Today the Real Estate Sector (XLRE) 20-day EMA crossed up through the 50-day EMA (Silver Cross), generating an IT Trend Model "Silver Cross" BUY signal. This is the 12th, and probably the last, BUY signal this week for the market and sector indexes we track.
There are still four sectors that are waiting for a Silver Cross: XLB, XLC, XLE and XLF. The margin is still fairly large between their 20/50-day EMAs so they have a lot of work to do.
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: XLC lost its place in the Leading quadrant and joined XLV. At this point, the most bullish sectors based on location and heading are XLP and XLU. Interesting that the more defensive sectors, XLP and XLU are setup the best. The rest are still in the Leading quadrant, but now have southward components to their headings which implies deterioration.
Weekly: Yesterday's comments still apply:
"The long-term RRG shows a market that is improving greatly. All but XLB, XLU and XLE have bullish northeast headings. XLU doesn't look that terrible as it does have a northward component to its heading and could find itself in the Improving quadrant after a likely foray into Lagging. Energy (XLE) was hit very hard and is still trying to recuperate in the intermediate term."
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: BUY as of 8/2/2022
LT Trend Model: SELL as of 5/5/2022
SPY Daily Chart: The market rallied strongly and kept the short-term rising trend intact. Total Volume was about average on the move. The VIX bounced off its moving average on our inverted scale implying internal strength.
Stochastics are also staying comfortably above 80 suggesting internal strength.
Here is the latest recording:
S&P 500 New 52-Week Highs/Lows: New Highs/New Lows were even so the 10-DMA of the High-Low Differential kept the prior day's reading. It looks toppy and we aren't happy about that.
Climax* Analysis: Only SPX Net A-D Volume reached the climax threshold today, so we're not going to declare a climax day; nevertheless, there is a hint of upside exhaustion.
*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 both contracted today on a strong rally. That isn't good news.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT.
On the bright side, both the ITBM and ITVM are continuing to move higher. Unfortunately they are getting overbought and %PMO BUY signals did move slightly lower on the day.
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.
%Stocks > 20/50/200-day EMAs ticked upward slightly so yesterday's comments still apply:
"We have a strong bullish bias in the short term based on %Stocks above their 20/50-day EMAs being much higher than the SCI.
The intermediate-term bias is also bullish now given the sharp increase and trajectory of the SCI.
The long-term bias is still bearish given the GCI is only at 28.6%, but it is improving and should continue to improve given there are far more stocks with price above their 50/200-day EMAs than those with Golden Crosses. This will eventually push the GCI upward. Note how far the 50-day EMA is from the 200-day EMA on the SPY. The majority of stocks have this configuration so it will take time before we see the GCI begin to accelerate higher."
CONCLUSION: We said yesterday:
"We expect an upside breakout, but we are now a bit more cautious given participation is now shrinking and many of our indicators have topped."
Our outlook really hasn't changed, although we do note that today participation improved slightly unlike yesterday. We have internal strength. The PMO continues to rise, the RSI is positive and rising, and Stochastics continue to oscillate above 80. The market should continue higher. We are cautious given declining STOs.
Erin remains 55% exposed to the market, but is considering purchase of a two ETFs she mentioned in today's DP Diamonds Report.
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Bitcoin rallied today and closed above the 50-day EMA. Our main concerns are the bearish rising wedge and OBV negative divergence. So far the RSI and PMO are doing well. Stochastics are attempting to bottom in positive territory. We would look for a test of the upper bound of the rising wedge, but likely we will see a decline at that point...if it makes it there.
Yields cooled today, but they are all over the place right now with some rising and others falling. Overall the declining trend is most intact on all but the 1-month and 3-month 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
We see a bearish shooting star filled black candlestick. While we got the breakout yesterday, today's thrust failed to hold as $TNX closed below its open and very close to the lows on the day. Indicators are certainly improving in the short term, but in the ultra-short term, we expect consolidation below the 20/50-day EMAs.
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:
"So far support is holding at the 50-day EMA. The RSI turned up and reentered positive territory and Stochastics are rising again. Both of those indicators tend be "leading" unlike the PMO which can sometimes "lag". Price is still in a declining trend, but there is now a possibility the Dollar could recover. It's too early to bank on it."
IT Trend Model: NEUTRAL as of 5/3/2022
LT Trend Model: SELL as of 6/30/2022
GLD Daily Chart: Yesterday's bearish engulfing candlestick did not resolve to the downside. Yesterday $GOLD had a positive finish with no bearish candlestick. Today, GLD was up and $GOLD was down. GLD has a bearish filled black candlestick, but it also looks like a bullish hammer. Overall we like the indicators. Maybe we are looking at a bullish cup with handle pattern developing.
GOLD Daily Chart: As noted above, $GOLD was down today while GLD was up. This will happen occasionally since GLD is an ETF and $GOLD is a continuous contract or the "spot price". Discounts are elevated but in a declining trend. Investors are getting less bearish on Gold since mid-July.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners continued to pull back today. We could see a reverse head and shoulders pattern developing. The PMO is still looking favorable, but the little bit of participation we were seeing is drying up already.
CRUDE OIL (USO)
IT Trend Model: NEUTRAL as of 7/8/2022
LT Trend Model: BUY as of 3/9/2021
USO Daily Chart: USO dashed hopes on today's hefty decline. We have a large bearish engulfing candlestick that implies for downside tomorrow. The 200-day EMA is there with April lows for support, but this is not a pretty chart anymore. The RSI has tumbled into negative territory and the PMO topped and is nearing a crossover SELL signal already. Stochastics also imply more downside ahead. Erin is reevaluating her positions in Energy.
IT Trend Model: BUY as of 8/2/2022
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: TLT failed to overcome resistance, but had an excellent day. The rising trend is intact and the RSI/Stochastics are positive and rising. This is a nice looking bottoming formation after yesterday's IT Trend Model "Silver Cross" BUY signal.
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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