Today the Energy Sector 20-day EMA crossed up through the 50-day EMA (Silver Cross), generating an IT Trend Model BUY signal. Energy was the last holdout, so now all 11 S&P Sectors are on BUY signals. Participation is a big problem on this chart. The Golden Cross Index (GCI) is falling fast as more Energy stocks experience "Death Crosses" of the 50/200-day EMAs. %Stocks above their 20/50/200-day EMAs is still positive, but deteriorating.
TLT's 20-day EMA crossed down through the 50-day EMA (Dark Cross). Since the crossover took place below the 200EMA, the IT Trend Model changes to SELL. We'll discuss TLT in more detail in its section at the bottom of the report.
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 RRG continues to deteriorate with the exception of XLF, XLRE, XLP and XLV. All four of those sectors are in the Leading quadrant and are holding bullish northeast headings.
XLC and XLB added bearish southward components to their headings.
XLK sailed quickly into the Weakening quadrant today to join XLY and XLE. XLE actually moved slight north today which is positive. XLU and XLI continue southward toward the Weakening quadrant.
Weekly: The weekly chart shows us that the market is in a strong rising trend given all sectors with the exception of XLB and XLE, have bullish northeast headings.
XLU has managed to get into the Leading quadrant before all of the other sectors. XLB is seeing improvement. It is moving toward the Improving quadrant, but still has a westward component to its 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: BUY as of 8/2/2022
LT Trend Model: SELL as of 5/5/2022
SPY Daily Chart: Price dropped today. It wasn't a huge decline, but price is now headed to test the bottom of the bearish rising wedge. The PMO slowed its ascent in overbought territory. We have an OBV negative divergence in play now. The decline did help the RSI move out of overbought territory.
The VIX continues to oscillate above its moving average on our inverted scale and Stochastics remain above 80 (although they turned down today). This suggests internal strength is still in effect.
Here is the latest recording:
We apologize but due to technical difficulties (wetware problem), there is no recording for today's DecisionPoint Trading Room. We will be back next week and will make sure to hit the "record" button. You'll find last week's recording HERE.
S&P 500 New 52-Week Highs/Lows: New Highs pulled back, but on the bright side, there were no New Lows. The 10-DMA of the High-Low Differential continues to rise slowly.
Climax* Analysis: There were climax readings on most of the indicators today, but SPX Net A-D was an exception, and SPX Total Volume failed to confirm. The end result was still a downside initiation climax. This climax is opportune in the respect price has finally topped, and overbought conditions have been calling for a 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.
STOs turned down from extremely overbought territory. Last time we saw overbought conditions relieved on sideways consolidation. We'd like to think that is what will happen this time too, but we have to consider this a big attention flag. Notice the damage done to %PMOs Rising. If stocks don't have rising momentum, the index will struggle to keep the rally afloat.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT.
The ITBM/ITVM rose again and are now at overbought extremes. We don't see deterioration of PMO BUY signals, but the reading is very overbought.
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 86.6% of stocks above their 20-day and 87.2% above their 50-day EMAs. While these percentages are much higher than the SCI reading of 76.8%, we note that both of those indicators have topped.
The intermediate-term bias is BULLISH. The SCI is above 70% which is bullish.
The long-term bias is Neutral to BULLISH. We have 62.4% of stocks with price above their 200-day EMA and that is higher than the GCI reading of 34.6%. The GCI has had a positive crossover its signal line and is rising, albeit very slowly.
CONCLUSION: Erin tweeted today that she believes there could be a pullback/correction very soon (Follow her on Twitter @_DecisionPoint). The rising trend is intact and the PMO is still rising, but overbought conditions continue to be a problem. It's the STOs that bother us most given they topped today. Last two times they did we didn't see much price damage. Let's hope for the best, but definitely prepare for the worst by setting hard stops.
Erin is 60% exposed to the market with hard stops.
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Bitcoin dropped below both the 20/50-day EMAs. Price is now testing the bottom of a bearish rising wedge. We expect it to breakdown as the pattern suggests. The RSI nearly hit negative territory today and the PMO has topped and is nearing a crossover SELL signal in near-term overbought territory. Stochastics just dipped into negative territory.
Yields are now in rising trends.
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 pushed above the 50-day EMA and is about to overcome short-term overhead resistance. Indicators are firming up with the RSI now in positive territory and the PMO rising out of oversold territory. Stochastics are above 80 and have turned back up. Rising rates will likely continue.
IT Trend Model: BUY as of 6/22/2021
LT Trend Model: BUY as of 8/19/2021
UUP Daily Chart: Since mid-July, the Dollar has been consolidating. There are positives in the short term. The RSI is positive, Stochastics are above 80 and the PMO has turned back up. We did see a bearish filled black candlestick today as resistance arrived at the early August top. We could see a decline tomorrow based on the candlestick, but indicators suggest the Dollar will continue higher.
IT Trend Model: NEUTRAL as of 5/3/2022
LT Trend Model: SELL as of 6/30/2022
GLD Daily Chart: We have a bullish cup with handle pattern on Gold, but for now it appears the "handle" will continue to form. The short-term rising trend was broken and support at the 20-day EMA gave way. The PMO hasn't turned completely down, but it looks like it will top below the zero line which would be extra bearish. Stochastics are now in negative territory. Short term, Gold is very weak. We still favor it in the long term.
GOLD Daily Chart: GLD (above) never cleared resistance at the May low. While $GOLD was successful in that endeavor, it has now lost that support level. Indicators imply a drop to $1750.
GOLD MINERS Golden and Silver Cross Indexes: We really liked Gold Miners and Miners in general, but with Gold getting hit, those groups don't look as appetizing. Participation was slashed on this recent decline. The RSI is negative and the PMO is topping beneath the zero line. This was a promising set up. Unfortunately it appears support will need to be tested. We will watch to see participation improve under the surface.
CRUDE OIL (USO)
IT Trend Model: NEUTRAL as of 7/8/2022
LT Trend Model: BUY as of 3/9/2021
USO Daily Chart: Crude Oil rebounded today, but it did little to improve the chart. The RSI did turn back up, but is firmly negative. Stochastics are still falling. The PMO is on a SELL signal. The indicators are very oversold and support is still holding, but this area of the market is still suspect.
There is a clear support zone between the March low and April/July lows that needs to hold.
IT Trend Model: SELL as of 8/17/2022
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: The short-term declining trend continues for TLT and today's "Dark Cross" IT Trend Model SELL signal suggests TLT will continue to be under pressure. The RSI is negative and Stochastics turned down. The PMO is on a SELL signal and moving lower. This is a fairly strong level of support, but indicators and the yield charts tell us it is likely it will be broken.
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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