The weekly chart for USO has a new weekly PMO crossover BUY signal. It's an overbought BUY signal. The weekly RSI is also on the overbought side. However, seeing the recent breakout on $WTIC, we would expect to see Crude Oil prices move even higher. At this point, supply has not been increased and our strategic reserves aren't going to be tapped at this point in time to alleviate price at the pump. Demand has not changed and it will only get higher as it increases during the winter months.
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: [[comments]]
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: NEUTRAL as of 10/4/2021
LT Trend Model: BUY as of 6/8/2020
SPY Daily Chart: It wasn't a complete surprise to see price move slightly lower today. Technically we have a bearish engulfing candlestick which would suggest lower prices. However, price closed above the 20-EMA so we may see a 'drift' out of the bullish falling wedge rather than a test of the bottom of the wedge. The PMO is still rising, but the RSI is negative.
We do need to be cautious as this could turn out to be a reverse island formation. That would mean an upcoming gap down.
SPY Weekly Chart: We continue to monitor the weekly PMO which does appear to be decelerating slightly on this week's positive close.
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 has turned up and the GCI is also beginning to rise again.
The long-term view of participation reminds us that we are seeing these indicators rising out of oversold territory and are not overbought at all.
New Highs contracted. We did see elevated readings on yesterday's near miss upside exhaustion climax. We determined that given low Total Volume that it wasn't an "official" climax.
Climax Analysis: Though it wasn't an "official" climax day yesterday, we deduced that given the high Up/Down Volume Ratio on the NYSE, that we could see a pause in the current short-term rising trend. No climax today. The VIX is rising nicely out of oversold territory and that usually accompanies higher prices in the ultra short term. When it nears or punctures the upper Bollinger Band, we'll look for lower prices.
*A climax is a one-day event when market action generates very high readings in, primarily, breadth and volume indicators. We also include the VIX, watching for it to penetrate outside the Bollinger Band envelope. The vertical dotted lines mark climax days -- red for downside climaxes, and green for upside. Climaxes are either initiation or exhaustion.
Short-Term Market Indicators: The short-term market trend is UP and the condition is SOMEWHAT OVERBOUGHT.
STOs didn't change much from yesterday. They are both in somewhat overbought territory which could be a problem. We saw damage on %PMOs rising, but the reading is still mostly neutral at 53%.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERSOLD.
IT indicators continue to rise out of oversold territory which is positive. We also note and expansion in PMO BUY signals.
Bias Assessment: The short-term bias is somewhat bullish because the percent of stocks above their 20EMA and 50EMA is greater than the Silver Cross Index (SCI), which should pull the SCI higher in the short-term.
With the Silver Cross Index (SCI) in the low 40s, almost the lowest it has been since the 2020 Bear Market, the intermediate-term market bias is bearish.
The Golden Cross Index (GCI) is in the mid-80s, so the long-term bias is still firmly bullish; however, the GCI is in a down trend, and will continue down until the the percentage of stocks above their 200EMA is greater than the GCI.
CONCLUSION: Our climax analysis this week pointed to a short-term bottom. We have seen the rally off that bottom, but price is stalling at the top of the bullish falling wedge. STOs are overbought and the STO-V did decline today leaving us less bullish in the short term. However, the intermediate term does appear healthy given rising indicators. The SCI while in the 40's is beginning to rise. Next week we expect to see churn with the outside possibility of a reverse island gap down. While indicators overall are mostly bullish, the market is now vulnerable in the short term. Stay cautious next week. Erin is 70% exposed to the market and will not be increasing her exposure in the coming week. Sectors to watch next week are Industrials, Materials and Energy.
Calendar: Next week is options expiration, so we should expect low volatility toward the end of the week. Since this is not an end-of-quarter expiration, we typically do not expect a surge in SPX Total Volume.
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On Thursday, Federal Reserve Chairman, Jerome Powell, stated that the U.S. had no intention of banning crypto currencies. The same day there was a spike in volume so large as to make the volume and OBV displays useless, so we have removed them until this is sorted.
Rates are on the rise again so we expect to see more downward pressure on Bond prices.
10-YEAR T-BOND YIELD
After forming a bull flag, $TNX climbed higher. The PMO and RSI are bullish and suggest we will see it move even higher. The next test of resistance is at the April/May tops. We don't think they will have a problem breaking out.
IT Trend Model: BUY as of 6/22/2021
LT Trend Model: BUY as of 8/19/2021
UUP Daily Chart: We now have a short-term bearish double-top on UUP suggesting lower prices and a break back down below support/confirmation line.
The indicators don't look that bad yet. The PMO is attempting to top, but the RSI is still in positive territory. However, we expect the Dollar to break down given the double-top.
UUP Weekly Chart: The weekly chart doesn't look bad. In fact, it looks fairly bullish. The weekly RSI is positive and rising and the weekly PMO is on a BUY signal and has now entered positive territory. Price broke out of a bullish double-bottom and we have a new 17/43-week EMA crossover. Still, the short-term picture isn't bright.
IT Trend Model: NEUTRAL as of 6/24/2021
LT Trend Model: SELL as of 8/9/2021
GOLD Daily Chart: Gold surged early today but petered out to finish higher by only 0.04%. Big black candles like that are generally bearish. Take a look at the one in August. The Dollar still looks soft so we don't believe we will see a decline like we did in August. More likely we will see more sideways movement. We did see a new crossover BUY signal on GLD's PMO.
The PMO for $GOLD is still on a SELL signal, but barely. We saw an expansion in discounts today which could suggest this rally will see a continuation as it means that investors are still bearish on Gold.
GOLD Weekly Chart: The weekly chart is unfavorable given the negative weekly RSI and negative PMO. Additionally there is a bearish descending triangle. Gold may find favor in the short term, but we will want to see if it can break that declining trend on the weekly chart.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners hit the top of the bullish wedge and fell back today. However, we did see a positive close. This chart is firming up with the RSI nearing positive territory and a new PMO crossover BUY signal. Volume is coming in. Short-term participation has made giant strides. One problem for these stocks is their distance from their 50-EMAs. That number won't start improving until GDX has already broken out. We like Miners in the short term.
CRUDE OIL (USO)
IT Trend Model: BUY as of 9/3/2021
LT Trend Model: BUY as of 3/9/2021
USO Daily Chart: We now have an accelerated rising trend channel on USO. As noted in the opening, we will likely see higher prices continue. The RSI is positive and not overbought, and the PMO is still rising nicely, albeit overbought.
USO/$WTIC Weekly Chart: At this point, we are looking for USO to reach $60.
IT Trend Model: NEUTRAL as of 10/1/2021
LT Trend Model: BUYas of 8/6/2021
TLT Daily Chart: TLT is diving lower as interest rates continue to rise. The next level of strong support available is at $140. We expect interest rates to continue rising so we don't expect that support level to hold.
TLT Weekly Chart: The weekly chart looks ominous as the weekly RSI is now diving into negative territory. The weekly PMO is topping and will likely trigger a crossover SELL signal next week if we are correct that rising rates will continue to pressure TLT.
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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