Today the SPDR Gold Shares (GLD) 50-day EMA crossed down through the 200-day EMA, an event generally known as a "death cross," because it has negative long-term implications for gold. The result is a SELL Signal on the LT Trend Model for GLD. While we track these events on a wide range of market and sector indexes, we always emphasize that these are information flags, not action flags. It is let you know that something is happening that needs a closer look. In this case, we can see that after it dropped below the 200-day EMA, GLD has been moving sideways for two months. From this we conclude that GLD is long-term negative, but not aggressively so. The last two "death crosses" in November and December (not shown) didn't result in any real damage. To us that means no immediate action is necessary, but we will continue to monitor it closely, because we are expecting the situation to reverse sooner than later.
We also check the Continuous Contract Gold ($GOLD) chart to see if it agrees with GLD, and we see that the 50/200 downside crossover has not quite happened yet. Not a problem, we use the GLD signal because that is a trading vehicle.
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® Chart: We are using $ONE as our benchmark so that the RRGs reflect overall performance rather than relative performance against the SPY.
Daily: All of the sectors now have bullish northeast headings with the exception of Energy and Materials. This tells us that a bear market rally is occurring and should continue further, led by the Consumer Staples, Real Estate and Healthcare sectors.
Weekly: The weekly $ONE RRG has looked extraordinarily bearish, but we are starting to see some improvement in the longer term. None of the sectors have bullish northeast headings yet. XLF had been traveling northward, but it has turned back into a bearish southwest heading. XLK and XLC are seeing improvement as is XLV. We are still not fans of the Tech and Comm Services sectors.
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 market lost support today, but did finish with a somewhat bullish hollow red candlestick. We won't make excuses for the market as this is not a good look.
The PMO is now topping and the RSI is continuing lower in negative territory. Stochastics look very negative and the VIX is staying below its moving average on our inverted scale which suggests internal weakness.
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Topic: DecisionPoint Trading Room
Start Time: Jun 27, 2022 09:00 AM
Meeting Recording Link
Access Passcode: June#27th
S&P 500 New 52-Week Highs/Lows: New Lows expanded while New Highs were about the same. This has caused the 10-DMA of the High-Low Differential to pause its rising trend.
Climax* Analysis: Today we got a downside exhaustion climax. It wasn't one of the strongest ever, but it was confirmed by a SPX Total Volume surge. This suggests some relief tomorrow or at least consolidation.
*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.
The STO-V is now in negative territory and both STOs are falling. This isn't good for the short term. On the bright side, we didn't see too much damage to stocks above their 20-day EMA. We still have more than half of the SPX holding rising momentum, but the deterioration is obvious.
Intermediate-Term Market Indicators: The intermediate-term market trend is DOWN and the condition is NEUTRAL.
The ITBM and ITVM ticked downward today, but we did see a small expansion in PMO BUY signals suggesting pockets of strength do exist.
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.
Interestingly, we saw more stocks move above their 50-day EMAs. Unfortunately, the SCI topped beneath its signal line.
The short-term bullish bias is disintegrating. Since percentage of stocks above 20/50-day EMAs are larger than the SCI, we will leave the short-term bias as bullish, but deteriorating.
The intermediate-term bias is looking more bearish again given the SCI topped beneath its signal line.
The long-term bias is bearish as the GCI is falling and reading at a low 29%. With %Stocks > 50/200-day EMAs lower than the GCI reading, it will not be possible to see more Golden Crosses. Hence the GCI should continue lower.
CONCLUSION: The good news is that we did get a downside exhaustion climax. Unfortunately it isn't accompanied by positive short-term indicators. Most of our indicators are now in decline or deteriorating. While it is possible we will get follow-through on this climax as well as today's hollow red candlestick, the picture is more bearish than bullish in the short term now. There are clearly pockets of strength where there were none a few weeks ago so make sure the industry groups you nibble in have positive momentum at a minimum, but best if they are outperforming the SPY too. All positions should be considered "short-term" and hard stops are needed.
Erin is 50% exposed. ALL positions have hard stops. She will be paring down to 40% or lower by selling portions of positions into strength.
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Bitcoin lost support at $20,000. The indicators had been firming up, but today the PMO turned down beneath its signal line and Stochastics topped in negative territory. We've been talking about Bitcoin moving to $10,000, this isn't out of the realm of possibility. It is actually looking highly likely. Months ago we pointed out the topping formations on Bitcoin and that based on those patterns, we should consider that Bitcoin could reach $10,000. Everyone thought we were crazy... As an aside, today on Twitter it was announced that Bitcoin turned 6 years-old. Many of us commented that it might not make it to 7 years-old.
Long-term rates haven't broken their declining trends out of the recent top, suggesting rates are topping.
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
As we thought, given $TNX didn't make it to the top of the bearish rising wedge, we expected a breakdown from the pattern. That's exactly what we got. The 50-day EMA is still holding as support, but we don't think that will continue based on the negative RSI, PMO SELL signal and Stochastics topping in negative territory. Look for a move to the next support level at 2.7%.
IT Trend Model: BUY as of 6/22/2021
LT Trend Model: BUY as of 8/19/2021
UUP Daily Chart: The Dollar paused its rally and formed a bearish engulfing candlestick. Indicators still suggest UUP will continue to rise, but now we see a short-term bearish rising wedge to go with the intermediate-term rising wedge. Although the short-term bias is bullish, the intermediate term is beginning to look less so.
IT Trend Model: NEUTRAL as of 5/3/2022
LT Trend Model: SELL as of 6/30/2022
GLD Daily Chart: Gold is now testing important support. The indicators are very bearish right now and given today's "death cross" we would be careful trying to invest in a reversal.
GOLD Daily Chart: Discounts on PHYS are still showing bearish sentiment. We need to see discounts get deeper before counting on a reversal based on sentiment.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners lost important support and are now at a 52-week low. We have no heartbeat under the hood as every Gold Miner has price below the 20/50/200-day EMAs. Additionally none have a 20-day EMA above the 50-day EMA (0% SCI reading) and only a fraction have 50-day EMAs above 200-day EMAs (13.8% GCI reading). The GCI will trend to zero as well unless some stocks find their way above the 50/200-day EMAs.
A look at the weekly chart and we see how important this support level was. Next up is $25.
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 retesting the bottom of the bearish rising wedge. Given it didn't come close to testing the top of the wedge on the last rally, we have to assume we have a breakdown ahead. Indicators are confirming this. The RSI is tumbling in negative territory, the PMO is accelerating its decline and Stochastics topped in negative territory.
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:
"With interest rates in a declining trend, TLT has been in a rising trend. Today price broke above both the 20-day EMA and the declining tops trendline. The RSI is nearing positive territory and Stochastics bottomed in positive territory. The PMO continues to slowly march higher. The breakout is beginning to confirm the bullish falling wedge formation. We don't think there is huge upside potential, but Bonds appear to be finding favor again."
Good Luck & Good Trading!
Erin Swenlin and Carl Swenlin
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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