Okay, so hacking isn't really "new", but it is starting to catch more attention in the war in Ukraine. The Ukrainians actually have a volunteer "IT Army" and the hacking group "Anonymous" have declared war on Russia. Here are two interesting articles on this:
- Ukraine's Volunteer ‘IT Army' Is Hacking in Uncharted Territory
- Shadowy hackers group Anonymous declares cyberwar on Russia for Ukraine invasion
Given this, I presented the Cybersecurity ETF (HACK) which appeared in one of my scans to DP Diamonds subscribers. I thought I'd give you a taste of what I do in the Diamonds reports and reprint it in case you aren't a "Bundle" subscriber. You'll note that I include earnings dates (if applicable), a synopsis of what they do (or in the case of an ETF, their top ten holdings), any StockCharts.com Predefined Scans that triggered, what it is doing in after hours trading, whether I've covered it before and a write up on both the daily and weekly charts. Remember, all stock picks are considered "Diamonds in the Rough"...they may end up shining up or maybe not. If you'd like to add DP Diamonds to your subscription, just let me know.
PureFunds ISE Cyber Security ETF (HACK)
HACK tracks a tiered, equal-weighted index that targets companies actively involved in providing cybersecurity technology and services.
Predefined Scans Triggered: Filled Black Candles, Moved Above Upper Price Channel, P&F Double Top Breakout and P&F Bearish Signal Reversal.
HACK is up +1.11% in after hours trading. I would say nearly all of the Top Ten holdings for this fund look bullish; this ETF is a way to spread your exposure. The chart is very favorable with a giant double-bottom pattern that was "kind of" confirmed with the breakout above the confirmation line. I say "kind of" because price closed on the line forming a bearish filled black candlestick. I still like it. There is a mild OBV positive divergence given OBV bottoms are flat and price bottoms are declining. The RSI is positive and the PMO is on a whipsaw BUY signal. Volume is going through the roof and I expect that to continue with wartime hacking going on. Stochastics are above 80 and still rising. Relative strength for the fund is picking up big time. The stop is still manageable at 7.7%. It is aligned with the early February price low.
You can see the double-bottom on the daily chart on the weekly chart. Notice that it is bottoming right on strong multi-year support. The weekly RSI is rising and should hit positive territory shortly. The weekly PMO is about to bottom in oversold territory. Upside potential will likely be much higher than 17.7%. I expect all-time highs to be set soon.
(Full Disclosure: I must notify you if I plan on purchasing a stock/ETF within the next 72 hours. It's on my radar for my portfolio.)
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
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: What a difference a day makes, at least for XLK. It is now hooking around back toward Improving, but remember it is still Lagging. XLB and XLP are headed toward Weakening. XLF continues to fail and should it Lagging soon. XLE is making a comeback and could reach Leading in another week. XLV is a bit of a surprise. It is now back in Leading.
XLY is about to enter Lagging, it is probably the most bearish sector on the RRG.
All other sectors are in Improving with bullish northeast headings. XLI and XLU should reach Leading tomorrow.
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: NEUTRAL as of 1/21/2022
LT Trend Model: BUY as of 6/8/2020
SPY Daily Chart: The war may be weighing heavy on the market, but it was already weak. After two upside initiation climaxes, price only managed to move sideways and now today, we have a new climax which I'll discuss further down.
Price has failed to overcome resistance at the 200-day EMA. The 20-day EMA wasn't even tested. The RSI has been oscillating in negative territory below 50. The PMO was trying to make a comeback, but it has now topped beneath its signal line which is especially bearish. Stochastics are beginning to top already.
Recording Link for 2/28 Trading Room:
Topic: DecisionPoint Trading Room
Start Time: Feb 28, 2022 08:54 AM
Meeting Recording Link.
Access Passcode: Feb#28th
S&P 500 New 52-Week Highs/Lows: New Highs expanded despite the lower close, but we also saw more New Lows today. The 10-DMA of the High-Low Differential has now turned up which is a good sign, but all told, it isn't that spectacular.
Climax* Analysis: There were climactic indications across the board today (although the Down/Up Volume Ratio for the NYSE was just below the climactic threshold). This gives us a downside initiation climax. The VIX continues to tap the bottom Bollinger Band on our inverted scale and generally that will lead to an upside reversal... so far nothing.
*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.
STOs continue to contract which is generally bullish, but participation is continuing lower and fewer stocks have rising momentum.
Intermediate-Term Market Indicators: The intermediate-term market trend is DOWN and the condition is OVERSOLD.
IT indicators reversed today. They remain oversold, but as we have often noted, if this is the bear market we think it is, the indicators are not that oversold.
PARTICIPATION and BIAS Assessment: 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 long-term bias is bearish given the GCI is below 70% and still falling. %Stocks > 200-day EMA is less than 50% now which will likely keep the GCI in decline.
The intermediate-term bias is bearish. The SCI is at a very low 38% and it has topped beneath its signal line.
The short-term bias is bearish given %Stocks > 20/50-EMAs are lower than the SCI.
CONCLUSION: Bear market rules are clearly in play. We had oversold indicators that were rising and two upside initiation climaxes, but the foundation was too thin to provide the necessary support for a rally. Now we have a downside initiation climax. Given the market climate, this one will likely play out as expected with more downside ahead. There are pockets of strength, but so far they haven't held the market up. Be especially cautious. With a bear market rally failure, we should expect the next move down to be rough.
I remain comfortably exposed to the market at 8%, but will likely add a small position in the Cybersecurity industry group.
I was asked about where you can read about "Bear Market Rules". Here is a link to my most recent article on the subject.
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Bitcoin continues to rally strongly. Price has now overcome three areas of resistance, the 20-day EMA, the 50-day EMA and $42,000. The next resistance level is at the 200-day EMA and $45,000. It so far hasn't pushed through, but with very bullish indicators, including a new PMO crossover BUY signal today, look for Bitcoin to move higher.
Interest rates continued to tumble today as the flight to Bonds continues.
10-YEAR T-BOND YIELD
It was a spectacular seven basis point drop on $TNX today. This had the yield gapping down below the 50-day EMA. It is now seated on support at the October/November highs, but given the very bearish indicators, we don't expect it to remain there.
IT Trend Model: BUY as of 6/22/2021
LT Trend Model: BUY as of 8/19/2021
UUP Daily Chart: UUP is now testing the top of the bearish rising wedge. With the PMO rising on an oversold crossover BUY signal, the RSI positive and not overbought, and Stochastics rising again, we could see a bullish conclusion to this bearish pattern.
IT Trend Model: BUY as of 12/29/2021
LT Trend Model: BUY as of 1/12/2022
GLD Daily Chart: Gold righted the ship and is holding its rising trend after pulling back to the breakout point at $175. The indicators are strongly bullish. The RSI is now overbought, but GLD is in a solid rising trend so it could stay overbought for some time.
(Full Disclosure: I own GLD)
GOLD Daily Chart: Overall, traders are getting less bearish on Gold (about time!) based on the declining trend on discounts for PHYS. We expect Gold to continue higher.
GOLD MINERS Golden and Silver Cross Indexes: With the big rally in Gold, Gold Miners resumed their move upward. I was bothered by the decline in %Stocks > 20-EMA, but that has reversed. Look for Miners to continue higher.
CRUDE OIL (USO)
IT Trend Model: BUY as of 1/3/2022
LT Trend Model: BUY as of 3/9/2021
USO Daily Chart: USO rocketed higher today. That pushed it through the top of the current rising trend channel. The RSI is overbought, but what's new. The PMO is overbought, but it just had a crossover BUY signal. Stochastics are headed back up. This was a HUGE rally today and there is a high likelihood that we will see a pullback soon.
IT Trend Model: NEUTRALas of 1/5/2022
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: Bonds are rallying strongly and today closed not only above resistance at the January lows, but also the 50-day EMA. The next level of resistance could be strong at the 200-day EMA and $144, but with the flight to Bonds continuing, we could see more upside than originally thought. I noted about 25 Bond funds when I ran my Diamond scans today.
Good Luck & Good Trading!
Technical Analysis is a windsock, not a crystal ball. --Carl 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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