We are seeing a bullish bias on both the SP400 and SP600 given the rising Silver Cross Index on both. Participation is also improving.
The SP400 looks better than the SP600 given the fairly recent Silver Cross of the 20/50-EMAs, although the SP600 is nearing one. The SCIs on both are rising from oversold territory. Notice that the %Stocks > 20/50-EMAs is much higher than the SCI readings which is the reason we see a bullish bias. The GCI on the SP400 is beginning to pause, but the GCI on the SP600 is still in decline suggesting long-term cracks below the surface. Also we have less than half of stocks within both indexes with a 20-EMA > 50-EMA based on these SCI readings being below 50%.
With both IJH and IJR, the SCI is rising out of oversold territory and participation is not overbought by any means. If participation continues to improve on both, we could see this current "trickle up" pick up some momentum.
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: XLV has left "Leading". XLI and XLF looks the strongest.
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: We saw new all-time highs once again on the SPY and the PMO is on a crossover BUY signal. I like today's candlestick as it can be considered a bullish engulfing candlestick.
The OBV is getting ready to dispense with its OBV negative divergence. One concern could be the decline in Total Volume on today's rally to new all-time highs.
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.
On Monday (8/9) Carl discussed the concept of a "stealth correction" during the DecisionPoint show. You can watch it HERE.
The SCI on the SPX is also rising out of oversold territory and the BPI has turned back up as well in oversold territory. We are still seeing a slight decline in the GCI.
In the short term, we no longer have negative divergences, however it is still a problem in the intermediate term.
Climax Analysis: Far from a climax day given the small amount of Net A-D numbers, but it is worth noting that they were both negative on a rally to new all-time highs. The VIX remains above its EMA and below the upper Bollinger Band on the inverted scale which is positive.
Short-Term Market Indicators: The short-term market trend is UP and the condition is OVERBOUGHT.
The STOs were mostly unchanged today. We are seeing a decline in the %Stocks with Rising PMOs and that tells me not everyone is participating in this "trickle up".
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is SOMEWHAT OVERBOUGHT.
The IT indicators continue to rise and suggest the intermediate-term rising trendline should remain intact for now.
Bias Assessment: We've added this new section called "bias assessment". It occurred to us that one of the ways we can measure market bias is to compare the SCI to the percent of stocks above their 20/50-EMAs. When the percentages are lower than the SCI, the market bias is bearish and if they are higher, it is bullish. Any "mechanical" signal requires additional analysis to confirm the numbers.
The bullish bias continues given %Stocks > 20/50-EMAs is higher than the SCI reading, but we didn't see that much improvement in participation on today's rally.
CONCLUSION: We seem to be in a "trickle up" environment in the market. Participation is beginning to improve for small- and mid-caps and the SCI continues to rise out of oversold territory. A bullish bias is present in both the short and intermediate terms for all three indexes. Greg Schnell wrote about his frustration with sector rotation these days. I echo that. Finding strength is now dependent on industry group, not necessarily sector strength. However, even that is challenging as group rotation is changing quickly. I'm cautiously optimistic moving forward but rather than 'predict' group rotation, I have decided not to expand my exposure past 50% for now.
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Yesterday's comments still apply:
"Bitcoin reached the top of the rising wedge and resistance at $47500 and pulled back slightly. The RSI is overbought and suggests we could see a pullback at least back to support at $42500. The PMO is still rising and in fact, has a positive divergence with price lows. Support should hold, but it is time for more downside."
Yields are breaking from their declining trends. A rising yield environment is going to tear down Bonds quickly.
10-YEAR T-BOND YIELD
$TNX is now testing the intermediate-term declining tops trendline. Given the bullish double-bottom, positive RSI and rising PMO out of oversold territory, I suspect we will get a breakout from that declining trend and the 50-EMA.
IT Trend Model: BUY as of 6/22/2021
LT Trend Model: SELL as of 7/10/2020
UUP Daily Chart: The Dollar has a declining trend going presently, but today it rallied and will likely test it soon. The PMO is nearing a crossover BUY signal and the RSI is positive so it will likely see a breakout.
I still see a bullish cup and handle on the one-year daily chart. My only concern would be the island on price. That could be a sign of a reversal that would likely test the rising trend out of the June lows.
IT Trend Model: NEUTRAL as of 6/24/2021
LT Trend Model: SELL as of 8/9/2021
GLD Daily Chart: Gold was mostly unchanged which kept GLD beneath overhead resistance. Discounts are expanding, but are not yet at oversold levels.
(Full disclosure: I own GLD)
GOLD Daily Chart: The one-year chart for $GOLD also shows the unsuccessful attempt at a breakout. The RSI has flattened and the PMO is still in decline. We may be in for some oscillation in the large trading range between 1675 and 1750 moving forward which means an upcoming decline.
GOLD MINERS Golden and Silver Cross Indexes: Miners rebounded yesterday, but pulled back to support again today. Participation continues to be sickly. With the RSI turning down in negative territory and the PMO on a SELL signal, I think the best we can hope for is that support will hold at the late March low.
CRUDE OIL (USO)
IT Trend Model: BUY as of 11/23/2020
LT Trend Model: BUY as of 3/9/2021
USO Daily Chart: Crude Oil was down today keeping price from breaking above the 20-EMA. The RSI and PMO are neutral so they are no help.
Today's decline didn't happen on much volume so a breakout above the 20-EMA isn't out of the question.
IT Trend Model: BUY as of 6/10/2021
LT Trend Model: BUY as of 8/10/2021
TLT Daily Chart: TLT is clinging to its "Golden Cross", but a drop below the 200-EMA will likely blow it up. Given yields are looking very bullish, I suspect we will see a "Death Cross" again soon.
On the bright side, we do have a possible bullish cup and handle on the one-year chart, but again, with yields rising strongly, this isn't likely to finish with a breakout.
Technical Analysis is a windsock, not a crystal ball.
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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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