XLRE popped today and as a consequence, we saw an IT Trend Model "Silver Cross" BUY signal. It was triggered when the 20-day EMA crossed above the 50-day EMA. The PMO is in positive territory and rising, the RSI is positive and Stochastics are oscillating above 80. Digging into participation, we see the Silver Cross Index (SCI) has bottomed above the signal line and is increasing its angle of ascent. While the SCI isn't above 70%, the percentage of stocks greater than their 20/50-day EMAs are above 80% which gives us a bullish bias in the short term and a neutral to bullish bias in the intermediate term.
Long term, the sector also looks bullish given the Golden Cross Index (GCI) is above 70% and there are a higher percentage of stocks above their 50/200-day EMAs. Relative strength continues to improve. The chart is favorable enough to consider a return toward all-time highs.
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 is now the only sector in the Leading quadrant with XLK on its heels. More than likely we will see it reach Leading by the end of the week.
XLF is in Improving but it has begun to travel in the bearish southwest direction. XLC is moving in the bullish northeast direction, but still has quite a bit of ground to cover before it reaches Leading.
Interestingly XLRE which triggered a new IT Trend Model Silver Cross BUY signal has just entered the Lagging quadrant. However, it at least is traveling somewhat northward.
XLP is just looking more and more bearish as it moves westward with no northward direction within the most bearish Lagging quadrant.
The other sectors have bearish southwest headings and are in the Weakening quadrant. Although we do note that XLE is moving in a more northward direction with the possibility of avoiding the Lagging quadrant altogether.
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: Overhead resistance was cut through easily with a gap up. However, be aware this could turn into a bearish reverse island. Although with a silver cross almost certain tomorrow we do admit that this looks very bullish. This rally came with pretty good Total Volume.
Indicators are still quite favorable and suggest further upside as the RSI is positive, the PMO is rising above the zero line and Stochastics are staying above 80.
Here is the latest recording:
Topic: DecisionPoint Trading Room
Start Time: Mar 21, 2022 08:58 AM
Meeting Recording Link.
Access Passcode: March@21
S&P 500 New 52-Week Highs/Lows: New Highs expanded on today's rally, but technically we still have a negative divergence given New Highs are still technically in a declining trend.
Climax* Analysis: We got strong climax readings today on all possible indicators. Since they occurred during the continuation of a price advance, we have to call it an upside exhaustion climax.
*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 UP and the condition is OVERBOUGHT.
I find it positive that the STOs rose today, but we currently have negative divergences with price. We also note that %Stocks > 20-day EMA is clearly overbought. %PMO BUY signals is also overbought.
Intermediate-Term Market Indicators: IT indicators are overbought but rising.
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 bias in all three timeframes is neutral to bullish. It is bullish given %Stocks > 20/50/200-day EMAs is higher than both the SCI and GCI. The problem is that both the SCI and GCI are below 70% which is what we consider "bullish".
CONCLUSION: Apparently enthusiasm hasn't lessened. Total Volume popped today. We do have an upside exhaustion climax and several overbought indicators. I also suspect this could turn into a reverse island formation for price on the SPY. However we cannot discount the broad participation that has led price higher. A headline could easily sway this market, but at this point the rally appears fairly solid and somewhat trustworthy. I always like to follow the STOs for my sense of where the market is going to move. They are currently rising. As I said yesterday, enjoy the gains, just be prepared to switch the 'OFF' switch when we see the next downturn.
I'm presently 15% exposed to the market. I'm honestly sad that I couldn't (wouldn't) expand my exposure ahead of this rally, but being on vacation and the volatility of the market keep me on the sidelines.
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Yesterday's comments still apply:
"Bitcoin has broken out above 45,000 and the 200-day EMA. RSI is positive, but a bit overbought. Other than that the PMO and Stochastics suggest prices will move higher."
Carl discussed rates inversions are appearing. It's an unusual situation and to me, suggests there are problems under the surface. Rates overall pulled back today.
The Yield Curve Chart from StockCharts.com gives us a different view of the inversions taking place.
10-YEAR T-BOND YIELD
$TNX lost three basis points today, but are essentially keeping in line with their steep rising trend. Today's pullback helped the RSI leave overbought territory and all other indicators remain bullish.
IT Trend Model: BUY as of 6/22/2021
LT Trend Model: BUY as of 8/19/2021
UUP Daily Chart: Why did I say that the Dollar was helping the exchange rate? The Dollar dropped back below the 20-day EMA. The PMO is now on a SELL signal and Stochastics are topping before reaching above 80. I exchange my Euros in two days so hoping it will hold up a few days longer, but it doesn't look good.
IT Trend Model: BUY as of 12/29/2021
LT Trend Model: BUY as of 1/12/2022
GLD Daily Chart: Gold formed a reverse flag formation and now price has dropped below the pattern despite a positive close today. All indicators are negative so while it is holding above the 50-day EMA and a support zone between $175 and $177, it is looking as if the foundation may be cracking.
GOLD Daily Chart: I am looking for price to maintain above $1875 and consolidate sideways.
GOLD MINERS Golden and Silver Cross Indexes: Miners dipped but finished higher on the day. The PMO has triggered a crossover SELL signal. Short-term participation has eroded based on the %Stocks > 20-day EMA. The RSI is positive and technically so are Stochastics. Intermediate-term and long-term participation is still very favorable, but short term I expect more deterioration in price.
CRUDE OIL (USO)
IT Trend Model: BUY as of 1/3/2022
LT Trend Model: BUY as of 3/9/2021
USO Daily Chart: Yesterday's comments still apply:
"An Adam and Eve double-top is developing and the rising trend is beginning to deteriorate. Look for a test of support at $59.50 and the 50-day EMA."
IT Trend Model: NEUTRALas of 1/5/2022
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: Yesterday's comments still apply:
"With yields rising quickly, Bonds are feeling the pain. We do have a bullish falling wedge, but the RSI remains negative, the PMO is trending lower and Stochastics are very negative. Under "normal" circumstances we would look for a nice rally here. However, we know that we are in a rising rate environment. I still expect an upside breakout, but it won't likely take hold."
Good Luck & Good Trading! I'll post pictures when I have a decent internet connection which means it might take until I get home...sadly in just TWO days :-(
Technical Analysis is a windsock, not a crystal ball. --Carl Swenlin
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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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