The Energy Sector has briefly been on an IT NEUTRAL signal (for about a week), but today the 20- day EMA crossed back up through the 50-day EMA (Silver Cross), generating an IT Trend Model BUY Signal. Price is getting resistance, but the indicators are all very positive. Here is the long list:
The RSI is positive and not overbought. The PMO just triggered a crossover BUY signal just below the zero line. The Silver Cross Index (SCI) just moved above its signal line. The Golden Cross Index (GCI) is still over 85%. Participation of stocks above their 20/50/200-day EMAs is robust. Stochastics are above 80. Given it is showing relative strength against the SPY, it is a clear out-performer.
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.
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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)
Daily: All but three sectors are not holding bullish northeast headings, XLRE, XLU and XLP. XLU is by far the most bearish given its residency well within the Lagging sector.
XLE leapt into the Improving quadrant today. Note that it was even with XLF yesterday.
XLK has the most outperformance currently as it is further north and still moving strongly northeast.
Weekly: Yesterday's comments still apply:
"The weekly RRG is still reflecting internal weakness in the market. All sectors with the exception of XLE have strong bearish southwest headings. XLE is moving further into the Leading quadrant as Energy industry groups begin to surge."
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: SELL as of 9/8/2022
LT Trend Model: SELL as of 5/5/2022
SPY Daily Chart:
"Minneapolis Federal Reserve chief Neel Kashkari on Thursday said it's too early for the central bank to think about a pause in interest-rate hikes because there's little sign that inflation has peaked." - MarketWatch.com
This little story caused a market hiccup today, but notably, there wasn't any permanent damage. The market was down, but we think it was just more digesting of the big move on Monday and Tuesday. The last three days a bullish pennant has formed, with an upside projection of about SPY 395.
The RSI has topped in negative territory, but the PMO is still headed toward a crossover BUY signal. Stochastics are rising in positive territory.
Here is the latest recording:
S&P 500 New 52-Week Highs/Lows: New Lows continued to expand, but the 10-DMA of the High-Low Differential is rising out of oversold territory.
Climax* Analysis: Today there were unanimous downside climax readings, giving us a downside initiation climax. SPX Total Volume was sufficient to confirm. We note that the VIX hit the moving average and turned back down. None of this is bullish in the very short term.
*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 NEUTRAL.
After tipping over yesterday, both STOs started rising again which we look upon quite favorably. We lost some stocks with rising momentum, but we still have 74% with rising PMOs.
Intermediate-Term Market Indicators: The intermediate-term market trend is DOWN and the condition is EXTREMELY OVERSOLD.
We are happy to say that the ITBM/ITVM both continued higher, barely, but higher. They are still highly oversold and PMO Crossover BUY Signals expanded which is good.
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.
Yesterday's comments still apply:
"The short-term bias is bullish. We have a large number of stocks above their 20/50-day EMAs and those percentages are far higher than the SCI.
The intermediate-term bias is still bearish. The SCI may've turned up but the percentage is still bearishly low.
The long-term bias is bearish. The GCI continues lower. Given %Stocks > 200-day EMA is less than the GCI percentage, we can't expect the GCI to bottom in a meaningful way."
CONCLUSION: Let's see how we graded here are yesterday's questions and our answers:
" Will support hold? (We believe so.) Will STOs turn back up? (Probably not right away.) Will the IT indicators continue to rise? (Highly likely.) The majority of our indicators are still quite bullish suggesting to us that this was a pause rather than the beginning of a longer-term decline."
We passed. Ultimately, price held support at the July lows which bodes well. Indicators are bullish minus the RSI and a downside initiation climax. We expect an upside resolution, it just may take another day of churn.
Erin is 15% exposed.
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It's now time for Bitcoin to test the intermediate-term declining trend. It's looking more promising, but indicators are still wobbly. Stochastics are now above 80, but decelerating. It wouldn't be surprising if the breakout occurred, but indicator configuration tells us this short-term trading will be extended further.
After taking a short bearish breath, yields resumed their rallies.
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 looks very bullish. It resolved the parabolic advance, hit the rising trend line and 20-day EMA and promptly bounced higher. This really looks like a bull flag. The PMO is still holding its BUY signal and if we see follow-through, it will bottom above the signal line."
IT Trend Model: BUY as of 6/22/2021
LT Trend Model: BUY as of 8/19/2021
UUP Daily Chart: The Dollar saw a continuation of yesterday's rally in spite of the bearish filled black candlestick. The RSI is positive and rising and both the PMO and Stochastics are turning back up. Gold better watch out, the Dollar is ready to push higher.
IT Trend Model: NEUTRAL as of 5/3/2022
LT Trend Model: SELL as of 6/30/2022
GLD Daily Chart: Considering the strong rally in the Dollar, a small loss on GLD is a victory. Indicators are still bullish. Stochastics may be topping, but what is key for Stochastics, is that they stay above 80. That's occurring. The short-term rising trend is not yet being tested. In our opinion Gold is still showing strength.
GOLD Daily Chart: Discounts stagnated after falling from historic highs, but readings are still very high suggesting investors still don't find favor with Gold. Bearish sentiment is bullish for price.
GOLD MINERS Golden and Silver Cross Indexes: After pausing yesterday, Gold Miners rebounded and closed at the top of its trading range above the 50-day EMA. The indicators are very positive and participation has expanded greatly which is pushing the SCI above zero. A 20.69% SCI reading may not sound impressive, notice it has been reading zero for months. That's very bullish.
(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: Yesterday's comments apply:
"USO rallied strongly again today. Resistance at both the 50/200-day EMAs was overcome. This is fulfilling the bullish falling wedge we identified earlier. The indicators look great with a positive RSI, PMO rising on an oversold BUY signal and Stochastics above 80."
IT Trend Model: SELLas of 8/19/2022
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: TLT continues to languish and we expect this intermediate-term declining trend will continue dominate the daily chart in the longer-term. Indicators are nearly horizontal. A horizontal PMO means that no acceleration or deceleration is occurring. Price is basically on cruise control lower.
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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