(Clearly it is impossible to make Dad rest, but I thought his idea yesterday to publish updated charts was great. I've never asked him, but I'm thinking he won quite a few "Perfect Attendance" awards in school. Now let's get onto our combined content.)
The 5-minute candlestick chart shows us a breakout from a bearish rising wedge. Whenever we see upside breakouts from bearish patterns we consider it "especially" bullish. In a bear market, let's just call it "bullish". Still, the breakout was accompanied by high volume and a 5-minute PMO crossover BUY signal. This chart suggests follow-through.
(Erin and her mom found out they have COVID, likely brought home from the hospital. Comments will be very brief. Carl tested positive yesterday, but his symptoms are quite mild. Still quite a bit of fatigue.)
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: All but the three defensive sectors XLP, XLU and XLV have bullish northeast headings. While we don't want to see bearish south to southwest headings, at least XLP, XLU and XLV are still situated in the Leadings quadrant. Given all of the bullish northeast headings, the market is short-term bullish.
Weekly: The weekly RRG continues to improve with all sectors (except XLE) moving northward toward the Improving quadrant or in the case of XLC and XLK, already within the Improving quadrant. This suggests the bearish bias in the intermediate term is deteriorating. We wouldn't call the bias bullish until more sectors are within 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: Note that SPY is above its 20-day EMA and 50-day EMA. That's a setup for a Silver Cross BUY signal. Today's close above the 50-day EMA is the first since early April. We will want to see another upside finish tomorrow as it will be considered a "follow-through" day with implications price will continue to rally.
The VIX has penetrated the upper Bollinger Band again today on our inverted scale. While that typically leads to downside, the Bands are squeezed together and based on April readings isn't that overbought. Stochastics looks great.
Here is the latest recording:
S&P 500 New 52-Week Highs/Lows: Despite another strong rally, prior damage is still being repaired given there were no New Highs. On the flip side the the damage is being staunched given no New Lows. The 10-DMA of the High-Low Differential is trying to top below the zero line. We definitely don't want to see that.
Climax* Analysis: No climax readings, although as noted previously, the VIX has poked above the upper Bollinger Band on our inverted scale which is generally a precursor to a very short-term top.
*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.
We're concerned when we review this chart given indicators are now overbought. The STOs are still rising strongly, but are reaching levels we typically see before a market top.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is MIXED.
The ITBM/ITVM are now in neutral territory. %PMO BUY signals are overbought and rising. The IT trend is listed as "UP" because the declining trendline drawn from the April top has been broken.
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 short-term bias is bullish given we have far more stocks with price above both their 20/50-day EMAs as compared to the amount with Silver Crosses.
The intermediate-term bias is bearish, but improving. It's bearish due to the very low SCI reading, but improving based on its move higher.
The long-term bias is bearish but also improving given we have more stocks with price above their 50-day EMAs. We need to see more stocks with price above their 200-day EMAs compared to Golden Crosses. While that percentage is lower than the GCI, we know the GCI will stagnate at this low level.
CONCLUSION: The breakout and close above the 50-day EMA suggests we have more rally to come. Evidence that supports more rally would be rising short- and intermediate-term indicators. The only problems we see are the VIX's upper Band puncture and short-term indicators being overbought. Overbought conditions in a bear market are considered "thin ice"; basically it is a weak foundation for a longer-term rally. We're cautiously bullish.
Erin is 40% exposed to the market.
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Bitcoin reached the top of the rising trend channel. Given it is stalling at the 50-day EMA and Stochastics have topped, we would look for a test of the bottom of the 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 formed a giant bearish engulfing candlestick. It drifted out of its declining trend leaving us unimpressed. It appears overhead resistance will hold as the RSI moved back into negative territory and the PMO turned back down. This sure looks like a head and shoulders pattern developing here.
IT Trend Model: BUY as of 6/22/2021
LT Trend Model: BUY as of 8/19/2021
UUP Daily Chart: The Dollar pulled back, but is holding above the 20-day EMA and the old bearish rising wedge formation. The indicators look terrible as the PMO triggers a crossover SELL signal and Stochastics hit negative territory. The recent strength of the Dollar could still work in its favor as support is nearby.
IT Trend Model: NEUTRAL as of 5/3/2022
LT Trend Model: SELL as of 6/30/2022
GLD Daily Chart: The big pullback on the Dollar has done little to improve the chart of Gold. Support is holding, but that's about all. Indicators are flat, although the RSI has moved out of oversold territory.
GOLD Daily Chart: The August support level was successfully tested on the intraday low. Discounts remain very high suggesting investors still don't care for Gold. While that could lead to a reversal, the rest of the chart needs to firm up.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners are holding support after a nice rally day. The PMO is about to trigger a crossover BUY signal in oversold territory, but notice it did the same right before the big decline in June. We need to see participation. There is none whatsoever.
CRUDE OIL (USO)
IT Trend Model: NEUTRAL as of 7/8/2022
LT Trend Model: BUY as of 3/9/2021
USO Daily Chart: It looked promising for Crude Oil when it broke out from a bullish falling wedge. Unfortunately overhead resistance at the 20-day EMA and June low were too strong. Now we watch for a rally that would form a short-term reverse head and shoulders. It's too early to call it given a second shoulder hasn't formed yet. Indicators are flat or declining which makes us less confident about a bullish resolution.
IT Trend Model: NEUTRALas of 1/5/2022
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: TLT rallied strongly today and closed above the 50-day EMA. The RSI is rising in positive territory and the PMO has bottomed above the signal line; Stochastics have bottomed in positive territory. This looks good, but that is a very strong resistance zone 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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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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