Today we premiered our new DecisionPoint Trading Room. The DecisionPoint Show has been retooled to make it more actionable. Carl has joined the room (Click HERE to see us LIVE at Noon ET) and a replay of our live morning session is now on at 3p ET on StockChartsTV.
One of the attendees asked whether it was time to get back into Natural Gas. Carl liked the chart as this is the first time in awhile we've seen a constructive PMO bottom. Erin pointed out the improvement in Stochastics and the rising RSI. Price bounced off support and traded above the 20-day EMA. Erin said that she would be more convinced when we saw a breakout; Carl explained, we may not want to wait for PMO crossovers, particularly if the chart begins to shape up. Neither considers this discussion a "call to action"--simply noting it is looking good again.
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 picture had begun to look very bullish with all of the sectors rotating into the Improving or Leading quadrants. However, late last week all of the sectors began to turn over with the exception of Energy (XLE) which has a bullish northeast heading.
We now have several sectors that will more than likely fail to reach the Leading quadrant as they have moved into bearish southwest headings: XLY, XLC and XLK. XLF and XLI are looking shaky too. XLU could shift into the Leading quadrant, but XLRE which was headed there is now turning away.
XLB was seeing a bullish northeast direction, but today reversed into a bearish southwest heading.
Weekly: In the longer term, the RRG is improving, although we should note that no sector is in the Improving or Leading quadrants. XLE is one of the weakest with its bearish southwest heading and distance from all of the others. This is a good sign, nonetheless, given this has been a very bearish graph for some time.
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: After a fairly strong week that finished with a bullish hollow red candlestick, the market opted to decline. Price was turned away from the top of the declining trend channel before it actually tested/touched it which is generally a bad sign. Price also closed below the 20-day EMA. The PMO is still rising, but the RSI is back in negative territory.
Our concern now is that a bearish double-top is developing in the short term. The VIX pulled back from the upper Bollinger Band on our inverted scale which is also a bearish sign. Stochastics tipped over before moving above 80.
Here is the latest recording:
Replays are now available on YouTube! Here is the link to this morning's trading room!
S&P 500 New 52-Week Highs/Lows: We saw a slight expansion in New Lows. We want to see the 10-DMA of the High-Low Differential rising. Unfortunately it is acting as though it wants to top below the zero line. Not a good look.
Climax* Analysis: Climax readings were registered today, but they were not strong readings, and SPX Total Volume did not confirm. Also, SPX Net A-D was not climactic. Nevertheless, it was a downside initiation climax, and we think we should not ignore the warning.
*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 were rising, but they have now topped after venturing only a few days in positive territory. Three quarters of the index still have rising momentum. The last two declines haven't caused much damage to participation.
Intermediate-Term Market Indicators: The intermediate-term market trend is DOWN and the condition is NEUTRAL.
The ITBM and ITVM both started back down today, compounding the downside initiation climax. These indicators reversed to the downside in June and gave us good warning before the market dropped strongly. Over three quarters are still showing PMO crossover BUY signals and that continues to improve.
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 long-term bias remains bearish. The GCI is flat and currently with a lower percentage of stocks above their 50/200-day EMAs, the GCI will not be able to improve.
The intermediate-term bias is bearish, but improving somewhat. The SCI continued higher today and had a positive crossover its signal line last week, but the reading is too low to call it bullish.
The short-term bias is bullish, but deteriorating. We have a higher percentage of stocks above their 20/50-day EMAs, but those percentages are not rising.
CONCLUSION: Today's decline wouldn't have been a big problem, but the fact that it was accompanied by a downturn on the ITBM/ITVM and downside initiation climax, we believe it could be a problem. The STOs were already declining. Price fell back below the 20-day EMA and the VIX has reversed below the upper Bollinger Band on the inverted scale. In our opinion, a warning shot has been fired.
Erin is 45% exposed to the market.
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As the chart moves forward and the higher prices drop off the left side, we are now able to see price action better on Bitcoin. Currently $17,500 is the bottom of the current trading channel. It appeared a bullish double-bottom might see a breakout, but price turned down as it moved against the confirmation line. The OBV held a negative divergence with price tops last week. More than likely, we are looking at consolidation before another down leg. The PMO is getting ready to top well-below the zero line. Stochastics had already turned lower and the RSI is negative and falling.
After breaking through the short-term declining trend, long-term rates topped today. Shorter-term rates 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
There is a declining trend channel on $TNX. It turned back down after testing the top of the channel. We are still looking for a breakout, but it may need another test of support 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 continues its strong rally as it is providing the globe with stability. The chart is strong with the exception of an overbought RSI. That should not concern us too much as we've seen previously it can remain overbought without seeing price damage right away.
This could be a reverse island, but we can't read too much into gaps on the UUP chart as it gaps regularly.
IT Trend Model: NEUTRAL as of 5/3/2022
LT Trend Model: SELL as of 6/30/2022
GLD Daily Chart: While it may not look like a good day for Gold, given the Dollar was up +1.14%, it was only down -0.54%. That's a win and suggests there were more buyers today. Indicators are still negative, but this is somewhat encouraging.
GOLD Daily Chart: This support level needs to hold. If it doesn't, the next level of strong support doesn't arrive until $1675.
GOLD MINERS Golden and Silver Cross Indexes: It is always a double whammy for Gold Miners when Gold and the market slide lower. The declining trend continues. We still have zero participation in this industry group. We do watch it everyday in the DP Alert, so when it starts to look good "under the hood", we could find some excellent bargains.
CRUDE OIL (USO)
IT Trend Model: NEUTRAL as of 7/8/2022
LT Trend Model: BUY as of 3/9/2021
USO Daily Chart: Today USO saw a "Dark Cross" when the 20-day EMA dropped below the 50-day EMA. Price failed to get above resistance at the June low. The RSI is negative and flat. The PMO has been trying to bottom, but isn't quite there yet. Stochastics are rising, but we can see how they failed on the last rally.
IT Trend Model: NEUTRALas of 1/5/2022
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: After a strong pullback on the rising 20-year Treasury Yield, TLT rebounded off the prior declining trendline. The RSI moved into positive territory and the PMO is now beginning to accelerate higher. Stochastics are still a problem. However, it is encouraging to see them flatten in positive territory. It's only been one day of rising yields so we don't want to make any major proclamations, but it is starting to look like another rally on tap for Bonds.
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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