There are two Long-Term Trend Model signals that are about ready to switch. We'll discuss the charts in detail further down in the report, but this is headline material.
Interestingly, just as yields broke out and TLT broke down, a new LT Trend Model "Golden Cross" BUY signal is nearing. It will disintegrate quickly if TLT cannot hold the 200-EMA as support.
Gold (GLD) is nearing a LT Trend Model SELL signal. With Gold prices sinking so low, we expect this imminent SELL signal will stick around.
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
For the week:
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.
For the Week:
RRG® Chart: XLB is nearing the Leading category. XLF shot up with a bullish northeast heading. XLV is dropping toward Weakening and XLU continues to show strength in the Leading quadrant.
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: The market hit new all-time highs again today but did close below its open. The PMO is whipsawing again back into a PMO BUY signal. The SPX already triggered that BUY signal.
The RSI is positive but this flat whipsawing PMO is no help right now. The OBV did not make a higher high and thus has a negative divergence in play.
SPY Weekly Chart: Price continues to hover just below the top of a bearish rising wedge. The weekly RSI is overbought and the weekly PMO is on a SELL signal. This does suggest a possible breakdown of the rising bottoms trendline draw from the late 2020 low.
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 SCI had a positive crossover last week, but then fell out of bed. It currently remains above its signal line, but barely. This sluggish participation suggests lower prices ahead. The GCI is continuing to deteriorate as more stocks drop their "Golden Crosses".
There is a slight bullish bias in both the short and intermediate terms. However, they are slight given there are only 9% more stocks with price > 20-EMA than have "Silver Crosses" (60%). Same goes for %Stocks with price greater than their 50-EMA which is only 5.8% higher than the SCI at 60%. Still we are at least seeing some improvement in participation, just not enough to erase the negative divergences.
Climax Analysis: We didn't see any climaxes this week. New Highs spent the week contracting despite new all-time highs. The VIX looks strong suggesting internal strength in the very short term. When it punctures the upper Bollinger Band on the inverted scale, that would signal a short-term decline or pullback.
Short-Term Market Indicators: The short-term market trend is UP and the condition is NEUTRAL.
The STOs are contracting against rising price, which has proven to be a pretty good predictor of a short-term pullback.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is SOMEWHAT OVERBOUGHT. The market bias is BULLISH.
It is positive seeing the SCI rising today, but as noted earlier, the bullish bias is thin, especially given the negative divergences.
IT indicators trended higher this week which is bullish for the intermediate term, suggesting the IT rising bottoms trendline should remain intact.
CONCLUSION: Participation continues to lag new all-time highs. Additionally, volume reflected by the OBV is thin given the negative divergence with price in the short term. There is no real momentum in either direction on the SPY suggesting more chop. Rotation among the sectors isn't completely clear as each sector has industry groups that are outperforming the market in a big way. This could explain the lack of participation in the market as a whole. There is a barely detectable bullish bias in both the short and intermediate terms. We rely heavily on the Swenlin Trading Oscillators. While they turned up today, they are in a declining trend. This leads us to believe we should see more sideways chop with a possible pullback nearing.
Erin is 60% exposed to the market.
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Bitcoin has broken above stout resistance at the January top around $42500. The chart is bullish with the positive and not overbought RSI and the rising PMO. We expect the rally to continue, but it will not be easy for price to get through the $47,500 area of resistance at the April low.
Interest rates broke their declining tops trendline today. Rising yields will put pressure on Bonds.
10-YEAR T-BOND YIELD
This week's successful retest of the mid-July low was the first bullish sign since the breakdown at the beginning of July. The double bottom was followed by a break above the steepest declining tops line today, but overhead resistance is dead ahead at the double bottom confirmation line. The daily PMO upside crossover implies a bullish outlook.
IT Trend Model: BUY as of 6/22/2021
LT Trend Model: SELL as of 7/10/2020
UUP Daily Chart: The Dollar rebounded strongly off support at the 50-EMA. It cut right through the 20-EMA today on its gap up.
The chart is looking more bullish with a positive RSI and now rising PMO. We could have a bullish cup and handle which would suggest a breakout above the July top and beyond.
UUP Weekly Chart: The weekly chart is favorable with a positive RSI and rising PMO. Additionally we have rising bottoms on the PMO that align with flat price bottoms. That can be considered a positive divergence.
IT Trend Model: NEUTRAL as of 6/24/2021
LT Trend Model: BUYas of 5/21/2021
GOLD Daily Chart: Gold fell out of bed today after making a concerted effort to stay within its neutral trading range.
There is now a distinct possibility that we will get the LT Trend Model SELL signal. While Gold broke through the rising bottoms trendline, it may find support at the June lows. However, given the new PMO SELL signal and deep decline today, it is likely price still needs to test $1750. Discounts are paring back suggesting bearish sentiment is dissipating. Sentiment being contrarian, this is not good for Gold prices.
GOLD Weekly Chart: The weekly chart also doesn't inspire confidence. Last week's breakout was promising, but this week with Gold's demise today, price is back inside the declining trend channel. The long-term rising bottoms trendline is still intact and support is here at the November low. However, the negative weekly RSI and weekly PMO crossover SELL signal tells us to be prepared for a drop toward $1700.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners held so much promise with the gap up above the 20-EMA and an increase in the participation, including a positive crossover on the SCI. With Gold taking it on the chin, GDX found itself caught in crossfire. We are now seeing the July lows being tested. The RSI has moved into negative territory and the PMO is topping below the zero line. Time to reevaluate your positions in these stocks. Some of the Miners are still healthy, but the tsunami effect of Gold could tear them down sooner rather than later.
CRUDE OIL (USO)
IT Trend Model: BUY as of 11/23/2020
LT Trend Model: BUY as of 3/9/2021
USO Daily Chart: Oil struggled this week but managed to hold onto the short-term rising trend. Today's attempt to overcome the 50-EMA was thwarted and the 20-EMA looms as more overhead resistance. The RSI is negative and the PMO continues to decline.
It would appear the PMO is in oversold territory on the chart above, but we see that is not the case on the one-year daily chart. With the breakdown of the longer-term rising bottoms trendline, it seems inevitable that we will see the July low tested once again.
USO/$WTIC Weekly Chart: Good news and bad news on the weekly chart. Good news is an RSI that is no longer overbought and support being held above the 17/43-EMAs. Also $WTIC has landed on strong support. Bad news would be the very negative weekly PMO that is topping in overbought territory. Best case will be sideways consolidation given $WTIC is on support. However, if that support level is lost, we could see prices move as low as $50/barrel.
IT Trend Model: BUY as of 6/10/2021
LT Trend Model: BUY as of 8/9/2021
TLT Daily Chart: Yields broke out and that took TLT back down to its rising bottoms trendline. The RSI moved negative and the PMO triggered a crossover SELL signal this week. It is positive seeing a Golden Cross lining up, but that could disappear very quickly if price cannot hold above the 200-EMA.
We noted earlier that $TNX has a bullish bias given the configuration of the PMO and the double-bottom that is forming. It is likely time to cash in those Bonds given they will see downward pressure as yields begin to recover.
TLT Weekly Chart: The weekly chart is quite so bearish given the positive RSI and rising PMO, but we can see long-term overhead resistance has been hit. Pushing past that will be very difficult given the break of the declining trend in yields.
Technical Analysis is a windsock, not a crystal ball.
-- Carl & Erin Swenlin
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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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Price Momentum Oscillator (PMO)
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