Today the Dow Jones Transportation Average ETF (IYT) 50-day EMA crossed down through the 200-day EMA, generating an LT Trend Model SELL Signal. Strong support is arriving soon which begs for a bounce, but with participation so thin and Stochastics below 20 that level isn't a lock.
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!
MARKET/INDUSTRY GROUP/SECTOR INDEXES
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: Today's decline was perilous with short-term support being obliterated. We have to go to the one-year chart to see where the next level of support lies.
The next level of support is at 400. Given the very negative PMO and Stochastics we have to prepare for that level to be hit.
Here is the latest recording 10/23:
S&P 500 New 52-Week Highs/Lows: New Lows contracted by more than half of yesterday's reading, which is quite surprising considering the size of today's selloff. This is short-term bullish.
Climax* Analysis: There were no climax readings today; however, SPX Total Volume expanded to a level we might consider being a blowout, meaning the selling might be done. We're not in love with that idea, but it bears thinking about.
*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.
Swenlin Trading Oscillators (STOs) have now turned up in oversold territory, setting up a positive divergence. We also note that participation did not thin on the decline, nor did we lose any rising PMOs. In fact, we saw more PMOs rising.
Intermediate-Term Market Indicators: The intermediate-term market trend is DOWN and the condition is NEUTRAL.
With IT indicators falling we have to expect lower prices in the intermediate term. They suggest any bounce we get off rising STOs would likely be short-lived.
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 three timeframes.
While the bias is bearish in the short term, we do note that we saw an increase in participation of stocks above their 20-day EMA and no loss to stocks above their 50-day EMA. The short-term bias is bearish, but we do see signs of life. The Silver Cross Index continues its descent and the Golden Cross Index is falling leaving the bias bearish in both the intermediate and long terms.
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 items with highlighted borders indicate that the BIAS changed today.
_____________________
CONCLUSION: What stands out to us is the fact that New Lows contracted on a hard down day, that SPY Total Volume possibly marks a blowout, and that the STOs both bottomed in oversold territory. No loss in participation was absorbed either. These are all indications that a short-term bounce may be in the cards. However, the IT indicators are still seeing deterioration so we shouldn't look for a sticky rally. Short-term hedges could see some upside damage.
Erin is 20% long, 15% short.
Have you subscribed the DecisionPoint Diamonds yet? DP does the work for you by providing handpicked stocks/ETFs from exclusive DP scans! Add it with a discount! Contact support@decisionpoint.com for more information!
BITCOIN
Yesterday's comments still apply:
"Bitcoin is hot right now. The RSI is extraordinarily overbought and the PMO while rising is also overbought. This is a parabolic rally and those always beg for a correction. Technically we should see a digestion phase, but Bitcoin is often recalcitrant. This rally does seem extended."
"The resistance that was broken was a multi-year level of resistance. We now have to determine where the next level of resistance will be. At this point we would look to 40,000 to 41,000 levels."
INTEREST RATES
Treasury yields were down on the day offering Bonds some relief. They are due to cool or at least consolidate sideways.
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
It doesn't appear that we are going to get a harsh parabolic breakdown, more likely digestion. The PMO gave us a new Crossover SELL Signal and Stochastics tipped over. $TNX doesn't look that bearish, but bearish enough to experience a decline to the 20-day EMA.
BONDS (TLT)
IT Trend Model: SELL as of 5/16/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: Today there was a new PMO Crossover BUY Signal. Yields appear ready to cool somewhat and that will help TLT. Stochastics are rising so we should see a bit more upside for long Bonds.
DOLLAR (UUP)
IT Trend Model: BUY as of 8/3/2023
LT Trend Model: BUY as of 5/25/2023
UUP Daily Chart: The PMO has turned back up just as price broke out of the short-term declining tops trendline. The RSI is positive and Stochastics just pushed past 80 so we should look for the rally to continue on the Dollar.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: GLD is struggling to get above overhead resistance. The indicators look good, but we do note that relative strength against the Dollar has subsided. The Dollar looks more bullish and that could make it slow going for Gold. It shouldn't be a rally killer as the correlation between Gold and the Dollar has eased.
GOLD Daily Chart: 2000 seems to be the sticking point for Gold. We are looking for a breakout, but this is a psychological resistance level that may take more time to penetrate. Discounts remain high which is bullish for Gold and with the PMO rising and not overbought, we would look for an eventual breakout.
GOLD MINERS Golden and Silver Cross Indexes: The market's decline had its way with Gold Miners. Gold wasn't there to help with a strong rally. Price is breaking back below the declining tops trendline and GDX also closed below the 20/50-day EMAs. We don't like the bleeding participation and Stochastics look particularly bearish right now. The RSI also moved into negative territory. We would be very careful with Gold Mining positions. Make sure your Gold Miner is trading above key moving averages and best case, has a rising PMO.
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 took back yesterday's profits. We would look for a possible drop to the October low based on the bearish PMO and falling Stochastics. Intermediate-term we are bullish on Crude Oil, it appears we have to experience a bit more decline before the rally kicks back into gear.
Good Luck & Good Trading!
Erin Swenlin and Carl Swenlin
Technical Analysis is a windsock, not a crystal ball. --Carl Swenlin
(c) Copyright 2023 DecisionPoint.com
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.
DecisionPoint is not a registered investment advisor. Investment and trading decisions are solely your responsibility. DecisionPoint newsletters, blogs or website materials should NOT be interpreted as a recommendation or solicitation to buy or sell any security or to take any specific action.
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)