It's been a rough week and the intraday chart displays that clearly. We were hoping for a falling wedge on the intraday chart, but instead we see a declining trend channel. When we talk about "Diamonds in the Rough" for the DecisionPoint Diamonds Report, we look for a positive 5-minute RSI with a 5-minute PMO positive crossover. We're not there yet. Certainly seeing a 5-minute PMO on the rise toward a positive crossover its signal line is what we use to determine a "conservative" entry on a 5-minute chart. We have the 5-minute PMO rising, but the 5-minute RSI has topped in negative territory. If we're lucky, we'll get a move to the top of the declining trend channel, but overall on a daily chart, the picture isn't quite so bright.
** Erin: "I just received word that my mother-in-law from my previous marriage just went on hospice. I'm helping to organize flights for my daughters and ex-husband so they can be there for her. Hence this report will be abbreviated as necessary." **
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® Charts ($ONE Benchmark):
Yesterday's comments still apply:
"We see bullish northeast headings popping up and if not northeast, they are traveling northward from the Lagging quadrant. If this rally continues, we would expect to see nearly all of these sectors reach the Improving quadrant.
XLE was on a fast train to the Lagging quadrant, but that is changing as it begins to curl back toward the Leading quadrant. XLU took a brief dip into Lagging, but continues to move quickly toward Leading."
XLP and XLV have turned southwest and are headed toward the Lagging quadrant. All others should hit the Leading quadrant to join resident XLU. XLE, XLY and XLK are getting close to the Leading quadrant. We do see some deterioration of heading on XLC and XLRE which could actually end up in the Lagging 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: BUY as of 8/2/2022
LT Trend Model: SELL as of 5/5/2022
SPY Daily Chart: The short-term rising bottoms trendline failed to hold today. The indicators are very bearish. We do note that if we see a lower price bottom and the OBV stays where it is, we could end up with a positive divergence. We aren't there yet.
The RSI halted its decline but remains in negative territory below net neutral (50). The PMO is still moving lower after topping bearishly below its signal line. The VIX continues to oscillate below its moving average on our inverted scale suggesting we still have internal weakness. Stochastics topped yesterday and continue lower which is definitely bearish.
Here is the latest recording:
S&P 500 New 52-Week Highs/Lows: While price was lower today, New Lows contracted, which is bullish in the ultra-short-term. The fact that New Lows are not at all extended, doesn't lend a lot of weight to this assessment.
Climax* Analysis: There were no climaxes today. The relatively high volume indicates a lot of turnover.
*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 DOWN and the condition is OVERBOUGHT.
The STOs continue to contract and we still have very few stocks with rising momentum.
Intermediate-Term Market Indicators: The intermediate-term market trend is DOWN and the condition is NEUTRAL.
Today both the ITBM and ITVM moved lower extinguishing the hopes for a new rally.
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 Bearish given the steep decline in participation of %Stocks > 20/50-day EMAs sharply dropping.
The intermediate-term bias is Bearish. Not only are the %Stocks > 20/50-day EMAs lower than the SCI, the SCI has topped beneath its signal line.
The long-term bias is Bearish. The GCI is at a very low reading and we see fewer stocks above their 50/200-day EMAs. The %Stocks > 50/200-day EMAs is lower than the GCI percentage.
CONCLUSION: Tomorrow is options expiration. Usually we expect a lot of volume and low volatility. Given the negative indicators and loss of the short-term rising trend, there is high likelihood we will see more price movement than usual. Be sure your stops are tight and you are ready should the market make another big push to the downside.
Erin is 30% exposed to the market.
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Yesterday's comments still apply:
"We finally got bullish on Bitcoin given the strong breakout from the bullish falling wedge and 20/50-day EMAs. The indicators were finally rising in agreement. Well, the bottom dropped out. We now have a negative RSI, PMO top beneath the zero line and sharply declining Stochastics...all in one day. The breakdown below the 20/50-day EMAs and below the July/August bottoms. Not a good look. More decline likely ahead."
Rates continue to march skyward with little relief in sight with many yields breaking multi-year highs.
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
Yesterday's comments still apply:
"$TNX is now testing overhead resistance at the June high. Given the rising trend channel, strong RSI, rising PMO (which isn't overbought) and Stochastics oscillating above 80, we expect to see the breakout."
IT Trend Model: BUY as of 6/22/2021
LT Trend Model: BUY as of 8/19/2021
UUP Daily Chart: The Dollar finished slightly higher today, but is still indecisive. The indicators do suggest we will see the Dollar rise given the positive RSI and rising Stochastics. The PMO is still tentative.
Given price did not have to test the bottom of the bearish rising wedge before reversing, we expect higher prices.
IT Trend Model: NEUTRAL as of 5/3/2022
LT Trend Model: SELL as of 6/30/2022
GLD Daily Chart: Gold lost support today in a big way. The indicators are very negative. It continues to confound us that Gold isn't doing better in this bearish environment, but we have to go with the charts. Lower prices are highly likely.
GOLD Daily Chart: $GVZ dropped deeply on our inverted scale which could mean this is more of a downside exhaustion phase for Gold. We'll know if that is the case tomorrow.
GOLD MINERS Golden and Silver Cross Indexes: GDX fell heavily due to the drop in Gold and the decline in the market. Participation has slimmed significantly after we were finally seeing GDX make headway. Erin owns GDX and has set a stop just below the recent short-term low.
(Full Disclosure: Erin owns GDX.)
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 dropped precipitously. We were finally seeing a rally and positive indicators but the decline today swiftly changed the indicators and our outlook to bearish.
IT Trend Model: SELLas of 8/19/2022
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: TLT dropped but managed to hold above support after breaking below it on Tuesday. Price is in a declining trend channel and indicators are poorly configured. With yields continuing higher and likely to continue rising, TLT will continue to suffer the consequences.
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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Price Momentum Oscillator (PMO)
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