Today the Health Care Sector 50-day EMA crossed down through the 200-day EMA (Death Cross), generating an LT Trend Model SELL signal. The dramatic name implies that the ETF is headed for some long-term turbulence. That may well be, but in this case, the price chart shows a full year of sideways movement and no obvious tendency for decline. We shall see.
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: It's pretty ugly right now. On the bright side, many of the sectors are beginning to curly up toward the Improving category. Unfortunately they are very far away from the border. The bias is clearly bearish.
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.
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 barely survived staying above support and holding the short-term rising trend. The "breakout" from the bullish falling wedge happened as a "drift" and with no upward price action.
Indicators remain very negative. The RSI is below net neutral (50), the PMO is falling and will likely move below the zero line tomorrow and Stochastics are mostly flat. The VIX remains beneath its moving average on our inverted scale which implies internal weakness.
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 may be seeing a slight positive divergence between price lows and New Lows. It's a bit early, but something we will watch, particularly since the 10-DMA of the High-Low Differential is flattening.
Climax* Analysis: There were no climaxes today.
*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 were mixed today. Participation of stocks above their 20-day EMA is anemic at best and we have only 3% of the SPX with positive momentum (15 stocks out of 500). These indicators suggest there isn't any strength to get price to pivot.
Intermediate-Term Market Indicators: The intermediate-term market trend is DOWN and the condition is OVERSOLD.
We've listed the ITBM/ITVM as being oversold, however there is plenty of room for them to fall further. Only 4% of stocks are on PMO BUY signals. Since we have only 3% with rising PMOs, that number isn't likely to move much higher.
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 BEARISH in all three timeframes. The %Stocks > 20/50/200-day EMAs are all below the SCI and GCI. We can't see improvement on those indicators until those percentages move higher than the SCI and GCI.
CONCLUSION: One look at the Industry Summary on StockCharts and you know there is little to no participation. Nearly every group has negative momentum. Indicators are all very negative in all timeframes suggesting more downside ahead. Another down day and we will see the short-term rising trend and support broken. Currently Erin is only 15% exposed to the market with about half that exposure in inverse ETFs. I don't think we need to tell you to be careful right now, but if you do expand your exposure, stay true to your targets and stops.
Erin is 15% exposed.
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Bitcoin drifted out of the bullish falling wedge. "Drifts" will nearly always mean downside ahead and Bitcoin is proving the point. Indicators are very bearish. Look for a test at $18,000.
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
In spite of a bearish rising wedge, $TNX pushed higher and broke through the top. A bullish conclusion to a bearish pattern is especially bullish. Indicators are very bullish with a positive RSI (albeit getting overbought), rising PMO that is not overbought and Stochastics oscillating above 80. All of this suggests the June high will be tested.
IT Trend Model: BUY as of 6/22/2021
LT Trend Model: BUY as of 8/19/2021
UUP Daily Chart: The Dollar broke out and continues higher. The RSI is now overbought, but based on activity in April, May and July, it can stay overbought. We think it will as UUP continues higher. Note the pop in volume today.
IT Trend Model: NEUTRAL as of 5/3/2022
LT Trend Model: SELL as of 6/30/2022
GLD Daily Chart: Gold is holding support at the July low, but with the Dollar strengthening, downward pressure will likely push price below support.
GOLD Daily Chart: Discounts are extraordinarily high. Usually that condition will lead to higher prices. So far it hasn't helped.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners were one of only two industry groups with positive momentum on Friday. That rising momentum ended today. The Dollar is putting pressure on Gold and hence Gold Miners too. A weak market also adds fuel to the bearish fire. Until we start to see more participation, or should we say "some participation" since there is zero, we would expect support to fail once again.
CRUDE OIL (USO)
IT Trend Model: NEUTRAL as of 7/8/2022
LT Trend Model: BUY as of 3/9/2021
USO Daily Chart: Oil Equipment & Services was the other industry group that had positive momentum Friday. That has also ended likely on the weakness in Oil in right now. USO is managing to hold support, but indicators are very negative. We have also annotated a large symmetrical triangle. Those are continuation patterns. Since the prior trend was down, we should expect a breakdown rather than a breakout.
IT Trend Model: SELLas of 8/19/2022
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: TLT may be holding support right now, but the 20-year yield is showing no signs of weakness right now so expect a breakdown here. Indicators are certainly in favor of that conclusion.
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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