It appeared yesterday that XLU was breaking out of a bullish flag formation. Instead, it dropped like a rock today and triggered a PMO negative crossover SELL signal. Stochastics have turned and are moving lower. Is it over for Utilities? Today's drop didn't move it out of the recent trading range. The RSI is no longer overbought and participation is still very strong. 100% of XLU have a 20-day EMA above the 50-day EMA and %Stocks > 20/50/200-day EMAs are still above our 70% bullish threshold. However, if price continues lower that could change quickly. When the %Stocks > 20/50-EMA begin to crash that will have the Silver Cross Index (SCI) declining and then the picture will be more bearish. For now, this appears a short-term hiccup. Given this new weakness, I would avoid Utilities until we see whether it can hold support at the 20-day EMA.
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: We are starting to see some slight damage to the headings of the sectors within the Leading category. Only Materials (XLB) has retained its bullish northeast heading. All others are beginning to curl toward the Weakening quadrant.
Consumer Discretionary (XLY) managed to reenter the Weakening quadrant after a quick detour yesterday in the Lagging quadrant.
Up and comers Industrials (XLI) and Financials (XLF) look very bullish as they make their way toward Leading with bullish northeast headings.
Communications Services (XLC) is the most bearish of the bunch given its bearish southwest heading moving it further into the Lagging quadrant.
Technology (XLK) is trying to make a comeback, but it has a lot of work to do before it even reaches the Improving 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: The SPY did pop above the declining tops trendline today, but fell heavily. Support is still holding at about $435, but the indicators are getting weak. The PMO is topping beneath its signal line and the RSI has moved into negative territory. The VIX is getting close to puncturing the lower Bollinger Band on our inverted scale. Usually a puncture of the lower Band leads to higher prices.
Price also holding onto a short-term rising bottoms trendline. It appears we have three "support" areas: 1) $435 horizontal support, 2) 200-day EMA and 3) this rising bottoms trendline (trendlines are technically not considered "support"). Stochastics had been rising but have now flattened in negative territory.
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
Get Erin's FREE Presentation Recording from Synergy Trader's "Tech Wizards" Event!
Hurry! You will not be able to download the recording after tonight!
Erin presented Tuesday at the "Tech Wizards" Panel Event. She covered the DecisionPoint Analysis Process followed by her "trading rules" for timing entries and exits. Click HERE to get the recording. Thank you for your support of our work!
S&P 500 New 52-Week Highs/Lows: With the market opening to the upside, SPX New Highs expanded because New High readings are taken based upon intraday price movement, not the closing price. Usually a rising 10-DMA of the High-Low Differential tells us that price should rise, but that isn't always the case.
Climax* Analysis: The NYSE DOWN/UP Volume Ratio, SPX Net A-D and SPX Net A-D Volume indicators were climactic today, so we are calling a downside initiation climax. This suggests we will see a break below the current support levels.
*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.
STOs are backing off again suggesting this decline will likely continue. %PMOs Rising took a big hit on today's decline.
Intermediate-Term Market Indicators: The intermediate-term market trend is DOWN and the condition is NEUTRAL.
The ITBM/ITVM also switched directions and are moving lower. Only half of the index have PMO Crossover 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 turned up today but is below our 70% bullish threshold. This gives us a somewhat bearish intermediate-term bias.
Short term, we saw a big drop in the percentage of stocks above their 20/50-day EMAs. They are reading higher than the SCI, but barely. I read this as a neutral to bearish bias in the short term.
The GCI turned down well below its signal line. That alone would give us a bearish bias in the long term. We also can add that there are a fewer stocks with price above the 200-day EMA than there are golden crosses. Therefore, I see a clear bearish bias in the long term.
CONCLUSION: I noted in yesterday's conclusion:
"I'd would be more confidently bullish if price had closed higher on the day and we'd seen a breakout from the short-term declining tops trendline, but STOs are rising again, we have a bullish short-term bias and IT indicators are showing improvement. I believe we will see some more upside. If we don't, we know that the bear market technicals are applying downward pressure."
It is clear that the bear market bias is pressuring price downward, particularly now that we have a downside initiation climax. Additionally, the STOs and ITBM/ITVM all pulled back. I was feeling somewhat bullish in the short term yesterday, but that has changed. As they say, "What a difference a day makes". Be very cautious.
I opened my exposure to 20% but am already regretting it now that I see DP indicators going final today. I have a tight leash on all of my investments and I recommend that you do too.
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 basically holding onto the breakout from the "handle" of the cup with handle pattern, but its fall today and the RSI turning down in negative territory suggest this breakout isn't going to hold up. The PMO hasn't turned up yet. Stochastics still look favorable. I'm not a fan.
Yields ticked back up today. We expect more of the same.
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 resumed its rally but still remains within the bearish rising wedge chart pattern. The RSI is overbought, but the PMO is still rising and Stochastics are oscillating comfortably above 80. I don't see a big drop ahead, more than likely it'll continue higher.
IT Trend Model: BUY as of 6/22/2021
LT Trend Model: BUY as of 8/19/2021
UUP Daily Chart: UUP formed a bullish engulfing candlestick today that suggests it will resume its rally. I'm not so sure given the PMO is trying to top in overbought territory. The RSI and Stochastics seem to suggest UUP will move higher again tomorrow.
Price has popped out of the intermediate-term rising trend channel.
IT Trend Model: BUY as of 12/29/2021
LT Trend Model: BUY as of 1/12/2022
GLD Daily Chart: We have a bearish rising wedge on Gold and price tested the bottom of it. The pattern suggests a breakdown here. The 50-day EMA is available for support if it does, but the PMO and Stochastics look ugly so it appears Gold is in the midst of a pullback.
GOLD Daily Chart: Yesterday's comments still apply:
"The longer-term Gold chart shows a bullish cup with handle. However, I might scrap the pattern if we see Gold drop below the tenuous rising bottoms trendline in conjunction with a negative RSI."
GOLD MINERS Golden and Silver Cross Indexes: Miners fell out of the sky today, confirming the bearish rising wedge. The indicators have moved south quickly. This decline damaged almost all of the stocks in this industry group given we now only have 10% with price above the 20-day EMA. I was liking Miners, but with this drop and the serious damage done to the PMO, RSI and Stochastics, I worry that price won't hold the 50-day EMA. Might be time to take your profits if you own a Gold Miner.
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:
"Crude Oil was up on the day and is still traveling within a symmetrical triangle. That's a continuation pattern so we expect an upside breakout. We need to see the PMO and Stochastics improve. Otherwise, USO is vulnerable to a break down from the pattern."
IT Trend Model: NEUTRALas of 1/5/2022
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: TLT was back to its old tricks again as yields resumed their tear higher. The indicators are still negative.
Look for Bonds to continue lower given the bear market it is currently in and the strong bull market that yields are experiencing.
Good Luck & Good Trading!
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.
Helpful DecisionPoint Links:
DecisionPoint Alert Chart List
DecisionPoint Golden Cross/Silver Cross Index Chart List
DecisionPoint Sector Chart List
Price Momentum Oscillator (PMO)
Swenlin Trading Oscillators (STO-B and STO-V)
DecisionPoint is not a registered investment advisor. Investment and trading decisions are solely your responsibility. DecisionPoint newsletters, blogs or website materials should NOT be interpreted as a recommendation or solicitation to buy or sell any security or to take any specific action.