Crude Oil (USO) may have fallen almost 1% today, but that didn't prevent the PMO from crossing over it signal line for a BUY signal. Price bounced off support at the 200-day EMA and April lows. Erin has been cautiously bullish on Crude Oil this week based on a short-term reverse head and shoulders. The neckline of the pattern was broken, but the close was below it today. No confirmation yet.
USO still has work to do, but it is holding a nice rising trend out of this month's low and is about to push its way past the 20-day EMA. Today's PMO BUY signal is promising. Stochastics are rising despite today's decline. A break above the 50-day EMA would confirm the reverse head and shoulders pattern.
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 of the sectors are now in the Leading quadrant. XLP and XLV are mostly stagnant but at least staying in the Leading quadrant. Most have eastward components to their heading which is bullish. Particularly bullish are those with northeast headings: XLE, XLB, XLI, XLRE, XLF and XLU.
Weekly: On the longer-term RRG, all but XLE and XLB have bullish northeast headings. XLB should switch soon while XLE may take a bit longer.
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 saw a strong rally continuation today. Total Volume was slightly above its annual average. It is up against overhead resistance, but indicators are quite bullish. The RSI is in positive territory, the PMO just moved above zero, the negative OBV divergence is disappearing and the VIX is oscillating above its moving average on our inverted log scale.
The RSI turned up above 80 which also suggests internal strength.
Here is the latest recording:
S&P 500 New 52-Week Highs/Lows: We saw a few more New Highs, but some New Lows as well. Still given there are more New Highs, the 10-DMA of the High-Low Differential has moved back above the zero line.
Climax* Analysis: Today's climax activity is very slight, with only the SPX Net A-D reaching the threshold, and others coming close. We'll call it an upside exhaustion climax, but there was solid volume and good follow-through from yesterday. It doesn't feel like the end of anything.
*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.
STOs were mixed. The STO-B turned back up, but the STO-V did not. It does appear they will reverse in positive territory which would be very bullish. Participation is overbought, but we can see these conditions persist in a strong rally; still it is something to keep an eye on.
Intermediate-Term Market Indicators: The intermediate-term market trend is DOWN and the condition is OVERBOUGHT.
IT indicators continue higher. Everything looks healthy, but we do need to consider that all of these indicators are overbought. Doesn't seem a problem right now.
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 is looking very good. The SCI is rising quickly and short-term participation of stocks above their 20/50-day EMAs is solid, albeit a bit on the overbought side. The only problem we see is that the GCI is going nowhere. This shouldn't be a surprise. Most SPX stocks have an EMA configuration much like the SPY. Note that the 50-day EMA is well below the 200-day EMA. It's going to take time and work before we start seeing that indicator rising.
The short-term bias is bullish given solid participation of stocks above their 20/50-day EMAs.
The intermediate-term bias is neutral. The SCI is rising strongly, but the reading is still low.
The long-term bias is bearish but seeing slight improvement given we are seeing a nice increase in stocks above their 200-day EMA. The GCI reading is still very low.
CONCLUSION: Today's rally was broad with only Communications Services (XLC) finishing lower on the day. A look at the major indexes shows Silver Crosses on tap. We did see a slight upside exhaustion climax and the STO-V is still declining. Past that, the short-term and now even the intermediate-term biases are looking bullish. AAPL and AMZN reported earnings after the bell. AAPL is up +2.97% and AMZN is up a whopping +13.62% in after hours trading. We expect more upside tomorrow.
Erin is 50% exposed.
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Bitcoin saw some follow-through on yesterday's rally. It closed above the 50-day EMA, but not resistance at this month's high. The picture is definitely brighter. The RSI is positive and the PMO bottomed above its signal line and has moved above the zero line. Stochastics are back above 80. Looks like Bitcoin is ready to breakout above $25,000.
Rates pulled back further today leaving 1-year through 30-year yields in declining trends. The 3-month yield is falling now, but the 1-month yield is still on the rise.
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 lost support today. Indicators are very negative with the RSI negative and falling and the PMO moving below zero. Stochastics are oversold, but still falling. Look for a test at 2.4%.
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, but today's follow-up 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: Gold overall had an excellent day with GLD rallying +1.22% and $GOLD up +2.91%. Erin is finally ready to add to her Gold position.
GOLD Daily Chart: The RSI is now above net neutral (50) and we have a PMO BUY signal. Stochastics are positive and rising strongly. Discounts pulled back strongly which tells us that investors are far more bullish on Gold right now.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners are finally showing signs of life. Many of them made it past their 20-day EMAs, but we need to see more confirmation with a solid breakout from the short-term declining trend and more stocks above their 50-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: See opening paragraph.
IT Trend Model: NEUTRALas of 1/5/2022
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: TLT is struggling against overhead resistance at the May top. If the indicators are correct, we should see a breakout soon. The declining trend in yields also suggests a breakout ahead.
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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