I actually amended the lead story when I found out that Netflix was down over -25% in after hours trading. They reported earnings and I guess investors were spooked. I have the 5-minute candlestick chart below. It's pretty ugly. It's hard to say where it will land tomorrow, but expect a giant gap down.
As far as the Dow Industrials:
Don't get too excited here. We may've seen multiple BUY signals trigger (all of them whipsaw) on the Dow Industrials, but if after hours trading on Dow Jones ETF (IYY is down -1.68%) and Industrials sector ETF (XLI is down -0.74%) is correct, these bullish signals will not stick. We could be writing about bearish signal changes tomorrow.
Today, we had a ST Trend Model BUY signal (5-day EMA moved above 20-day EMA), IT Trend Model "Silver Cross" BUY signal (20-day EMA crossed back above 50-day EMA) and a PMO crossover BUY signal.
After hours trading aside, there are some positives working in the Dow's favor. NFLX isn't a member of the Dow so that helps right out of the gate. The RSI is now positive and rising. Today's breakout from the declining trend channel looks good. It is outperforming the SPY and Stochastics are rising out of oversold territory. I like this breakout, but volume wasn't great based on the small tick up by the OBV. I don't believe this will be a lasting breakout, but indicators are favorable.
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: The most bearish sectors are Technology (XLK) and Communication Services (XLC). They are not only in the Lagging quadrant, they both have a bearish southwest heading.
The most bullish sectors are Energy (XLE), Utilities (XLU), Healthcare (XLV) and Materials (XLB) given they are within the Leading quadrant and have bullish northeast headings. Real Estate (XLRE) only needs to start moving a little more northward to have a fully bullish heading.
Financials (XLF) and Industrials (XLI) are now in the Improving quadrant and both have bullish northeast headings. They still have work to do, but the outlook is good.
Consumer Discretionary (XLY) is the only sector in the Weakening quadrant. It is moving toward the Lagging quadrant and therefore has a clear bearish bias.
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: SPY broke above the declining tops line convincingly today, but it still remains inside the trading range set in the prior four trading days. SPX Total Volume was not robust, but it wasn't unduly spare either. The VIX closed beneath its moving average on our inverted scale. As long as it remains beneath that average, internal strength is weak.
The RSI has now recaptured positive territory above net neutral (50), but barely. Price did close above the 20-day EMA, but the IT Trend Model "Dark Cross" Neutral Signal remained. It likely will switch to a BUY signal tomorrow if price can remain above the 20-day EMA. Stochastics are technically rising, but not in a convincing manner.
Here is the latest recording (4/18):
Topic: DecisionPoint Trading Room
Start Time: Apr 18, 2022 09:00 AM PT
Meeting Recording Link.
Access Passcode: April#18th
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S&P 500 New 52-Week Highs/Lows: New Highs saw a slight increase which tells me that many of the beatdown stocks led today's rally; those stocks are very far from new 52-week highs. We saw only a few New Lows which also supports my thesis.
Climax* Analysis: We got a preponderance of upside climaxes today, giving us another upside initiation climax. The NYSE UP/DOWN Volume Ratio and SPX Total Volume did not confirm, but the rest of the indicators did.
*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.
The STOs rose today and are now firmly in neutral territory. Not surprisingly, those beatdown stocks managed to recapture support at the 20-day EMA and PMOs reversed and are rising.
Intermediate-Term Market Indicators: The intermediate-term market trend is DOWN and the condition is NEUTRAL.
The ITBM/ITVM ticked higher. I had to use the zoom thumbnail to actually see that they rose. It isn't that convincing, but given today's bounce off the 200-day EMA, it is somewhat encouraging. We saw a minute increase in PMO BUY signals.
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 SCI is still declining, but remains above its signal line. It is also below the 70% bullish threshold. This gives us a somewhat bearish intermediate-term bias.
Short term, we see a higher percentage of stocks above their 20/50-day EMAs than the SCI percentage. This gives us a somewhat bullish bias in the short term.
The GCI ticked up today, but remains below the 70% bullish threshold. There is a higher percentage of stocks above their 50-day EMA. That percentage is negligibly higher than the GCI which is somewhat positive; but, there is still a lower percentage of stocks above their 200-day EMA than the GCI percentage. I read this as a bearish bias in the long term.
CONCLUSION: The market rebounded primarily in beat down sectors like Consumer Discretionary (XLY), Technology (XLK) and Communication Services (XLC) which kept New Lows at a minimum, but didn't do much for New Highs. While this rally is encouraging today, particularly coming alongside an upside initiation climax, we know futures are lower and we know about the NFLX crash. This suggests those areas may not see follow-through. We don't see this as the beginning of an extended rally.
I am 15% exposed to the market. I don't like to be exposed during bear market moves, but I am fishing from my DP Diamonds Report lists. I'll notify you if I expand my exposure.
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Bitcoin is trying once again to confirm the bullish cup with handle pattern. I was ready to scrap the pattern, but given the rally of the past two days, I'm giving it more time. The indicators are mostly negative, although Stochastics are moving out of oversold territory.
Yields continue to soar. We don't see any relief ahead.
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.
Don't miss Carl's take on interest rate inversions in Monday's recording of the DecisionPoint Show. Here is a link to the YouTube video.
10-YEAR T-BOND YIELD
$TNX didn't reach the top of its rising trend channel and that created a bearish rising wedge. It's already trying to break out of the top of the wedge. Given the current rising rate environment and still positive indicators, it doesn't seem likely we will get a breakdown.
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 and should challenge the top of the short-term rising trend channel soon. The indicators are bullish so we don't have any reason to expect otherwise."
"On the one-year chart we see a breakout from the longer-term rising trend channel. That is very bullish, but also implies price is extended. Again, indicators don't imply a major decline is on tap."
IT Trend Model: BUY as of 12/29/2021
LT Trend Model: BUY as of 1/12/2022
GLD Daily Chart: Gold apparently gave us a fake out breakout last week. It closed on the 20-day EMA and the rising trend is still intact. I do not like that indicators are already looking bearish. I would expect to see the 50-day EMA tested, more than likely unsuccessfully.
GOLD Daily Chart: The longer-term Gold chart shows a bullish cup with handle. Price was breaking out from that handle, but is reversing course. The pattern hasn't busted, but it isn't looking good.
GOLD MINERS Golden and Silver Cross Indexes: Miners pulled back alongside Gold. I still like Gold Miners and this pullback gives latecomers (like me) an opportunity to finally get in on this rally. Participation is still very strong, suggesting to me that this is more of a hiccup than the beginning of a lingering decline.
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 today but is holding above the 20-day EMA. We still like USO. The indicators took a hit today, but it was an over 4% decline. Like Gold Miners, this pullback could offer us an opportunity to pad a position or add.
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:
"Bonds continue to languish. TLT broke down from a bullish falling wedge and indicators look very negative. With yields continuing higher, we don't expect much from Bonds."
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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DecisionPoint Sector Chart List
Price Momentum Oscillator (PMO)
Swenlin Trading Oscillators (STO-B and STO-V)
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