Yesterday's headline was "Apple Sinks the Market" -- a report said that Apple (AAPL) would be slowing down hiring and spending in some of its divisions. We guess that was the kind of story that needed to be digested overnight, because today AAPL was up 2.67%, and the market liked that just fine. Apple gained back nearly all of yesterday's losses, and that positively influenced most of the major averages.
(Erin and her mom found out they have COVID, likely brought home from the hospital. Comments will be very brief)
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 daily RRG is all over the place right now, but one thing is clear, aggressive sectors are beginning to outperform while defensive sectors are losing steam. XLE has turned to a bullish northeast heading, alongside aggressive sectors as well as XLB and XLF. XLI reversed back to its bullish heading.
Weekly: Yesterday's comments still apply:
"The longer-term RRG shows most sectors improving with XLC in the strongest position as it is the first sector out of the Lagging quadrant. Energy is the only sector with a bearish southwest heading. XLB is still looking weak with a westward heading. All other sectors are showing strong northward headings toward 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: SELL as of 5/5/2022
SPY Daily Chart: The market has broken the declining trend that began at the late March top. Price also managed to poke out of the recent trading range. It was stopped by the 50-day EMA, but indicators are positive.
Here is the latest recording:
S&P 500 New 52-Week Highs/Lows: Despite the strong rally, prior damage is clear given there were no New Highs Highs. The 10-DMA of the High-Low Differential continues to rise which is bullish.
Climax* Analysis: Today there were really strong climaxes across the board, and they create a bit of a dilemma. Friday there was an upside initiation climax, so today's must necessarily be called an upside exhaustion climax. We are not comfortable with that label because price broke out of the trading range and the declining trend channel. It's seems too soon for a blowoff. At any rate, a decision can be made based upon how the futures do overnight, and how the market opens in the morning. That doesn't always solve the problem, but at least current information will be available then since it isn't available now.
*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 are rising strongly and participation is broadening, but could be getting overbought.
Intermediate-Term Market Indicators: The intermediate-term market trend is DOWN and the condition is MIXED.
The ITBM/ITVM both moved higher. They are getting close to moving into positive territory. We have our second bottom above the signal line for %PMO 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 rose to 16.4% while the GCI was flat, remaining at 28%. Participation broadened significantly.
The short-term bias is bullish. The number of stocks with price above their 20/50-day EMAs moved sharply higher and percentages are higher than the SCI percentage.
The intermediate-term bias is bearish with slight improvement given the SCI is at such a low reading, but rising somewhat.
The long-term bias is bearish, but improving now that we have more stocks above their 50-day EMA than stocks with "Golden Crosses".
CONCLUSION: Apple may've hurt the market yesterday, but all was forgiven today. Netflix reported favorable subscriber numbers and is currently up +7.85% in after hours trading. Growth sectors which had been floundering are now leading the market into a breakout bear market rally. More than likely today's climax readings are almost an extension of Wednesday's upside initiation climax with yesterday's trading being influenced by Apple. Indicators overall are positive and improving. We expect the breakout to continue with Netflix being the influencer.
Erin is 40% exposed to the market.
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Yesterday's comments still apply:
"Bitcoin has formed a rising trend channel. The indicators suggest it will continue higher, but overhead resistance at the 50-day EMA has been sturdy. Price hasn't been above it since the March top. It might be time for it to test the bottom of this thin rising trend channel."
Rate inversions continue. Long-term rates are in declining trends while the 1-month/3-month yields soar higher toward long-term rates.
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 broke the declining trend, but really it was more of a "drift" than a breakout. Still, the PMO is bottoming and the RSI broke back into positive territory. Stochastics have turned around but are still negative which tempers our bullish expectations.
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 pulled back further today. The bearish filled black candlestick fulfilled its promise of decline. The PMO and Stochastics have topped with Stochastics dipping below 80. Support is arriving at the 20-day EMA and horizontal support at $28.25."
IT Trend Model: NEUTRAL as of 5/3/2022
LT Trend Model: SELL as of 6/30/2022
GLD Daily Chart: Gold again did not take advantage of a declining Dollar. It was up slightly. Indicators are about as flat as they can be.
GOLD Daily Chart: Support at $1675 hasn't been tested and given Gold isn't performing as it should against the Dollar, it will likely be tested.
GOLD MINERS Golden and Silver Cross Indexes: If you look at a very long-term chart of GDX, you'll know that the bounce right here is coming off strong support. The declining trend is intact. Participation is finally beginning to open up. If the short-term declining trend is broken and participation continues to improve, we might finally be able to reenter this industry group. It's too early now.
CRUDE OIL (USO)
IT Trend Model: NEUTRAL as of 7/8/2022
LT Trend Model: BUY as of 3/9/2021
USO Daily Chart: Yesterday's comments apply:
"Yesterday's breakout from the bullish falling wedge is suggesting the correction is over. However, we've seen this set up on the prior two rallies with the RSI and Stochastics bottoming and then failing. The PMO is flat and not confirming. We wouldn't get too excited until price gets back above resistance at the 20/50-day EMAs."
Looks like a bullish double-bottom, but beware of a possible reverse island setting up.
IT Trend Model: NEUTRALas of 1/5/2022
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: Yesterday's comments apply:
"The 20-year yield rose and that caused TLT to top below the 50-day EMA and resistance at the prior July top. This could be setting up a short-term double top. The indicators are deteriorating. The RSI moved into negative territory. Stochastics have topped and the PMO is preparing to follow suit. There isn't much upside potential even if it does rally as there is a strong resistance zone waiting for it between $117.50 and $120."
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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DecisionPoint Sector Chart List
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