: The intermediate-term market trend is DOWN and the condition is OVERSOLD.
As is often the case for the ITBM/ITVM, they have picked up speed after dropping below the zero line. We would consider them oversold, but know they can move lower. No new PMO BUY Signals were posted on today's rally.
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 are ready to pivot bullish in the short term should we see an expansion of %Stocks > 20/50EMAs. In order to move bullish or even neutral in the intermediate-term timeframe, we will need those indicators to see higher percentages than the Silver Cross Index. Otherwise the SCI will continue moving lower. The GCI is getting very close to a Bearish Shift as it nears a negative crossover its signal line.
CONCLUSION: The mega-caps and tech heavy Nasdaq and Nasdaq 100 were the stars today, both up over 1.5%. The SPY rallied as well given its exposure to both. Volume wasn't that impressive on the rally and that indicates to us it was far from broad. Swenlin Trading Oscillators are beginning to show a tiny bit of improvement, but we aren't looking for a market reversal at this time given participation remains weak and the market bias remains bearish in all timeframes. We still believe there is more downside to endure, but this is a good place for a pause.
Erin is 10% long, 8% short.
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BITCOIN
Bitcoin is digesting the crash last week. The decline pushed the RSI deep into oversold territory. The PMO isn't ready to reverse yet and Stochastics remain weak below 20. This has been a strong trading range so we aren't looking for another deep decline. More likely we will see price movement along the June lows.
INTEREST RATES
The rising trends in yields remain. Bonds are not the place to be as yields are likely to 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 now pushing past overhead resistance at the October high. This seemed a good place for it to digest the rally, but indicators are too positive to expect a decline right now. The RSI isn't even overbought yet.
BONDS (TLT)
IT Trend Model: SELL as of 5/16/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: Bonds saw a brief rally on Friday, but with rising rates continuing, the decline is back on. The 20-year yield is breaking to new highs and isn't likely to let up. The RSI is oversold, but the PMO is still in decline alongside very weak Stochastics.
We don't see relief ahead until price gets back down to 90 and even then it could be dicey.
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 is cooling somewhat but support is holding easily. This pause has given the RSI a chance to move out of overbought territory. The PMO is still rising and isn't overbought yet. Stochastics are very strong. All of this suggests the Dollar will remain strong.
GOLD
IT Trend Model: NEUTRAL as of 8/2/2023
LT Trend Model: BUY as of 1/5/2023
GLD Daily Chart: Considering the strength of the Dollar and Gold's relative weakness with the Dollar, we would expect this support level to be compromised, but Gold just keeps on holding tough.
GOLD Daily Chart: Other than price support nearing, the charts are clearly bearish for Gold. Indicators are showing no real signs of improvement, particularly the PMO. Gold sentiment is slightly less bearish but that hasn't resulted in investors buying Gold. The market decline should've goosed Gold, but it hasn't. It is losing its reputation as a 'safe haven' when the market gets cranky.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners managed a rally but it did nothing to improve the chart except for the mechanical rise in the RSI. Participation is almost completely absent. This is an area to look for a pause given support is very near so if you're in an inverse fund, you need to be ready to either deal with the loss on the way up or let go and see what happens at this support level.
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 was down on the day but it did see a higher high and higher low. The RSI is positive and Stochastics are rising again, so a rally isn't out of the question. Just know that USO is vulnerable given the PMO remains in decline. The Energy sector as a whole is beginning to weaken.
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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