As of now, four sectors (circled) have clearly bottomed, and six sectors have potentially/probably bottomed. The stalwart sector, Energy, has clearly topped. We, of course, do not know if current conditions will persist, but for now, we have to say that the bull is trying to horn back in the market for at least the short term. Longer-term we think the bear is still in charge.
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® Charts with Benchmark ($ONE):
Daily: By using the $ONE chart, we can see we are in a bear market. We are seeing XLP, XLV, XLRE and XLU improving their heading, but overall the picture is still negative. Given the opening, it makes sense that these are the ones showing better strength.
Weekly: The weekly version tells us the bear market is still in effect. XLK is seeing slight improvement in heading in the longer term, but overall it is very weak.
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: SELL as of 5/5/2022
SPY Daily Chart: The SPY is now up against overhead resistance at the May lows. Indicators are improving slightly, but not enough to say a breakout is imminent. The RSI is rising but still negative. The PMO has turned up, but barely. The OBV is confirming the rally. The VIX is still oscillating below its moving average on the inverted scale which tells the market is still internally weak in the short term.
Stochastics are looking more bullish but are still in negative territory below net neutral (50).
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Topic: DecisionPoint Trading Room
Start Time: Jun 21, 2022 09:00 AM
Meeting Recording Link
Access Passcode: June@21st
S&P 500 New 52-Week Highs/Lows: New Lows expanded slightly today. We do not like that the 10-DMA of the High-Low Differential accelerated its decline.
Climax* Analysis: There were no climax readings today. Since the upside initiation climax on Tuesday, the consolidation of the last two days is certainly acceptable behavior.
*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 are at their core exhaustion events; however, at price pivots they may be initiating a change of trend.
Short-Term Market Indicators: The short-term market trend is UP and the condition is NEUTRAL.
STOs have now left oversold territory. They did so in a hurry which is good for the market. Rising momentum has improved a great deal with nearly half of the SPX showing rising PMOs.
Intermediate-Term Market Indicators: The intermediate-term market trend is DOWN and the condition is OVERSOLD.
The ITBM/ITVM are mixed. The ITBM is now rising out of oversold territory, but the ITVM is moving lower. We see more PMO BUY signals. The reading is still considered 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.
In the short term, we are now seeing a higher percentage of stocks > 20-day EMA than stocks > 50-day EMA. That suggests improvement. With nearly one quarter of stocks with price above their 20-day EMA, we would read the short-term bias as somewhat bullish.
In the intermediate term, the SCI is still falling, but we should start seeing some improvement given there are more stocks above their 20/50-day EMAs. The intermediate-term bias is bearish until the SCI starts rising again.
In the long-term, the GCI kept yesterday's reading. We have %Stocks > 50/200-day EMAs reading lower than the GCI. This means we won't see the GCI rising yet which gives us a bearish long-term bias.
CONCLUSION: Ten of the 11 S&P sectors have bottomed or appear to be doing so, sentiment is very bearish, yields/interest rates have topped (for now), the Silver/Gold Cross Indexes are very oversold, and intermediate-term indicators (ITBM/ITVM) have bottomed, so we shouldn't be surprised if we get a nice rally from here. Nevertheless, inflation, the Fed's determination to continue raising rates, and the likelihood that the new earnings season (due July 1) will not be a happy time, still weighs on the market longer-term. We don't know what will happen, but indications are for a short rally followed by resumption of the bear market.
Erin is 15% exposed.
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Bitcoin was up and closed above $20,000. Indicators are seeing slight improvement, but the RSI is still very negative. The PMO did turn up in oversold territory, but barely. The OBV isn't really confirming the rising trend. Stochastics are mostly flat and in negative territory. We still don't like Bitcoin.
Rates fell heavily today, bringing long-term rates down toward overhead resistance at the May highs.
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 is now testing the bottom of the bearish rising wedge. With a new PMO SELL signal on tap and a now negative RSI, as well as falling/negative Stochastics, we think rates have topped and should break toward 2.7%.
IT Trend Model: BUY as of 6/22/2021
LT Trend Model: BUY as of 8/19/2021
UUP Daily Chart: The RSI is still positive, but the PMO is nearing a SELL signal and Stochastics have turned down. We still have a bullish cup with handle pattern. However, if we see price break below the 20-day EMA we would scrap that and concentrate on the larger bearish rising wedge.
IT Trend Model: NEUTRAL as of 5/3/2022
LT Trend Model: BUY as of 1/12/2022
GLD Daily Chart: Not much change from yesterday. Gold continues to stay within its trading range. We haven't seen the expected flight to safety, but if the Dollar breaks down that will change. For now indicators are neutral or negative. The RSI is in negative territory. The PMO is flat and still holding onto a crossover BUY signal, but Stochastics topped below net neutral (50). We expect Gold to continue to meander sideways.
GOLD Daily Chart: Yesterday's comments still apply:
"Discounts are pulling back slightly which indicates investors are getting slightly more bullish on Gold. So far it hasn't resulted in a Gold rally."
Full Disclosure: Erin owns GLD.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners are now testing important support at annual lows. It seems time to look for a reversal, but the internals and indicators are still very negative. The RSI is falling and in negative territory. The PMO is falling on a new crossover SELL signal. Despite what looked like a positive OBV divergence, price sank. Currently participation has no heartbeat.
CRUDE OIL (USO)
IT Trend Model: BUY as of 1/3/2022
LT Trend Model: BUY as of 3/9/2021
USO Daily Chart: USO is clinging to its long-term rising trend. We expect a breakdown given the negative RSI, falling PMO on a SELL signal and declining Stochastics.
IT Trend Model: NEUTRALas of 1/5/2022
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: TLT popped above its 20-day EMA. The RSI is almost in positive territory. Stochastics just arrived in positive territory and we have a new PMO crossover BUY signal. The rising rate environment seems to have ended and that will make TLT and other Bond funds continue to rally.
Good Luck & Good Trading!
Erin Swenlin and Carl Swenlin
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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