One of our many ChartLists on StockCharts.com (DecisionPoint ChartPacks are available in "Your Account"), one that we get a regular report on is the ETF Tracker. We have handpicked 82 ETFs that represent the major industries, sectors and Bond Funds. This week only eleven finished the week in positive territory.
Look closely. Of those eleven ETFs, seven were Bond funds. That leaves only four industries that finished in the green this week. Palladium, Semiconductors, Utilities and Home Builders. Erin wrote in DecisionPoint Diamonds today that Utilities (XLU) and Home Builders (XHB) looked the best going into next week.
We find it curious that Gold hasn't found favor in this weak market. Many have said that Bitcoin is now the preferred safety vehicle; however, Bitcoin (GBTC) finished lower by -5.59% and Gold only finished -0.13% lower. It's pretty clear that Bonds were the number one choice of investors in their flight to safety.
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.
Watch the latest episode of DecisionPoint on StockCharts TV's YouTube channel here!
MAJOR MARKET INDEXES
For Friday:
For the week:
SECTORS
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 Today: 
For the Week:
RRG® Chart: Short-term, XLU and XLRE look the healthiest. XLK is still in Leading, but its now moving in the bearish southwest heading along with XLY. XLP should hit leading soon and XLV looks alright as well. XLE and XLF returned to the Improving category. The other sectors are in Lagging, but all of them are hooking around.
Intermediate-Term (Weekly) RRG: XLK, XLI and XLB look the most interesting on the intermediate-term RRG as they are traveling in the bullish northeast direction and are either in Leading or Improving. XLC is the laggard and is getting worse. Definitely would avoid this sector. XLU and XLP look interesting--they should enter Improving soon. XLV is attempting to turn it around, but is still traveling west. XLRE is headed toward Improving, but still has some ground to cover to get there.
RRG® charts show you the relative strength and momentum for a group of stocks. Stocks with strong relative strength and momentum appear in the green Leading quadrant. As relative momentum fades, they typically move into the yellow Weakening quadrant. If relative strength then fades, they move into the red Lagging quadrant. Finally, when momentum starts to pick up again, they shift into the blue Improving 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 10/18/2021
LT Trend Model: BUY as of 6/8/2020
SPY Daily Chart: The SPY set a higher high that yesterday, but also set a lower low. Total Volume is still well above the annual average but it is beginning to contract on the selling which is positive. However, price has not broken away from the short-term declining trend. Price also failed to recapture the rising trend that began in October.
Price is now making its way down to the bottom of the long-term rising trend channel. $440 offers some support at the early October high, but the strongest level of support is at $427. That would put price at the September/October low and afford it the opportunity to bounce off the 200-EMA. Stochastics are attempting to turn back up, but the RSI turned down below net neutral (50) and the PMO is still in decline.
SPY Weekly Chart: Price is making its way down to the bottom of a long-term bearish rising wedge. It isn't out of the question that a breakdown will occur given the weekly PMO has topped below its signal line.
PARTICIPATION: The following chart objectively shows the depth and trend of participation in two time frames.
- Intermediate-Term - the Silver Cross Index (SCI) shows the percentage of SPX stocks on IT Trend Model BUY signals (20-EMA > 50-EMA). The opposite of the Silver Cross is a "Dark Cross" -- those stocks are, at the very least, in a correction.
- Long-Term - the Golden Cross Index (GCI) shows the percentage of SPX stocks on LT Trend Model BUY signals (50-EMA > 200-EMA). The opposite of a Golden Cross is the "Death Cross" -- those stocks are in a bear market.
The SCI continues to lose ground, but it has yet to hit even mildly oversold territory. The GCI is continuing lower meaning more SPX stocks are seeing "Death Crosses" of the 50/200-EMAs.
New 52-Week Highs/Lows: New Lows are contracting out of oversold territory. The 10-DMA of the High-Low Differential is starting to turn back up in oversold territory. Many times we see reversals. However, we would direct your attention to September where it turned up and price failed to hold an intermediate-term reversal.
Climax Analysis: As we suspected, yesterday's upside initiation climax hasn't amounted to much. We didn't see follow-through on that climax and we may not. The bearish bias is strong. The VIX continues to puncture the lower Bollinger Band on our inverted scale. Typically we see price move higher after punctures. Instead investors are getting more and more nervous as the VIX continues to see very high readings.
*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 indicate either initiation or exhaustion.
Short-Term Market Indicators: The short-term market trend is DOWN and the condition is OVERSOLD.
A bright spot would be the STOs which are rising out of oversold conditions. Although we would again point you back to September. The STO's spent most of the month in oversold territory. It took a positive divergence on readings before a bottom was eventually found. Participation did improve. %Stocks > 20-EMA and %PMOs Rising hit very oversold territory. However, this improvement hasn't translated into higher prices.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL to OVERSOLD.
This is the problem chart. The ITBM/ITVM are both continuing lower but neither has reached oversold territory on par with September lows. %PMO BUY signals are oversold and have extended past September lows, but we aren't seeing any improvement. We've also seen them go to 0%.
Bias Assessment: As mentioned earlier, %Stocks > 20-EMA improved. %Stocks > 50/200-EMAs did not. The short-term bias remains bearish as %Stocks > 20/50-EMAs are lower than the SCI reading. A declining SCI means an intermediate-term bearish bias. %Stocks > 200-EMA is lower than the GCI reading suggesting a long-term bearish bias. Basically, there is a bearish bias in all three timeframes.
CONCLUSION: Short-term indicators are oversold and Thursday's upside initiation climax suggests we could see some upside to start the week. However, given the very bearish intermediate-term indicators combined with bearish biases in all three timeframes, it's more likely that we will see volatile price action similar to September's. This week only two sectors finished higher, XLU and XLRE. XLRE barely made it, it was up only 0.02%. The cupboard is bare. If we do see some upside, consider it an opportunity to sell into strength.
Erin is currently 10% exposed to the market.
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BITCOIN
Bitcoin has now hit support at the September high. Today there was a "dark cross" of the 20/50-EMAs. While we could see a rebound off this support level, we expect a test of the rising trendline and 200-EMA given the falling PMO and negative RSI. Stochastics are about as negative as they can get.
INTEREST RATES
Longer-term rates slid lower this week taking out November lows easily on the flight into Bonds.
10-YEAR T-BOND YIELD
The 10-year yield dropped below its last line of defense at the August highs. Next up is 12.5. The PMO just dropped below the zero line and the RSI is negative and falling further. Stochastics are oversold but haven't reversed to the upside.
DOLLAR (UUP)
IT Trend Model: BUY as of 6/22/2021
LT Trend Model: BUY as of 8/19/2021
UUP Daily Chart: The Dollar bounced off the bearish rising wedge and 20-EMA. The RSI and Stochastics are positive, but the PMO is nearing an overbought crossover SELL signal.
The PMO is beginning to flatten out somewhat and the rebound off the 20-EMA does look very encouraging.
UUP Weekly Chart: The weekly chart displays a strongly rising weekly PMO and a positive RSI. It isn't surprising that price turned back down at $26. There is strong resistance there given the many "touches" at that price level. With positive indicators, we should eventually see a break above it.
GOLD
IT Trend Model: BUY as of 10/28/2021
LT Trend Model: SELL as of 12/3/2021
GOLD Daily Chart: Today the 50EMA crossed down through the 200EMA resulting in an LT Trend Model (LTTM) "Death Cross" SELL signal. A "dark cross" of the 20/50-EMAs is inevitable unless price can reach back above the 50-EMA.
Looking at the one-year chart, we can see that $GOLD is basically in a trading range that has resulted in five LTTM signal changes in that time period. While the saucer with handle formation looks broken, we still think it may hold the promise of higher prices -- because of gold's sluggish performance, the handle didn't quite go high enough, then it went too far down, penetrating down through the saucer. Disappointing, but not fatal especially given the rising RSI and Stochastics as well as a PMO that is decelerating its decline.
GOLD Weekly Chart: It had appeared we were going to get an upside breakout from the bearish descending triangle on the weekly chart. That failed, but price is clinging to support at $1750. The weekly RSI is negative and the weekly PMO is about to trigger a crossover SELL signal so the bias is bearish overall. The high discount rates the past two weeks tell us that investors are very bearish on Gold. Sentiment being contrarian, we could see a reversal soon.
GOLD MINERS Golden and Silver Cross Indexes: GDX broke support. The PMO has moved below the zero line and the SCI is falling fast. The bias is negative given the lack of participation. GDX could move to test the September lows.
CRUDE OIL (USO)
IT Trend Model: NEUTRAL as of 11/30/2021
LT Trend Model: BUY as of 3/9/2021
USO Daily Chart: USO finished lower but set a much higher low and high. The RSI and Stochastics are oversold, but the PMO isn't making the turn yet.
$46 also lands price on the May tops and near the July lows. This could provide sturdy support, but with slowing demand for Crude given the new Omicron variant, we could see $44 tested.
USO/$WTIC Weekly Chart: The weekly PMO has triggered a crossover SELL signal in overbought territory and price closed below the 43-week EMA. The weekly RSI just hit negative territory. This chart certainly suggests prices will move lower.
BONDS (TLT)
IT Trend Model: BUYas of 11/8/2021
LT Trend Model: BUYas of 11/5/2021
TLT Daily Chart: Bonds continue to soar. As noted in the opening the weak market has prompted many investors to pour into Bonds. The RSI is positive. The PMO is rising and is not overbought. Volume is pouring in. Stochastics have turned over; however, it is a bounded oscillator so it's inevitable. As long as it oscillates sideways near 80, it isn't a problem. What could be a problem is the 20-year yield reaching support at the summer lows.
Price confirmed a bullish ascending triangle (flat top, rising bottoms) with a breakout.
TLT Weekly Chart: The weekly PMO is rising after topping above its signal line, a condition that can be considered especially bullish. The weekly RSI is rising. This resistance line didn't just align with summer tops, it also aligned with the lows in 2020. The breakout is even more significant. If investors are hiding out in Bonds because the market is weak and if our IT indicators are right and this market decline isn't over, Bonds will likely rally further.
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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