We had two important signal changes today. First was an IT Trend Model "Neutral" Signal on the Dow. This occurred when the 20-day EMA dropped below the 50-day EMA above the 200-day EMA. Had this occurred below the 200-day EMA, it would've been a SELL signal. The Dow had already lost its PMO BUY signal last week. This is adding insult to injury. The next level of strong support lies at the March low.
The second signal was a PMO SELL signal on Real Estate (XLRE). The PMO is in overbought territory. Additionally, the Silver Cross Index crossed below its signal line. Notice that participation is deteriorating as the percentage of stocks > 20/50/200-day EMAs are organized from lowest percentage to highest percentage. Stochastics have dropped quickly and continue lower. Price is sitting on support at $48, but given the weak participation that is getting weaker, we expect that level will not hold.
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 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: XLI and XLY have now entered the Leading quadrant. I do need to remind you that this is based on "relative performance" against the SPY. None of the sectors currently have rising momentum. I am not a fan of XLY right now and XLI is shaky at best.
XLK is moving northward toward Improving, but I don't see any real opportunities available in this sector. It is still in the lagging quadrant. XLC is the most negative on the chart with its bearish southwest heading within the Lagging quadrant.
XLF had been traveling in concert with XLI, but it has hooked back toward the Lagging quadrant with a bearish southwest heading.
XLV has now left the Leading quadrant with a bearish southwest heading. It is moving further into the Weakening quadrant.
All others reside in the Leading quadrant. XLRE (which just had a PMO crossover SELL signal today) is the most "bullish" as it is maintaining an east to northeast heading, moving it further into the Leading quadrant. XLE, XLP, XLU and XLB are all looking weak as they all are working their way toward the Weakening quadrant.
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: From a bullish upside reversal yesterday, to a killer selloff today. This is a bear market. Price is now reaching a support zone between $410 and $415. I wouldn't count on this given price dropped below the prior declining trend channel and has set up a very steep declining trend from last week's top.
The PMO has dropped below the zero line and hasn't reached oversold territory yet. Stochastics are beginning to oscillate below 20 suggesting strong internal weakness. The VIX had another puncture of the lower Bollinger Band on our inverted scale...again. We've yet to see the typical result of a market bottom being set.
Here is the latest recording:
Topic: DecisionPoint Trading Room
Start Time: Apr 25, 2022 09:00 AM
Meeting Recording Link.
Access Passcode: April@25
S&P 500 New 52-Week Highs/Lows: We got an unexpected contraction in New Lows today. This is a bullish sign, for sure, but it also a lonely, little petunia in an onion patch.
Climax* Analysis: We got very strong climax readings today, which we assume is a downside exhaustion climax. However, we know how the last upside initiation climax didn't see higher 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 indicate either initiation or exhaustion.
Short-Term Market Indicators: The short-term market trend is DOWN and the condition is OVERSOLD.
Indicators are now oversold. We do note that the STOs could accommodate more downside. We saw lower readings in January. Just know that it is not out of the question that we see 0% of stocks with price above their 20-day EMA or with PMOs rising.
Intermediate-Term Market Indicators: The intermediate-term market trend is DOWN and the condition is NEUTRAL.
The IT indicators are very bearish and they aren't at all oversold yet. The ITBM/ITVM have finally reached negative territory, but barely. %PMO Crossover BUY signals continue to drop quickly lower, but that indicator is not at all 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 bias is clearly bearish and getting worse as participation continues to deteriorate quickly.
CONCLUSION: We may have seen a downside exhaustion climax and the VIX rise to oversold levels today, but conditions are still not ripe for a reversal given our other indicators are declining and are only somewhat oversold or not oversold at all. If we are very lucky, the downside exhaustion climax will result in a pause in the decline. Remember that none of the sectors have rising momentum. Zero. Don't absorb these losses in hopes that your stocks will reverse. You're better served pulling out and coming back in when conditions are more favorable. That's what I'm expecting to do on most of my current positions. So far they are holding up, but my stop levels will not allow for more than a 2% decline.
I am 20% exposed to the market with very tight stops.
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Yesterday's comments still apply:
"We've been watching a bullish cup with handle chart pattern. It's now getting "long in the tooth" (too old) and we have a failed breakout from last week. The indicators are more neutral than bullish or bearish. The PMO is flat, RSI is negative and Stochastics are oscillating in negative territory below net neutral (50)."
We note that longer-term yields have started trending downward.
The Yield Curve Chart from StockCharts.com shows us the inversions taking place. The red line should move higher from left to right. Inversions are occurring where it moves downward.
10-YEAR T-BOND YIELD
$TNX confirmed the bearish rising wedge today with a breakdown. Support is very near, but seeing that overbought PMO SELL signal today makes me think 25 will be the more likely stopping point on this decline.
IT Trend Model: BUY as of 6/22/2021
LT Trend Model: BUY as of 8/19/2021
UUP Daily Chart: Yesterday's comments still apply:
"The Dollar continues to rally. This has brought the RSI into overbought territory, but on the flip side the PMO is accelerating higher and Stochastics are oscillating strongly above the 80 level. My concern is that when price hits the top of a rising trend channel, it is usually due for a pullback." Particularly, when price breaks out of the top of the channel.
"However, the one-year chart demonstrates that is not always the case. UUP broke above the intermediate-term rising trend channel and has steepened the rising trend. Positive situation, just need to keep an eye on these overbought conditions."
IT Trend Model: BUY as of 12/29/2021
LT Trend Model: BUY as of 1/12/2022
GLD Daily Chart: Gold rebounded today, but finished the day in the lower portion of its trading range today which created a bearish filled black candlestick. Indicators are still very negative.
GOLD Daily Chart: Discounts were much higher today. This means that investors are getting more bearish on Gold. Unfortunately these readings aren't bearish enough to imply a continuation of today's small rally.
GOLD MINERS Golden and Silver Cross Indexes: Yesterday's comments still apply with a few added changes:
With Gold in free fall, GDX had to contend with a broad market crash as well as a crash in the price of Gold. It's hit this industry group hard. I warned on Thursday that getting out of your miners would be a good idea. Currently 0% (NONE) of the group members have price above their 20/50-day EMAs. Nearly half of the gains from the rally out off the late January low have been erased. Only 40% have price above their 200-day EMAs. Indicators are very bearish. It's not the time to seek a reversal even though the 200-day EMA is nearing as support.
CRUDE OIL (USO)
IT Trend Model: BUY as of 1/3/2022
LT Trend Model: BUY as of 3/9/2021
USO Daily Chart: Price recaptured the rising bottoms trendline and the RSI moved back above net neutral (50). Unfortunately, the PMO and Stochastics have not reversed. More than likely we are in for more trading range price movement.
IT Trend Model: NEUTRALas of 1/5/2022
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: TLT is moving higher as rates have begun to fall. The RSI is still negative, albeit rising. The PMO just began to turn up today, but not convincingly so. Stochastics are rising, but not with much conviction.
Good Luck & Good Trading!
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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