Today the NYSE Composite ($NYA) and the Technology Sector (XLK) 20-day EMAs crossed down through their 50-day EMAs (Dark Cross), generating an IT Trend Model NEUTRAL Signal.
Support was lost at the 200-day EMA on Thursday's crash. Friday saw follow-through. Price support at the July low has been reached so this could be a nice reversal point for a pause. Internals are very weak as we have less than a quarter of the index holding price above the 20-day EMA. The bias is clearly bearish and Stochastics are below 20. While this is an area for a pause or rebound, it isn't likely to last given the poor participation under the hood.
XLK is approaching strong support at the August low, but the Silver Cross Index is in free fall and participation has slimmed well below our bullish 50% thresholds. Stochastics are below 20. As with the NYSE, this is a good place to see a rebound on support, but weak internals suggest a breakdown ahead.
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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MARKET/INDUSTRY GROUP/SECTOR INDEXES
Today: 
This Week: 
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 has now been reached at the late June low. As per our discussion in the opening, this is a good place to look for a rebound, but indicators are very negative so we have to assume another breakdown to come.
The market is very stretched to the downside which also suggests we could see a pause on support. The VIX punctured the lower Bollinger Band again Friday and typically these punctures lead to a day or two of upside. Stochastics haven't turned up yet so internal weakness is strong.
Here is the latest recording:
S&P 500 New 52-Week Highs/Lows: New Lows have moved into near-term oversold territory. New Highs were negligible. The 10-DMA of the High-Low Differential topped this week and is now back in negative territory.
Climax* Analysis: There were no climax readings today. Two climaxes appeared this week and we chalked them up as downside exhaustion climaxes. They didn't resolve with higher prices which tells us how bearish the current market environment is.
*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.
Swenling Trading Oscillators (STOs) moved into oversold territory this week. Participation was slashed. While %Rising PMOs is oversold, we expect to see more decimation that would tear down the remaining rising PMOs. They can accommodate more downside.
Intermediate-Term Market Indicators: The intermediate-term market trend is DOWN and the condition is SOMEWHAT OVERSOLD.
We are marking the intermediate-term market trend as down given the rising bottom trendline was broken. It also appears that we will have a lower low to match the lower high. This is a bad situation. The IT indicators are falling and have reached somewhat oversold territory. We expect to see them move even lower. Notice that %PMO BUY Signals topped beneath the zero line for a second time this week, but they are not oversold yet.
PARTICIPATION: The following tables summarize participation for the major market indexes and sectors. The 1-Week Change columns inject a dynamic aspect to the presentation. There are three groups: Major Market Indexes, Miscellaneous Industry Groups, and the 11 S&P 500 Sectors.
Notice that every IT Bias is currently negative. This is clearly a market with serious internal problems. The only strength visible is the increase in Utilities (XLU) in both its SCI and GCI percentages.
The worst Bias belongs to Semiconductors (SMH) which continue to see major deterioration of the SCI. The highest Bias belongs to both Regional Banks (KRE) and Communication Services (XLC). Neither saw improvement to their SCI or GCI.
This table is sorted by SCI values. This gives a clear picture of strongest to weakest index/sector in terms of intermediate-term participation.
Energy (XLE) is finally seeing some near-term deterioration of its SCI. It holds the highest value, but the internals are finally starting to see weakness.
Regional Banks (KRE) saw a major loss to its SCI percentage and is reading weakest in the intermediate term.
This table is sorted by GCI values. This gives a clear picture of strongest to weakest index/sector in terms of long-term participation.
Energy (XLE) has shown the most internal strength and currently holds the highest GCI value. However, we see the near-term problem with the decline in the SCI. This sector is breaking down.
KRE also holds the lowest GCI as well as SCI. This is an industry group that we should continue to avoid.
PARTICIPATION: 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 timeframes.
Participation has been slashed in all three timeframes. The SCI is accelerating lower and the GCI has topped beneath its signal line. Given there are far fewer stocks above their 20/50/200-day EMAs versus the SCI/GCI, we will continue to see both deteriorate. We note that while %Stocks > 20/50EMAs are oversold, they have seen far lower readings before.
BIAS Assessment: The following table expresses the current BIAS of various price indexes based upon the relationship of the Silver Cross Index to its 10-day EMA (intermediate-term), and of the Golden Cross Index to its 20-day EMA (long-term). When the Index is above the EMA it is bullish, and it is bearish when the Index is below the EMA. The BIAS does not imply that any particular action should be taken. It is information to be used in the decision process.
No changes today:
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CONCLUSION: The market corrected this week with Thursday being the biggest decline. This is the beginning of a serious correction in our minds. Our evidence? Somewhat oversold short-term and intermediate-term indicators that can move lower. We also had two downside exhaustion climaxes that acted more like initiations than exhaustions. There is a strong Bearish Bias on nearly every member of our Bias table. We do admit that the market is very extended to the downside so a pause or small bounce could come along this week, we just don't expect it to be productive. This is not a good time to try and catch a falling knife. We would avoid expanding your portfolio unless you consider hedging your positions or take a foray into shorts.
Erin is 30% long, 2% short.
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BITCOIN
Bitcoin broke out last week and so far is holding support. It is clinging to a Golden Cross, but a Death Cross appears inevitable, it will definitely be inevitable if price can't get back above the 200-day EMA. Bitcoin is volatile so that isn't out of the question. However, we don't like that the PMO is topping and the RSI moved into negative territory. The chart isn't really bearish enough to short, but it is bearish enough to avoid Bitcoin and its ETFs.
It appears that we have stretched out the trading range this week. We expect it to hold up.
INTEREST RATES
Rates flew higher this week putting downside pressure on Bonds and the market alike. Friday they did decline slightly.
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 gapped up on Thursday and Friday pulled back to digest that incredible rally. We could be looking at a reverse island formation, but the PMO looks awfully good to expect a gap down ahead. We expect to see consolidation.
MORTGAGE INTEREST RATES (30-Yr)**
**We watch the 30-Year Fixed Mortgage Interest Rate, because, for the most part, people buy homes based upon the maximum monthly payment they can afford. As rates rise, a fixed monthly payment will carry a smaller mortgage amount, which shuts many buyers out of the market.
--
This week the 30-Year Fixed Rate changed from 7.18 to 7.19.
BONDS (TLT)
IT Trend Model: SELL as of 5/16/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: TLT saw a relief rally on Friday, but it did nothing to improve the chart. The RSI remains negative, the PMO is putting margin between it and its signal line and Stochastics are below 20. We don't have high hopes for TLT or Bonds in general.
Support doesn't really arrive until 89 or 90.
TLT Weekly Chart: We expect support at the 2022 low to be tested very soon and given the negative weekly chart, we have to think breakdown at that level. The weekly PMO topped this year below the zero line and the weekly RSI has been losing ground most of the year. Bonds aren't looking healthy.
DOLLAR (UUP)
IT Trend Model: NEUTRAL as of 7/13/2023
LT Trend Model: BUY as of 5/25/2023
UUP Daily Chart: The Dollar continues to march higher. A rising Dollar puts a great deal of pressure on large-cap global stocks which have to deal with the exchange rate overseas. The RSI is back in overbought territory, but given the strong rising trend that is not parabolic, it will likely remain there. The PMO managed to surge above the signal line this week (bottomed above the signal line) suggesting more upside to come.
We don't even see overhead resistance on the one-year daily chart.
UUP Weekly Chart: The weekly chart does show us where overhead resistance lies. It is getting closer, but given the strong weekly PMO that is not overbought, a breakout there isn't out of the question. For now, we do expect that resistance level to be tested.
GOLD
IT Trend Model: NEUTRAL as of 8/2/2023
LT Trend Model: BUY as of 1/5/2023
GOLD Daily Chart: Gold is really trying to rally, but as Gold often does it is taking its time. The rising Dollar has put incredible pressure on all metals. The daily chart still has some positives as price meanders sideways. The PMO is holding onto its Crossover BUY Signal and the RSI is back in positive territory. Stochastics have decelerated above net neutral (50).
We expect an upside breakout from the symmetrical triangle, the Dollar is preventing it. Unfortunately we don't see the Dollar letting up so we do need the correlation ease toward zero. Gold relative strength is in a declining trend so it has an uphill battle.
GOLD Weekly Chart: The weekly chart isn't particularly encouraging given the declining weekly PMO, but honestly given the straight up rally by the Dollar, it hasn't broken down, it is maintaining. A weak market often works in Gold's favor and support is holding. We are cautiously optimistic on Gold.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners were really clicking until the end of the week. The market's crash damaged GDX greatly, weakening the internals. There is still some participation so it isn't over for GDX. If Gold can get back on its feet, this will be a bright spot. Until then we expect sideways consolidation.
CRUDE OIL (USO)
IT Trend Model: BUY as of 7/12/2023
LT Trend Model: BUY as of 8/3/2023
USO Daily Chart: Despite Crude production restrictions, USO isn't rallying much. This week it took a pause and this brought the RSI out of overbought territory. Unfortunately, the PMO is nearing a Crossover SELL Signal and Stochastics have dropped below 80. It is time for a pullback or a continuation of the pause. Energy is starting to feel the strain.
USO/$WTIC Weekly Chart: The weekly chart is very favorable and suggests any decline or pause will end well. This chart on its own tells us to expect a test of overhead resistance at around 93. A cooling off period is now needed and we think that is what we will get next week.
Good Luck & Good Trading!
Erin Swenlin and Carl Swenlin
Technical Analysis is a windsock, not a crystal ball. --Carl Swenlin
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