Today we got four more market/sector Dark Cross SELL Signals, which is when the 20-day EMA crosses down through the 50-day EMA below the 200-day EMA -- Dow Industrials (DIA), S&P 600 Small-Cap (IJR), Nasdaq 100 (QQQ), and the Technology Sector (XLK). In order to regain the IT Trend Model BUY signals, price will need to scale above their 20/50-day EMAs. It could certainly happen given today's strong rally.
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: We're using $ONE as our benchmark.
Daily: The RRG is showing improvement after today's strong rally. All of the sectors are underperforming, but now we see all but XLE curling up toward the Improving quadrant. They still have quite a bit of distance to travel, but another few days of rally should close the gap between Lagging and Improving.
Weekly: The intermediate-term picture is more encouraging with the majority of sectors heading back toward the Leading quadrant. We do detect weakness for Healthcare (XLV) in particular given it has switched into a bearish southwest heading, moving toward the Lagging quadrant. Additionally, XLRE is losing steam.
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: If the market was going to bounce, this was the place for it to do so given the test of support at June/July tops and the rising trendline. It formed a bullish engulfing candlestick today. This is encouraging, but resistance will arrive very soon at the 20/50-day EMAs and mid-May top, lows at beginning of June and early-August lows. If that weren't enough, the short-term declining tops trendline arrives around that level as well.
Indicators saw slight improvement with the RSI rising (but negative), PMO deceleration and Stochastics angling higher. The VIX saw lower readings, but remains beneath its moving average on our inverted scale, suggesting internal weakness is still there.
Here is the latest recording:
We did not record on Monday due to the holiday so here is a copy of the week before:
S&P 500 New 52-Week Highs/Lows: We are seeing a slight positive divergence between price lows and New Lows.
Climax* Analysis: Strong and unanimous climaxes today resulted in an upside initiation climax. SPX Total Volume was okay, but not great. However, it could be due to holiday trading.
*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 OVERSOLD.
STOs contracted and participation improved greatly with almost 1/3rd of the SPX seeing rising momentum.
Intermediate-Term Market Indicators: The intermediate-term market trend is DOWN and the condition is OVERSOLD.
Both the ITBM/ITVM continued lower and are not oversold. These indicators have been giving us some excellent attention flags on shift in the trend. When/if they start contracting, we would then look for a more lasting bear market 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 bias is still BEARISH in all three timeframes. Although we are seeing some improvement in the long-term bias given %Stocks > 50/200-day EMAs are greater than the GCI percentage.
CONCLUSION: The market saw a much needed rally across everything but Energy. This improved the technicals somewhat. Indicators are still bearish, but we are seeing improvements in %Stocks > 20/50/200-day EMAs and the STOs. Today's upside initiation climax is accompanied by a bullish engulfing candlestick so we have to assume we will see a continuation of today's rally. If you have any inverse ETFs or hedges, consider tightening up stops as this rally could get some legs.
Erin is 15% exposed, but has tightened her stops on her hedges.
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We have a new bullish falling wedge annotated now that we have the top from yesterday. The pattern implies an upside breakout ahead, but we know how the last wedge resolved... with a "drift" out of it and then more downside. We have to admit that the PMO is starting to turn up, but Stochastics and the RSI need more help.
Interest rates are in the process of breaking above resistance at the June highs. We don't see relief in sight.
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 have reannotated the trendlines on $TNX. We had a bearish rising wedge, but price broke through the top and formed two new tops that we can use. This sets up a rising trend channel. The indicators are all very strong with a positive RSI, rising PMO and Stochastics oscillating above 80. It is at the top of the rising trend channel, so we could see a slight pullback to test the bottom of the channel.
IT Trend Model: BUY as of 6/22/2021
LT Trend Model: BUY as of 8/19/2021
UUP Daily Chart: UUP formed a giant bearish engulfing candlestick today. We've annotated a rising wedge formation which suggests the Dollar will at least move to test the bottom of the wedge. We expect a small pullback, but not likely that deep.
IT Trend Model: NEUTRAL as of 5/3/2022
LT Trend Model: SELL as of 6/30/2022
GLD Daily Chart: As with the market, if Gold were going to rebound, this was the place to do it--along support at the July low. GLD also formed a bullish engulfing candlestick that suggests follow-through tomorrow. Indicators are improving, but aren't totally bullish yet. The RSI is rising, but remains in negative territory below net neutral (50). The PMO is decelerating but hasn't quite turned up. Stochastics are rising but haven't left negative territory.
GOLD Daily Chart: We don't have updated discount information, but with today's bounce we expect they pulled back slightly. High discounts generally lead to rising trends which is what we are looking for right now.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners have a heartbeat, albeit very faint. We have over 20% of stocks above their 20-day EMAs now. The PMO is beginning to decelerate and the RSI is rising, as are Stochastics. This area of the market is perking up. If Gold and the market rallies hold up, this will be an excellent group to consider.
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 like a rock today. Energy was the only sector that finished lower on the day and this chart explains why. The loss of the 200-day EMA, the breakdown from the symmetrical triangle and drop below support at the July low is very bearish. OPEC is cutting production slightly, but it isn't affecting our Crude Oil prices yet.
IT Trend Model: SELLas of 8/19/2022
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: TLT is clinging to support right now. Indicators aren't bullish, but they are attempting to right themselves. We believe rates will continue to rise so ultimately this support level will likely be lost.
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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