We cover Bitcoin everyday in the DP Alert. Today Ethereum ($ETCHUSD) caught our eye based on its huge gain. Bitcoin was up +6.38% while Ethereum was up +12.92%. While promising moves, overhead resistance is still an issue for both.
The PMO did tick up on both Bitcoin and Ethereum today. The RSI is above net neutral (50), but Stochastics have turned down and are reading below 80. Stochastics did halt the decline today. With all of the "touches" on the current overhead resistance line, it will be difficult for Ethereum to overcome. If resistance is overcome then we can start thinking about a resurgence in crypto.
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: $ONE Benchmark
Daily: The most bullish sectors (those with bullish northeast headings) are XLE and XLI. Defensive sectors are starting to stagnate as XLP, XLU and XLV are stuck between the Leading and Weakening quadrants. Aggressive sectors are losing some ground with southeast headings, but remain in the bullish Leading quadrant. XLB and XLRE had bullish northeast headings, but have now turned to the southeast as well.
Aggressive sectors are all beginning to turn over in the Leading quadrant.
Weekly: On the longer-term RRG the picture is different with all sectors (except XLE) making their way northward. All but, XLB and XLE have bullish northeast headings. This could support the hypothesis of a longer-term rally developing.
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 popped to the upside. There had been whispering that the FOMC would do a 1 percentage point hike, but they fulfilled what they promised earlier this year with a 0.75 hike. This could have something to do with today's strong gain.
Indicators are still looking good with the RSI staying in positive territory and the PMO nearing positive territory above the zero line. Stochastics turned back up above 80 suggesting internal strength. The VIX remains above its moving average on our inverted scale and that also implies internal strength.
Here is the latest recording:
S&P 500 New 52-Week Highs/Lows: Yesterday's comments still apply:
"We're still seeing negligible readings on New Highs/New Lows telling us we don't have any new leadership, but at the same time, we aren't seeing expansion of weakness. The 10-DMA of the High-Low Differential is mostly flat as a consequence."
Climax* Analysis: Yesterday's downside exhaustion climax was followed today by an upside initiation climax. Climax readings were strong, and SPX Total Volume confirmed.
*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 OVERBOUGHT.
One big problem today was STOs continuing to decline despite a huge rally. Readings are overbought on participation, but we do have to say that with 88% of stocks carrying positive momentum, the rally can certainly continue.
Intermediate-Term Market Indicators: The intermediate-term market trend is DOWN and the condition is NEUTRAL.
IT indicators continue higher. For the bear market, the ITBM/ITVM are getting somewhat overbought. 88% of stocks have PMO BUY signals which can support higher prices. We just don't like the indicator being overbought and toppy looking.
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.
Participation improved. The current biases below are the same, but the intermediate-term bias is beginning to get bullish.
The short-term bias is bullish. We have 84.8% and 66% of stocks above their 20-day EMAs and 50-day EMAs, respectively. With the SCI reading at just 26%, we should begin to see more "silver crosses" which would then make the intermediate-term bias bullish.
Currently the intermediate-term bias is bearish but improving. An SCI below 50% is clearly bearish, but it's rising. Based on the short-term bullish bias, we are likely to see even more improvement.
The long-term bias is bearish given the GCI is at a very low 28.2% (lower than yesterday). We finally have more stocks above their 200-day EMA vs the GCI, but not enough for the GCI to improve quickly.
CONCLUSION: Today's upside initiation climax suggests we will see some follow-through on today's rally. The STOs are still falling and we do have plenty of overbought indicators; however, today's strength on a Fed rate hike is promising. META reported earnings and is currently down -4.58% in after hours trading. On the other hand, Ford (F) reported and is up +6.44% in after hours trading. It's a mixed bag, but it is filled with pockets of strength that can be exploited given the current bullish short-term bias.
Big names reporting this week: Apple (AAPL), Amazon (AMZN) and Exxon-Mobil (XOM).
Erin is 45% exposed.
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!
As noted in the opening, Bitcoin had a great day, but it too is still stuck under overhead resistance. The RSI did turn up and the PMO has begun to rise again. Stochastics are still suspect. They halted the decline, but didn't reverse with enthusiasm. We still think crypto is vulnerable to another downdraft.
The declining trend continues for all but the 1-month and 3-year treasure yields which continue to rocket higher.
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:
"$TNX is once again testing support. This is a strong support level as $TNX has been able to bounce off it three times prior. Indicators do not support this hypothesis. The PMO and Stochastics look especially bearish. We do see a possible island reversal pattern based on Friday and today's trading, but that is likely wishful thinking to expect a gap up."
IT Trend Model: BUY as of 6/22/2021
LT Trend Model: BUY as of 8/19/2021
UUP Daily Chart: The Dollar was looking pretty good on yesterday's pop higher, but today's decline pulled the RSI and Stochastics downward. The PMO continues to decline. More than likely we will see consolidation continue.
IT Trend Model: NEUTRAL as of 5/3/2022
LT Trend Model: SELL as of 6/30/2022
GLD Daily Chart: GLD nearly saw a bullish engulfing candlestick. The rally was excellent. However, $GOLD didn't have a great day. The indicators on both charts are favorable. The RSI is negative, but it is rising. The PMO had a positive crossover on GLD.
GOLD Daily Chart: The rally was less impressive for $GOLD. We haven't seen a positive PMO crossover yet. However, Stochastics are rising and discounts remain high. We believe there is more upside to come, we just aren't convinced this is the final low for Gold.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners have not broken from their declining trend. We still wouldn't want to be in this industry group until we start seeing participation increase greatly. It is improving given nearly one-third of the group are back above their 20-day EMAs, but there is still no pulse on the Silver Cross Index and no stocks above their 50/200-day EMAs.
CRUDE OIL (USO)
IT Trend Model: NEUTRAL as of 7/8/2022
LT Trend Model: BUY as of 3/9/2021
USO Daily Chart: Crude Oil rallied today, but it still isn't above overhead resistance. A close today above the 20-day EMA is very encouraging. The PMO is nearing a crossover BUY signal and the RSI is almost above net neutral (50). Stochastics look excellent and do suggest a breakout ahead.
IT Trend Model: NEUTRALas of 1/5/2022
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: Yesterday's bearish filled black candlestick resolved as expected with a decline today. Price still remains above the 50-day EMA and the rising trend is still intact. The RSI is in positive territory and the PMO is still rising. Unfortunately Stochastics have turned down, meaning that TLT is internally weak.
Good Luck & Good Trading!
Erin Swenlin and Carl Swenlin
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 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.