The market gapped up on the open, but steadily lost ground. Price moved back into negative territory and was never able to recover. This failure suggests the rally that just began is in jeopardy already. The 5-minute PMO is rising so we could see higher prices on Monday, we would temper bullish expectations.
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/SPX SECTOR/INDUSTRY GROUP INDEXES
Change Today: 
Change for the Week:
CLICK HERE for Carl's annotated Market Index, Sector, and Industry Group charts.
THE MARKET (S&P 500)
IT Trend Model: NEUTRAL as of 9/22/2023
LT Trend Model: BUY as of 3/29/2023
SPY Daily Chart: We did set a higher high and higher low today, but we note that the short-term declining tops trendline is still intact. The PMO has yet to turn back up.
The VIX finished near its highest reading of the day so there is still worry out there, deservedly so. Stochastics are rising which does hint at a possible rally continuation.
SPY Weekly Chart: We've confirmed the double top formation on the weekly chart and based on its height, the minimum downside target is about 403.00.
SPY Monthly Chart: The monthly PMO has topped beneath the signal line which is especially bearish for the longer term. We do see the rising bottoms trendline is holding up, but based on the weekly chart, it is vulnerable.
New 52-Week Highs/Lows: The 10-DMA of the High-Low Differential continues lower. It is near the point where we saw a significant market bottom, but we we wouldn't count on this given the weakness of the weekly and monthly charts.
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.
Swenlin Trading Oscillators (STOs) are moving higher and do suggest higher prices in the short term, but we have to wonder if that is possible when we've again lost %Stocks > 20EMA. We need to see more rising momentum within the index as well. Currently %Rising PMOs is in a declining trend.
Intermediate-Term Market Indicators: The intermediate-term market trend is DOWN and the condition is OVERSOLD.
The ITBM/ITVM are both oversold but continue to move lower which will work against the rally. Until they turn back up we should assume any rally will end quickly.
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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.
There are no bullish IT Biases on the table. The best we have is Communication Services (XLC) which did maintain its SCI and GCI percentages. It was the only one to hold its current SCI value while all others lost ground.
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) has been a bright spot, but it has begun to pull back. While it holds the highest SCI value, it lost ground this week. Gold Miners (GDX) has the lowest SCI value. It lost the most percentage points this week. The group is very bearish.
This table is sorted by GCI values. This gives a clear picture of strongest to weakest index/sector in terms of long-term participation.
XLE also holds the highest GCI value. It will take some time for it to lose ground and honestly with Crude Oil likely to rise further, it may not lose any ground in the longer term.
Regional Banks (KRE) has the weakest GCI and it lost more golden crosses again this week. We don't like this group at all. Might be worth a search for shorting opportunities.
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 remains BEARISH in all three timeframes.
Even with a few days of rally, we didn't see much expansion in %Stocks > 20/50EMAs. The Silver Cross Index did decelerate its decline, but given the lower percentages of stocks above their 20/50EMAs, it will continue lower. The GCI is in a similar configuration, declining with %Stocks > 50/200EMAs holding lower percentages which will keep the GCI moving lower.
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.
The bias is mechanically bearish across all entities on our table. This is going to make it very tough for the market to rally. Even the longer term is almost completely bearish.
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CONCLUSION: We were feeling pretty good about this price bottom until the market failed to rally higher today. Rising STOs and oversold indicators set this up as a good pivot point, we just don't see much internal strength to carry price much higher. The ITBM/ITVM have yet to confirm rising STOs and the bias is solidly bearish in all timeframes. The weekly and monthly PMOs are especially bearish. If we see higher prices on Monday, take the rally with a grain of salt, the backdrop is very bearish.
Erin is 10% long, 2% short.
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BITCOIN
Bitcoin bottomed this week with the market. The indicators have improved enough to look for prices to move higher. A test of 28,000 is likely but it has to fight through the declining trend first.
This chart is to show where some of the support/resistance lines come from.
INTEREST RATES
Yields marched higher this week but took a breather to finish the week. They are due for a pause.
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
The 10-year yield is rising parabolically and is due for a pause (as with all rates). Stochastics are above 80, but they have topped. The RSI was overbought and also needs relief. The PMO is still rising so overall we do expect the rising trend to continue after a pause or pullback. The rising trend is awfully steep.
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, and potential sellers will experience pressure to lower prices (to no effect so far).
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This week the 30-Year Fixed Rate changed from 7.19 to 7.31.
BONDS (TLT)
IT Trend Model: SELL as of 5/16/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: TLT reversed to finish the week. We do believe yields are ready for a pause and that could afford TLT the opportunity to see more rally. It isn't likely to last. The RSI is oversold and the PMO is decelerating alongside rising Stochastics, but we think the longer-term bearish picture will overshadow any near-term strength.
TLT Weekly Chart: Strong support was broken on the weekly chart. We are now a multi-year lows. The weekly RSI is now oversold, but given the bearish weekly PMO we expect lower prices will prevail.
TLT Monthly Chart: Based on the monthly chart, support is available at 80. That would be an excellent area for a reversal, but that monthly PMO is highly bearish and making new lows. We can see the strength in the price pattern of the 20-year yield so we do expect that next level of support will be broken on TLT.
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 paused briefly yesterday, but is rallying once again. It was incredibly overbought based on the RSI and that dip yesterday did alleviate that. More downside is needed. Stochastics did top and do look ready to drop below 80. We believe the rising trend will remain intact, but we see a pause in UUP's future. It's simply too overbought.
There really isn't much overhead resistance for the Dollar to deal with.
UUP Weekly Chart: Overhead resistance is finally visible on the weekly chart. We have a strong feeling that area of resistance will hold briefly and the Dollar would pause at that time if not now. The weekly PMO is very favorable, but the weekly RSI is overbought. Look for the Dollar to challenge the 2022 high.
UUP Monthly Chart: The monthly chart suggests UUP will breakout when it hits resistance. The monthly PMO has bottomed above its signal line which is especially bullish. The monthly RSI is not overbought. The long-term picture for the Dollar is very bullish.
GOLD
IT Trend Model: NEUTRAL as of 8/2/2023
LT Trend Model: BUY as of 1/5/2023
GOLD Daily Chart: Gold is losing ground quickly. It careened lower this week, picking up speed and volume along the way. The indicators are decidedly bearish, but the RSI is oversold. Stochastics want to turn back up but as we noted before, they are oscillators and must oscillate. We aren't going to put too much emphasis on their direction change.
Discounts have not expanded as we would expect given the very bearish outlook for Gold. We need to see them expand. Gold not only is getting hit by a rising Dollar, it is also losing relative strength against the Dollar. The next level of support on the daily chart is 1800.
GOLD Weekly Chart: Losing the 1900 level was significant. The weekly PMO is accelerating lower and the RSI is negative not oversold. As with the daily chart, 1800 looks like the next stopping point.
GOLD Monthly Chart: Our concern on the monthly chart is the start of a bearish triple top. The monthly PMO saw a Crossover SELL Signal suggesting more downside ahead. The outlook for Gold is very bearish in all three timeframes.
GOLD MINERS Golden and Silver Cross Indexes: With Gold on the ropes, Gold Miners are facing a strong headwind. A general market rally could help the cause, but participation is terrible right now. The Silver Cross Index is near zero and the Golden Cross Index is picking up speed to the downside. We believe this strong support level will be broken soon.
CRUDE OIL (USO)
IT Trend Model: BUY as of 7/12/2023
LT Trend Model: BUY as of 8/3/2023
USO Daily Chart: After confirming the bull flag, USO began to pullback. With production tight, we do expect to see Crude rise again. However, right now, it is ripe for lower prices. There is a new PMO Crossover SELL Signal that triggered today and Stochastics look especially bearish as they've topped. We could see a test of the rising bottoms trendline and the 50-day EMA. Tighten stops on Energy positions or consider shedding them while it pulls back further.
USO/$WTIC Weekly Chart: We haven't hit significant overhead resistance yet and as we noted earlier supply does suggest we will see a test of that level. It just ran too hot and needs this pause.
WTIC Monthly Chart: The monthly PMO has decelerated but it is in decline still. The monthly RSI did move back into positive territory and this rally looks impressive on $WTIC. Think short-term pause and then rally resumption.
Good Luck & Good Trading!
Erin Swenlin and Carl Swenlin
Technical Analysis is a windsock, not a crystal ball. --Carl Swenlin
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