The market popped on the open logging a new intraday all-time high, but then dove lower to test support at last week's highs. While the market did rebound, it began to lose ground to finish up a modest +0.12%. I don't believe that yesterday's downside initiation climax has completely played out, especially when I see the bearish rounded top on the 10-minute candlestick chart. The RSI is now negative and the PMO is on a crossover SELL signal. Note also that the OBV is in decline.
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.
RRG Chart: XLY has now joined XLK in the "Weakening" category. XLC moved from "Weakening" to "Lagging". Also notice in the Sector Summary above that the defensive groups saw the best performance.
CLICK HERE for an animated version of the RRG chart.
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: When I opened up today's Diamond Mine trading room for subscribers, there was a bearish engulfing candlestick on this chart. Instead the SPY finished slightly higher on the day. Total volume did increase on today's price rise which is good.
I see a bearish rising wedge within the longer-term rising trend channel. The market hasn't been able to rally to the top of the channel since April.
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 BPI turned down below its signal line today. The GCI remained steady at 95.2% of stocks on "Golden Cross" BUY signals. The SCI is in near-term oversold territory, but as I mentioned yesterday, successful rallies from oversold conditions generally occur on a price low, not an all-time high. Additionally, it is still falling.
Not much change in participation on this chart. Short-term and intermediate-term readings are not really oversold given the depths we've seen. Readings in the long term remain extremely overbought.
Climax Analysis: Today was not a climax day. New Highs remained about the same and the VIX continues to oscillate around its EMA on the inverted scale, leaving us with little information to go on as far as sentiment.
Short-Term Market Indicators: The short-term market trend is UP and the condition is NEUTRAL.
The STOs continue to decline which suggests price will do the same in the short term. Even as price challenges all-time highs, less than half of the index members have rising momentum.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL. The market bias is NEUTRAL.
The ITBM and ITVM moved lower today despite the positive close. How can this market continue higher when only half of the stocks in the index are on PMO crossover BUY signals? Of those 51%, 6% have declining PMOs.
CONCLUSION: Some of our indicators may be in near-term oversold territory, but ultimately participation is still meager and not improving. Building strength would mean more percentage of stocks above their 20/50-EMAs in comparison to the SCI and more rising momentum than crossover BUY signals. We don't have that. When the market is getting progressively weak internally, it is best to limit exposure or consider trailing stops. Booking profits is never a bad idea either.
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Yesterday's comments still apply:
"Bitcoin continues to flounder in the bottom half of its price range as represented by the negative RSI. The 20-EMA continues to pressure price lower. It won't be long before we see 30,000 tested."
The declining trend in long-term yields has not been broken.
10-YEAR T-BOND YIELD
The 10-year treasury yield moved lower after it appeared to be recapturing the intermediate-term rising trend. There is a congestion of resistance that $TNX needs to get through. It is positive that it is holding above the 200-EMA and the PMO is trying to turn back up. But the inability to get over resistance and the weak RSI tell me not to expect a huge turnaround in long-term yields.
IT Trend Model: BUY as of 6/22/2021
LT Trend Model: SELL as of 7/10/2020
UUP Daily Chart: The Dollar pulled back today after failing to recapture the short-term rising trend. The PMO is now topping, but the RSI remains positive and the 20- and 200-EMAs are available for support.
The large double-bottom pattern still looks good on the one-year daily chart, but price will need to test that confirmation line soon or the pattern will need be scuttled.
IT Trend Model: NEUTRAL as of 6/24/2021
LT Trend Model: BUY as of 5/21/2021
GLD Daily Chart: Gold broke out of the short-term bull flag today. Given the length of the flagpole, the minimum upside target is $176.
GOLD Daily Chart: Today $GOLD followed GLD's lead and generated a PMO crossover BUY signal. The RSI has moved into positive territory. Gold is looking interesting again.
Full Disclosure: I own GLD.
GOLD MINERS Golden and Silver Cross Indexes: Miners are finally beginning to look interesting. Short-term strength is beginning to show itself with more stocks above their 20-EMAs, a nearing PMO crossover BUY signal and an SCI that is beginning to flatten. I presented two Gold Miner stocks to DecisionPoint Diamonds readers so it might be time to do your own "mining" in this industry group.
CRUDE OIL (USO)
IT Trend Model: BUY as of 11/23/2020
LT Trend Model: BUY as of 3/9/2021
USO Daily Chart: I decided to annotate a rising trend channel on Crude Oil. Today's big decline was difficult, but ultimately price is staying within a rising trend channel. In the short term, this rising trend channel could be broken quickly given the PMO has topped below its signal line and the RSI is nearing negative territory, but the 50-EMA is still available for support.
Additionally, you can see that the intermediate-term rising trend is still very much intact, so I believe that Oil prices will continue to rise in the intermediate term. It could be a bumpy ride along that rising trend so avoid too much exposure.
IT Trend Model: BUY as of 6/10/2021
LT Trend Model: SELL as of 1/8/2021
TLT Daily Chart: Bonds had a stellar day, but given yields fell significantly, it isn't a surprise. The EMAs are still providing support.
Additionally the rising bottoms trendline is still intact and we could have a PMO bottom above the signal line soon which is especially bullish. Until yields break their declining trends, I like bonds.
Technical Analysis is a windsock, not a crystal ball.
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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.
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