We cover Gold every market day in the DP Alert. However, recently we looked at Silver (SLV). We think Gold prices will continue moving higher, but overhead resistance is near at the all-time highs ($2100). Meanwhile, Silver has only just begun to rally.
Below is the weekly chart for SLV. There is a beautiful double-bottom pattern that was confirmed with this week's breakout above the confirmation line. The weekly RSI is positive and not overbought. The weekly PMO had a recent upside crossover and has now entered positive territory. If it can reach the upside target of the double-bottom pattern that would be an almost 18% gain.
However, looking at the monthly chart we see there is even more upside potential. The monthly RSI is positive and rising and the monthly PMO is about to bottom. If we see a breakout above $27.50, the next level of resistance doesn't arrive until $35. That would be an over 43% gain should it reach that level. We are not saying that is where Silver will go, merely that it has plenty of upside potential before reaching significant resistance.
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 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:
Short-term (Daily) Relative Rotation Graph (RRG):
XLC and XLK are the most bearish as both have bearish southwest headings with XLC losing its status in Improving and XLK traveling further into Lagging. XLF and XLY are seeing some improvement in heading as they are moving northward not southward. The problem is they are still traveling westward.
XLP has reached Weakening. It's an interesting phenomena to see this defensive sector struggling while the others (XLV, XLRE and XLU) are in Leading. This is a hit and miss sector so be careful.
The remainder are bullish as they sit in Leading. We are seeing some deterioration in the heading of XLRE and XLV, but nothing to be concerned about right now. XLB is returning from its brief foray into Weakening.
Intermediate-Term (Weekly) RRG:
Three sectors look the most bearish: XLK, XLY and XLC. XLK and XLY are in Lagging with a southwest heading. XLC is in Improving, however, it has reversed and is actually heading back toward Lagging (hard to see unless you magnify it).
XLRE is losing ground in the intermediate term. It is headed to Lagging out of Weakening.
The remainder are very bullish. XLP is starting hook toward Weakening, but it is firmly in Leading for now. XLE, XLU, XLI, XLV and XLB are all in Leading with bullish northeast headings.
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 charts.
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: We have annotated a symmetrical triangle pattern developing. These are typically continuation patterns, meaning they tend to break out in the direction of the prior trend. Given the prior trend is down, a breakdown is more likely to happen than a breakout.
The PMO has topped below its signal line and the RSI continues to hover in negative territory, meaning price has been staying in the bottom half of its two week price range. The VIX is oscillating below its moving average on the inverted scale and that implies internal weakness. Stochastics did turn back up, but they are still below net neutral (50).
Last Monday's (3/7) Free Trading Room recording:
Topic: DecisionPoint Trading Room
Start Time: Mar 7, 2022 09:00 AM PT
Meeting Recording Link.
Access Passcode: March@7th
SPY Weekly Chart: There is a bullish falling wedge on the weekly chart, but the indicators and price action don't suggest a breakout ahead. It is encouraging to see this bullish pattern. When the bear market finishes and/or indicators start getting bullish, this sets price up for a breakout rally.
New 52-Week Highs/Lows: New Lows and New Highs contracted overall this week. The 10-DMA of the High-Low Differential has already topped. Price typically shows strength when that indicator rises.
Climax Analysis: Today we had a downside climax, which comes behind the upside climax on Wednesday. We will call it a downside initiation climax, but SPX Total Volume didn't confirm, and there has really been too much chop to give this climax much weight. Nevertheless, the weight must be given to the bear side.
*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 Neutral.
Falling STOs are confirming the decline. %Stocks > 20-day EMA continues to weaken overall. %PMOs Rising is seeing similar damage. About two-thirds of the SPX have PMOs that are pointed down.
Intermediate-Term Market Indicators: The intermediate-term market trend is DOWN and the condition is OVERSOLD.
These indicators have been sitting in oversold territory for months, but as we expect in a bear market, those oversold conditions are not providing any kind of foundation for higher prices.
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 following table summarizes participation for the major market indexes and sectors.
We have added 1-Week Change columns for each Index so that there is a dynamic aspect to the presentation.
The long-term bias is bearish given the GCI is reading less than 70% and it continues to move lower. Pretty soon we will have only half of the index on "Golden Crosses" (50-EMA > 200-EMA).
The intermediate-term bias is also bearish. The SCI is reading below 30% and is falling.
The short-term bias is bearish. %Stocks > 20/50-day EMAs are the same or less than the SCI. The %Stocks > 20/50-day EMA lines are also trending lower.
CONCLUSION: Indicators and participation are weak and falling. The market had an opportunity to rally mid-week after growth stocks pushed the indexes higher generating an upside initiation climax. However, it failed quickly, demonstrating the power of a bear market. Today's downside initiation climax sets the stage for the market to open lower next week. We agree with most that we haven't seen investor capitulation yet. There are still traders holding losing positions, banking on "hope" not reality. This leaves the market vulnerable to even more decline when they finally throw in the towel. Best advice we have is to set hard/trailing stops and/or keep your hand on the wheel with ALL your investments.
Calendar: Next week: (1) There is an FOMC meeting with the announcement to be made on Wednesday; (2) End-of-quarter options expiration -- expect low volatility toward the end of the week and very high volume on Friday.
*** Working VACATION March 23rd to April 1st ***
Erin will be taking a trip to the Netherlands and Belgium to see the tulips! As always, she will post pictures and give you a brief diary of her adventures at the end of the reports for those interested. Here is how publishing will be affected...
DP Alert - The DPA will be published each market day as usual, but comments will be abbreviated. You will get the latest charts with up to date annotations, but if there are no significant changes, comments will be carried over.
DP Diamonds - Week of March 21st: Five picks on 3/21 and five picks on 3/22 - No Diamond Mine or Recap // Week of March 28th: No Diamonds Reports or Diamond Mine trading room. (Diamonds subscribers will be compensated with a week added to the end of subscriptions).
Have you subscribed the DecisionPoint Diamonds yet? DP does the work for you by providing handpicked stocks/ETFs from exclusive DP scans! Add it with a discount! Contact firstname.lastname@example.org for more information!
Bitcoin is holding a short-term rising trend. Indicators have been fickle. More than likely we will continue to see Bitcoin oscillate within the trading range between $32500 and $45000.
Long-term rates paused today but spent the week pushing back up to February highs. The rest of the yields rose all week long.
10-YEAR T-BOND YIELD
After testing strong support at 17.0, $TNX took off and is ready to test February highs at 20.5. Given the nearing PMO crossover BUY signal, positive RSI and Stochastics above 80, we should expect that level to be met and surpassed.
MORTGAGE INTEREST RATES (30-Yr)**
**We watch the 30-Year Fixed Mortgage Interest Rate, because, for the most part, people buy homes based upon the maximum monthly payment they can afford. As rates rise, a fixed monthly payment will carry a smaller mortgage amount. (See table.) As buying power shrinks, real estate prices will fall, and sellers will increasingly find that they are upside down with their mortgage.
The 30-year Mortgage Rate pulled back to the original breakout point at 3.8%. It held that level and is bouncing. Expect rates to reach above 4% soon.
IT Trend Model: BUY as of 6/22/2021
LT Trend Model: BUY as of 8/19/2021
UUP Daily Chart: The Dollar finished the week higher after bouncing around. Support was held at $26.20 on the throwback. Indicators are very bullish so we expect the Dollar to breakout.
UUP Weekly Chart: The weekly chart so a weekly PMO that is accelerating upward and a positive weekly RSI. Significant resistance doesn't arrive until about $27.50.
IT Trend Model: BUY as of 12/29/2021
LT Trend Model: BUY as of 1/12/2022
GOLD Daily Chart: The Gold rally was going parabolic so a cooling off period was warranted. The pullback moved the RSI out of overbought territory. The PMO did flatten, but it is still rising.
Discounts are decreasing which tells us that investors are getting more bullish on Gold.
GOLD Weekly Chart: We can see that Gold came very close to hitting all-time highs this week. The weekly RSI is positive and the weekly PMO is accelerating higher. Look for Gold to make another attempt at all-time highs.
GOLD MINERS Golden and Silver Cross Indexes: GDX hit overhead resistance this week and then pulled back. The rising trend hasn't been damaged and neither has participation. We believe Gold Miners and Miners in general will continue to enjoy their bull markets.
CRUDE OIL (USO)
IT Trend Model: BUY as of 1/3/2022
LT Trend Model: BUY as of 3/9/2021
USO Daily Chart: Crude Oil pulled back this week toward the 20-day EMA. Today's 3%+ rally kept the PMO from a crossover SELL signal. The decline pulled the RSI out of overbought territory. The conditions seem ripe for another rally.
USO/$WTIC Weekly Chart: The weekly RSI is overbought but with a rally in Energy this strong, expect overbought RSIs everywhere. The weekly PMO is rising. It is overbought, but we can see that on the downside the weekly PMO has seen readings in the 20's. A long-term rally in Crude Oil could easily move the weekly PMO even higher.
IT Trend Model: NEUTRAL as of 1/5/2022
LT Trend Model: SELLas of 1/19/2022
TLT Daily Chart: With yields rising this week, TLT fell quickly. This is another failure to breakout at resistance. Yesterday prices closed at multi-month lows. The PMO is about to trigger a crossover SELL signal well-below the zero line which is especially bearish. The RSI is negative and not oversold. A rally would set up a possible double-bottom, but overall we expect rates to continue higher (it'll be interesting to hear what the FOMC has to say next week).
It may have lost support at the February low, but we can see this is a sturdy support line as it aligns with May 2021 lows.
TLT Weekly Chart: The weekly chart shows another level of support available at $130 should price continue lower. The weekly RSI is negative and falling. The weekly PMO is below the zero line on a crossover SELL signal. The long-term picture holds some promise given strong support at $130 (2021 low/late 2019 lows), but the indicators suggest TLT is vulnerable to a breakdown there.
Good Luck & Good Trading,
Carl & Erin Swenlin
Technical Analysis is a windsock, not a crystal ball. --Carl Swenlin
(c) Copyright 2022 DecisionPoint.com
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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