Yesterday, Consumer Discretionary (XLY) whipsawed into an IT Trend Model SELL signal on its 20/50-day EMA negativecrossover. XLK gets an IT Trend Model Neutral signal today because the negative 20/50-day EMA crossover occurred above the 200-day EMA. Both sectors are weak and getting weaker based on participation. The SCI has topped and the GCI continues to fall. Both are below our 70% bullish threshold. %Stocks > 20/50/200-day EMAs continues to deteriorate giving XLK a decidedly bearish bias in all three timeframes.
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 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® Daily Chart: XLC has made a turn down toward the Lagging quadrant. XLK and XLY both have bearish southwest headings and are moving quickly toward the Weakening quadrant.
XLB had looked good, but has whipped around and is now back in the Weakening quadrant.
Bullish sectors are XLU, XLP and XLRE given bullish northeast heading within Leading. XLP also looks bullish as it leaps through Improving toward Leading. XLV is also somewhat bullish given its northeast heading.
XLF, XLI and XLE are very bearish as they as they head further into the Lagging 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 was up a half of a percent today and formed a bullish engulfing candlestick. Price is still holding above the 50-day EMA. The RSI managed to stay in positive territory above net neutral (50) but the PMO is still looking toppy. The VIX is reversing just above its moving average and that is somewhat bullish, at least in the very short term.
Stochastics have not improved at all, telling us that internal weakness is still a problem.
Here is the latest recording:
Topic: DecisionPoint Trading Room
Start Time: Apr 4, 2022 08:59 AM
Meeting Recording Link.
Access Passcode: April#4th
S&P 500 New 52-Week Highs/Lows: New Highs contracted on today's rally and New Lows expanded again. This is keeping the 10-DMA of the High-Low Differential from rising.
Climax* Analysis: No climax today.
*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.
On the bright side, the STOs reversed today. Unfortunately we didn't see much improvement on participation indicators.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT.
All of these indicators continue to fall out of very overbought territory which is very bearish in the intermediate term.
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 market bias in the short term is bearish. %Stocks > 20/50-day EMAs are less than the SCI and are falling.
The SCI is still at a low 54% and has turned down. That gives us an intermediate-term bearish bias.
The long-term bias is bearish. The GCI is reading below 70% and has topped. %Stocks > 50/200-day EMAs are below the GCI percentage.
CONCLUSION: Today was a nice rebound and we did see improvement with the VIX and STOs. However, the bearish bias remains in all three timeframes and participation is still very weak. I would look for more churn and chop going into next week. I had a question about what strategy to apply on parabolic movers. Rather than reset stops on a daily basis, I will typically use a trailing stop. Keep your stops tight and the leash short.
Thank you for your patience with odd publishing hours. My mom-in-law is still struggling and decisions will need to be made this month. Pray for wisdom to get her in the best possible care environment possible, be it at home with helps or in assisted living. Thanks for your support and especially prayers.
I am still 15% exposed. Under the current market environment, I've decided not to expand.
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Yesterday's comments still apply:
"Bitcoin lost support and is now testing the 50-day EMA. We could still be seeing a bullish cup and handle pattern developing, but given the downturn on the RSI, PMO and Stochastics, I would expect the decline to continue."
Rates are rising trends which makes bond buying less attractive.
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
Yesterday's comments still apply:
"I mentioned the possibility that $TNX was forming a bull flag. It was confirmed by another strong rally. It is further confirmed by the positive RSI, PMO bottom above the signal line and Stochastics above 80."
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 is in the process of breaking out above March highs. The indicators are favorable so I expect the rally to continue."
Price is about to tap the top of the longer-term rising trend channel. That could mean a move sideways, but I expect price to continue trickling higher and pressing against the top of the channel.
IT Trend Model: BUY as of 12/29/2021
LT Trend Model: BUY as of 1/12/2022
GLD Daily Chart: Yesterday's comments still apply:
"GLD finished slightly higher. Gold is in neutral right now. Indicators are moving sideways with price. A rising Dollar could put pressure on Gold."
GOLD Daily Chart: I see a possible diamond reversal pattern. So far price isn't showing its hand, but a breakout is what the pattern suggests. The PMO did flatten today and the RSI entered positive territory above net neutral (50). Discounts are deep suggesting investors are still somewhat bullish on Gold.
GOLD MINERS Golden and Silver Cross Indexes: I am less bearish on Gold Miners right now given price is staying above the 20-day EMA and is a symmetrical triangle. Those are continuation patterns and suggest an upside breakout ahead. The SCI and GCI are both above 70% which is bullish. I'd like to see more improvement in the number of stocks above their 20-day EMA because at this level it implies a short-term bearish bias. Stochastics also need to turn back up.
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:
"USO is pulling back and is breaking down from the symmetrical triangle. Given the prior trend was up, it should be breaking out not down. Indicators look very negative so I expect to see more decline."
The intermediate-term rising trend is being broken, but price is still above support.
IT Trend Model: NEUTRALas of 1/5/2022
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: With interest rates continuing to rise and the FOMC signaling rising rates, TLT is tumbling lower. All of the indicators are negative and falling suggesting price will continue to sink.
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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Price Momentum Oscillator (PMO)
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