During today's DecisionPoint Show, Carl brought out the Golden Cross Index/Silver Cross Index chart for the Nasdaq. (This chart is part of our subscriber-only Golden Cross/Silver Cross Index ChartList available on the upper left-hand side of our Blogs and Links page).
We have the Golden and Silver Cross Indexes for all of the sectors and most of the broad market indexes. The GCI measures the percent of stocks with a 50-EMA > 200-EMA (a "golden cross") and the SCI measures the percent of stocks with a 20-EMA > 50-EMA (a "silver cross").
If you've been watching the GCI/SCI on the SPX, you know that they have been confirming the new all-time highs. The Nasdaq GCI and SCI are doing no such thing. In fact they are showing severe negative divergences with price. Today the BPI dropped below its signal line for the Nasdaq. It's very early, but we could be looking at a double-top should today's decline turn into an extended move lower. Currently only half of the members of the Nasdaq have a 20-EMA > 50-EMA and now less than 70% have 50-EMAs above their 200-EMAs. Both are still declining. Rally supporters are disappearing.
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
Each S&P 500 Index component stock is assigned to one, and only 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 Sector charts.
THE MARKET (S&P 500)
IT Trend Model: BUY as of 5/8/2020
LT Trend Model: BUY as of 6/8/2020
SPY Daily Chart: The current steep rising bottoms trendline was breached slightly, but overall the rising trend remains intact. Volume pulled back somewhat on today's decline. The PMO has reached overbought territory as its typical range is between -2 and +2. It is beginning to slow its ascent.
Price bumped against the top of the rising trend channel and is pulling back as expected. Notice that the RSI is still in overbought territory.
Participation: The following chart uses different methodologies for objectively showing the depth and trend of participation for intermediate- and long-term time frames.
- The Silver Cross Index (SCI) shows the percentage of SPX stocks on IT Trend Model BUY signals (20-EMA > 50-EMA).
- The Golden Cross Index (GCI) shows the percentage of SPX stocks on LT Trend Model BUY signals (50-EMA > 200-EMA).
- The Bullish Percent Index (BPI) shows the percentage of SPX stocks on Point & Figure BUY signals.
The SCI and GCI on the SPY looks VERY different from the Nasdaq's. The SCI is nearing an all-time high based on our data going back to 2017 and the GCI already is at its all-time high. The BPI did turn down, but remains safely above its signal line.
Participation is strong in all time frames; however, the %Stocks > 20/50-EMAs are beginning to deteriorate.
Climax Analysis: We don't see a climax day here. However, I do note that the VIX has reached its EMA. In a bull market, the EMA provides support and generally leads to higher prices in the very short term. We continue to see New Highs coming in.
Short-Term Market Indicators: The short-term market trend is UP and the condition is OVERBOUGHT.
While it isn't surprising to see the Swenlin Trading Oscillators (STOs) turn down on a decline, it does suggest a short-term top is developing.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT. The market bias is BULLISH.
Both indicators topped today. I would like to see another day or two of decline before considering this a strong bearish signal for the intermediate term. However, it does suggest we proceed with caution.
CONCLUSION: While the SPX indicators are still mostly bullish, we noted at the beginning of this blog article that other indexes like the Nasdaq are showing significant deterioration. The STOs and ITBM/ITVM have topped. While the VIX is at a typical bullish reversal point in a bull market, it will likely continue to see higher readings (more fear). Given this, we don't expect significantly higher prices this week. More likely, look for consolidation and prepare for a likely pullback this week.
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Price did not make it to the top of the wedge before turning lower. The PMO unenthusiastically had crossed above its signal line, but has already whipsawed into a crossover SELL signal. The RSI is now negative, but oversold for Bitcoin. Typically when Bitcoin loses or tests the 50-EMA, it is an upside reversal point. Given we haven't seen a close below the bearish wedge yet, this certainly could be a reversal point. I'd feel more certain of a reversal here if the PMO would flatten a bit more.
IT Trend Model: BUY as of 3/5/2021
LT Trend Model: SELL as of 7/10/2020
UUP Daily Chart: UUP lost support at the March lows and December top. The PMO and RSI are confirming this downtrend.
The next area of support is just above $24.40, but the strongest level of support doesn't arrive until $24.10.
IT Trend Model: NEUTRAL as of 1/13/2021
LT Trend Model: SELL as of 3/4/2021
GLD Daily Chart: Normally Gold and the Dollar share a strong reverse correlation so on a day that the Dollar falls, we should expect to see higher prices for Gold. That didn't occur today, suggesting Gold had more sellers that overrode that correlation.
The indicators still look good for Gold and it did hold support. I'm not surprised to see Gold stumble on a test of the 200-EMA. Given the activation of the double-bottom pattern, I am expecting Gold to test resistance at 1875.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners pulled back again to digest Thursday's strong rally above the 200-EMA. This strikes me as a "pause" or a tiny flag on Thursday's flag pole. Participation is improving and the foundation among members is strong given 90% have price above their 20-EMAs as well as 80% with price above their 50-EMAs. Additionally, the SCI, BPI and GCI are all rising. The PMO is rising and the RSI is positive and not overbought.
CRUDE OIL (USO)
IT Trend Model: BUY as of 11/23/2020
LT Trend Model: BUY as of 3/9/2021
USO Daily Chart: After breaking out from the bullish ascending triangle, price has been consolidating. Today we had a new PMO Crossover BUY signal. The RSI is positive.
We would expect prices to rise after this period of digestion.
IT Trend Model: NEUTRAL as of 8/27/2020
LT Trend Model: SELLas of 1/8/2021
TLT Daily Chart: Yields began to rise on Friday and that pushed TLT down after it reached the 50-EMA. Despite a rising PMO on a BUY signal, TLT hasn't done that much. Price is still above support and the 20-EMA.
We don't expect yields to continue to rise much further and that will give TLT an opportunity to bounce off this level of support.
Technical Analysis is a windsock, not a crystal ball.
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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