We are still working through family medical issues so we will continue to be brief in our analysis. Tomorrow we should be back to a more normal blog.
The market spent the entire day working its way higher and closed up +1.5%. The 5-minute RSI remained positive nearly all day. The PMO was declining even as price was rising. This will happen when price loses acceleration due to rising at a consistent pace. The morning gap up was a high momentum move and once the trend steadied, the PMO (like an accelerator) pulled back as momentum faded. Basically it isn't a bad thing.
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 the $ONE benchmark.
Daily: XLE has moved into a bullish northeast heading, albeit more north and east. XLB is also see that bullish heading. The rest have either a bullish northeast heading or are curling around creating southeast headings. Those headings are acceptable particularly since the sectors are in Improving quadrant or Leading quadrant.
Weekly: The weekly RRG on the other hand is mostly bearish, but improving. With the exception of XLB, XLP and XLE, all other sectors are curling back around toward the Improving quadrant. Overall they are still underperforming by a mile as they are situated firmly in the Lagging quadrant or at best, the Weakening quadrant. We do note that XLC and XLV are showing a slight bullish northeast heading.
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: Price broke above the short-term declining trend confirming the bullish falling wedge. The RSI just moved into positive territory. Price is now on its way to testing the top of the declining trend channel. The VIX is looking very good as it rises toward the upper Bollinger Band on our inverted scale. One problem we see would be decreasing Total Volume on the current rally.
Stochastics are rising in positive territory.
Big News! Carl Joins the FREE DecisionPoint Trading Room!
The DecisionPoint Show on StockChartsTV is undergoing changes. We will now be rebroadcasting our FREE DP Trading Room on StockChartsTV! As part of that, Carl will be joining Erin in the trading room! If you want to attend the trading room LIVE and ask Carl questions, you can register HERE. Erin will still send out the recording link in Monday's DP Newsletter, but it will now be a slick recording produced by StockChartsTV. Join us LIVE Monday July 11th at Noon ET or watch the recording on StockChartsTV!
Here is the latest recording:
Topic: DecisionPoint Trading Room
Start Time: Jul 5, 2022 08:55 AM
Meeting Recording Link
Access Passcode: July$5th
S&P 500 New 52-Week Highs/Lows: New Lows and New Highs were negligible. The 10-DMA of the High-Low Differential is rising toward the zero line which is bullish.
Climax* Analysis: We did get some climaxes today, but it was not unanimous -- SPX Net A-D fell short. SPX Total Volume contracted and did not confirm. If we were to name this climactic activity, it would be considered an upside exhaustion climax.
*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 still improving. We are seeing almost 90% of the SPX with rising momentum so that indicator is beginning to get overbought.
Intermediate-Term Market Indicators: The intermediate-term market trend is DOWN and the condition is NEUTRAL to OVERSOLD.
The IT indicators are all rising and not at all overbought. Almost 3/4ths of the SPX have PMO BUY signals. That can support a bear market rally.
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 ticked up slightly today, but the GCI continues to fall. Not a surprise given there is a lower percentage of stocks above their 50/200-day EMAs than the GCI.
The short-term bias is bullish given there is a higher percentage of stocks above their 20/50-day EMAs than the SCI percentage.
The intermediate-term bias is bearish, but improving given the SCI is at a low 12.6% and had a positive crossover its signal line today.
The long-term bias is bearish. The GCI is at a low 29.2% and there are fewer percentage of stocks above their 50/200-day EMAs. The GCI will not be able to improve until those percentages move higher.
CONCLUSION: All of our indicators are on the rise with the exception of the GCI. This has us fairly optimistic regarding the short term and even a little bit in the intermediate term. Although today's near climactic behavior could mean lower prices tomorrow, ultimately the short-term bias should carry prices higher. The SPY is trading lower by -0.21% in after hours trading currently so the possible exhaustion climax could play out tomorrow. Keep stops in play!
Erin is 45% exposed to the market.
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Bitcoin rallied meaningfully today. The very short-term declining trend has been broken to the upside and broke above the 20-day EMA. Indicators are shaping up. This also has the look of a short-term bullish double-bottom. The OBV is not yet on board. Buying overall is muted. We could see a challenge of overhead resistance at possibly $25,000. That is probably too optimistic, but Bitcoin overall is looking the most bullish it has in a very long time.
The declining trend in yields could be coming to a close. The declining trends are still in place, but are now being challenged.
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 continued higher and even broke above the 50-day EMA and resistance. Indicators are still leaning negative and the short-term declining trend has not been broken yet. This looks like the beginning of a bearish head and shoulders. We'll see.
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:
"UUP gapped up out of a bearish rising wedge. This is a bullish conclusion to a bearish chart pattern and we find that especially bullish for the Dollar. The RSI is positive, the PMO is accelerating higher and Stochastics are about to move above 80. We expect the Dollar will continue to rise."
IT Trend Model: NEUTRAL as of 5/3/2022
LT Trend Model: SELL as of 6/30/2022
GLD Daily Chart: Gold stalled its decline, but didn't make any headway. GLD formed a bearish filled black candlestick. Indicators remain bearish.
GOLD Daily Chart: Support at $1750 was obliterated yesterday, but $1725 did hold on today's slight rise. Discounts hit a very high level yesterday. This is actually bullish for Gold as sentiment is contrarian. High discounts imply bearish investors.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners bounced today, but on fairly low volume. The OBV barely ticked up. Participation continues to be nil. This was a constructive move today, but there is far too much work to do before we consider dipping into this group.
CRUDE OIL (USO)
IT Trend Model: BUY as of 1/3/2022
LT Trend Model: BUY as of 3/9/2021
USO Daily Chart: Note that the 20-day EMA is about to cross down through the 50EMA (Dark Cross), and it could happen tomorrow. This was an excellent bounce, but we note that price closed near the lows for the day. The head and shoulders pattern is still valid in our opinion. This could be the end of the Energy correction, but we aren't so sure.
IT Trend Model: NEUTRALas of 1/5/2022
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: Yields continued higher which pressured TLT back below its 20-day EMA. This looks very "cup and handle"-like. Stochastics have turned down and they generally are a good gauge at timing tops and bottoms. The RSI also dropped into negative territory. We see TLT moving to test support at $110.
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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