As predicted, the NDX saw an IT Trend Model "Silver Cross" BUY signal. These occur when the 20-EMA crosses above the 50-EMA. We did see some bifurcation today as the NDX was down on the day while the SPX made a new all-time closing high. The RSI and PMO are bullish, but Stochastics could be a warning that the NDX may drop back to support at 15250 given %K turned down today.
Materials (XLB) also had an IT Trend Model "Silver Cross" BUY signal. The chart still looks strong with a newly positive PMO on a BUY signal and a positive RSI. The Silver Cross Index (SCI) is rising and given strong participation of stocks > 20/50-EMAs, that will only continue to improve.
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, XLI and XLB are in the Leading category. XLY looks the strongest of the three given its northeast heading. XLK and XLRE should hit the Leading quadrant soon. XLV is making quite a turnaround, although it remains in the Lagging category.
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 10/18/2021
LT Trend Model: BUY as of 6/8/2020
SPY Daily Chart: The SPY set a new closing all-time high today and is now pushing up against resistance at the all-time intraday high from early September. The indicators remain positive.
Total Volume expanded slightly but remains below the annual average. Like the NDX, Stochastics are topping. It isn't the end of the world as we can see that when the market is rallying, Stochastics can oscillate above 80 for some time.
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 is rising. With more than 50% of stocks having Silver Crosses, the bias is moving more bullish. The SCI is still mostly oversold and has plenty of room to move higher. The GCI is holding steady for now.
Participation continues to expand. The readings have reached near-term overbought territory. Certainly we've seen higher readings this year so there is still room to grow.
Climax Analysis: It was not a climax day, but it was very close given Volume Ratios nearly passed the 3.0 threshold. Net A-D was also elevated. The VIX continues to rise on our inverted scale, pushing the upper Bollinger Band higher and protecting it from puncturing it. Still, these are the lowest readings on the VIX since the summer. Had today been a climax, it would most certainly have been an exhaustion.
Short-Term Market Indicators: The short-term market trend is UP and the condition is EXTREMELY OVERBOUGHT.
The STOs are now in extremely overbought territory. These are the highest readings we've seen in 2021. They are still rising, but the SPY has hit overhead resistance, so these could suggest we have a buying exhaustion nearing.
Intermediate-Term Market Indicators: The intermediate-term rising market trend is UP and the condition is NEUTRAL.
Yesterday's comments still apply:
"These indicators are rising and as far as the ITBM/ITVM, they aren't at all overbought. %PMO Crossover BUY signals is very healthy, but it is getting overbought. We've seen higher readings and I expect they will move higher still."
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 SCI is now reading neutral at 50%, but it is rising and given the high participation percentages, it will continue to which gives us an intermediate-term bullish bias. Looking at the GCI and Stocks > 200-EMAs, the readings are bullish, but the bias is neutral given there isn't supporting participation to move the GCI much higher.
CONCLUSION: The rally continues to bring more sectors into the fold of "Silver Cross" BUY signals and momentum is strongly positive throughout the sectors. Given price has reached resistance at all-time highs and our short-term indicators are very overbought, it seems reasonable to assume price will begin to consolidate. That would relieve overbought conditions. The bias is still very bullish so I'm not expecting a devastating decline, more of a pause in the action.
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Bitcoin set new all-time highs as it proceeds along the very steep rising bottoms trendline. Vertical rallies are difficult to sustain, but Bitcoin likes to break the rules. The RSI is very overbought, but is still rising along with the PMO. Stochastics are oscillating above 80 which speaks to internal strength. With the release of new ETFs that follow Bitcoin, I suspect we will see it move even higher.
Support has been found on long-term rates as they begin to inch higher again. Short-term rates continue to trend higher.
10-YEAR T-BOND YIELD
The 10-year yield has hit the top of its short-term rising trend channel. It could be time for it to back down. However, the indicators are all very positive, so a continued move higher isn't out of the question.
IT Trend Model: BUY as of 6/22/2021
LT Trend Model: BUY as of 8/19/2021
UUP Daily Chart: The Dollar is now testing the 50-EMA. Given the falling and negative RSI and PMO SELL signal, I would look for UUP to test the bottom of the bearish rising wedge.
IT Trend Model: NEUTRAL as of 6/24/2021
LT Trend Model: SELL as of 8/9/2021
GLD Daily Chart: The Dollar is looking bearish and Gold is holding onto its short-term rising trend. We now have a positive RSI and the PMO is rising slightly. Stochastics have turned back up above net neutral (50) which is very bullish.
(Full disclosure: I own GLD as a long-term buy and hold position.)
GOLD Daily Chart: Sentiment is still quite bearish, but we've seen even deeper discounts. At this point, Gold is traveling within a rising trend channel. $1750 still looks like a strong area of support even if this short-term rising trend is broken.
GOLD MINERS Golden and Silver Cross Indexes: Yesterday's comments still apply:
"I spy a bull flag on the Gold Miners chart. Price is testing resistance, but if this is in fact as bull flag, we should see the breakout. The upside target would suggest a move that would at least test the $36 level. The PMO is almost above zero and the SCI is pointing straight up as more stocks have 20-EMAs above 50-EMAs. Participation is strong and suggests the SCI will move even higher. Also I note that the SCI reading is the highest we've seen June."
CRUDE OIL (USO)
IT Trend Model: BUY as of 9/7/2021
LT Trend Model: BUY as of 3/9/2021
USO Daily Chart: Yesterday's comments still apply:
"Price continues to push higher within a bearish rising wedge. The RSI and Stochastics are overbought, but have been so for weeks.
The PMO appears highly overbought on the chart above, but the one-year charts shows us that it can rise much further. We expect Crude Oil to continue to move higher, but acceleration will probably decrease."
IT Trend Model: BUY as of 6/10/2021
LT Trend Model: BUY as of 8/10/2021
TLT Daily Chart: TLT lost support and is likely headed to test support at $140. The indicators are very bearish. In fact, tomorrow we will likely see a "Death Cross" SELL signal as the 50-EMA is only one one-hundredth of a point away from the 200-EMA. The only thing that could prevent it would be a rally above the 200-EMA which is highly unlikely.
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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