It was a choppy day for the market, but not worse than we expected based upon yesterday's upside exhaustion climax. But the day turned out much better than it might have considering how bad big tech performed. AAPL had the best day, only down -1.96%; AMZN -4.10%; GOOGL -9.14%; META -5.59%; and MSFT -7.72%. Astounding. The fact that the market didn't completely tank tells us how broad the current rally is.
Energy (XLE) and Healthcare (XLV) were both up over 1%. Solar (TAN) was up 4%+, Copper (CPER) was up 4%+ and Oil Services (XES) was up +4.87%. We are now seeing a market that has plenty of pockets of strength.
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.
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: Today's candlestick looks suspect. It is a clearly bearish "shooting star" (long wick, small body at the bottom). This does imply another down day ahead. Additionally, the VIX did puncture the upper Bollinger Band today on our inverted scale. That would also imply a down day tomorrow. At present, the SPY is up +0.38% in after hours trading so the decline should be mild if we get one.
Primary indicators are very bullish. The PMO is rising on an oversold BUY signal. The RSI is above net neutral (50) and Stochastics are sitting well above 80.
Here is the latest recording:
S&P 500 New 52-Week Highs/Lows: While the market closed lower today, we saw an expansion in New Highs. This is indicative of the intraday readings during the rally today. We aren't seeing much in the way of New Lows. The 10-DMA of the High-Low Differential is rising strongly and should hit positive territory soon.
Climax* Analysis: There were no climax readings 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 UP and the condition is OVERBOUGHT.
Today's decline left the short-term indicators unperturbed. Overbought conditions could become a problem, but we've seen higher readings.
Intermediate-Term Market Indicators: The intermediate-term market trend is DOWN and the condition is NEUTRAL.
Yesterday's comments still apply:
"The ITBM/ITVM are still somewhat oversold, but %PMO BUY Signals is clearly overbought. All are rising which is bullish; however, we note that unlike the %PMOs Rising in the prior chart, it doesn't usually stay overbought for very long."
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're seeing an expansion in participation of Stocks > 20/50-day EMAs and those readings are much higher than the SCI.
The intermediate-term bias is moving bullish. The SCI is rising strongly after a positive crossover last week. We'd call it bullish, but we would like to see a higher reading on the SCI.
The long-term bias is bearish but improving. The GCI isn't quite rising yet, but we do finally see some higher percentages on %Stocks > 50/200-day EMAs and those are higher than the GCI. "
CONCLUSION: The fact that the market held up so well in the face of the mega-tech stock crash, implies that there is still strength in the rest of the market, and that the bear market rally isn't over. Indicators simply look too good to expect the end of the rally. We also have plenty of pockets of strength to hold things together. More earnings to come this week including Apple (AAPL) which reports tomorrow after the bell. The reaction to Apple's earnings will be telling regarding the fortitude of the market to keep the rally alive. We may see more churn/pullback, but we are not giving up on the bear market rally.
Erin 40% exposed with a 2.5% hedge.
Have you subscribed the DecisionPoint Diamonds yet? DP does the work for you by providing handpicked stocks/ETFs from exclusive DP scans! Add it with a discount! Contact firstname.lastname@example.org for more information!
This is exactly what we needed to see to move out of our neutral outlook for Bitcoin--followthrough on yesterday's breakout. Bitcoin even broke from overhead resistance at $20,500! Indicators have finally shifted out of neutral and into drive. We should see prices continue higher.
Yields continue to pullback. We might finally see a respite and reversal. Rising trends are vulnerable but not dead.
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 pulled back to multiple areas of support at the September top, 20-day EMA and short-term rising bottoms trendline. This is the first real PMO SELL signal and Stochastics are confirming this decline. It is time for interest rates to correct with a possible target being support at the June high for $TNX.
IT Trend Model: BUY as of 6/22/2021
LT Trend Model: BUY as of 8/19/2021
UUP Daily Chart: UUP confirmed the double-top with a breakdown below both the 50-day EMA and the confirmation line at the early October price low. The minimum downside target of the pattern would be around $28.75 or at least a test of the intermediate-term rising bottoms trendline. Indicators are falling fast so we do not expect an upside reversal.
IT Trend Model: NEUTRAL as of 5/3/2022
LT Trend Model: SELL as of 6/30/2022
GLD Daily Chart: We finally got a PMO crossover BUY signal on Gold. The RSI is about to move into positive territory above net neutral (50) and Stochastics are gently rising. We would look for Gold to at least test the confirmation line of the double-bottom pattern.
GOLD Daily Chart: Yesterday's comments still apply:
"$GVZ remains above it moving average on the inverted scale indicating strength, but the Bands have definitely contracted. This is a precursor to new volatility. Our hope would be volatility to the upside, but Gold is so recalcitrant. Discounts remain at historic levels, making the ground fertile for a rally continuation."
GOLD MINERS Golden and Silver Cross Indexes: GDX looks very good right now. Erin will be on StockChartsTV's "The Pitch" tomorrow. One of the five symbol she'll be "pitching" is GDX. The RSI is now in positive territory and the PMO is rising again on a crossover BUY signal. There is a distinct reverse head and shoulders pattern on price. What is most convincing to us would be the thrust of the SCI upward and 100% of the Miners having price above their 20-day EMA. That's is excellent fuel to keep GDX rising. More fuel? Rising Gold prices and a favorable market environment.
CRUDE OIL (USO)
IT Trend Model: NEUTRAL as of 7/8/2022
LT Trend Model: BUY as of 3/9/2021
USO Daily Chart: USO finally broke out in a meaningful way. Price traded almost completely above the 50-day EMA. The RSI is rising now and the PMO just moved above the zero line. Stochastics have turned up early. The $OVX is still above its moving average on the inverted scale, implying internal strength.
IT Trend Model: SELLas of 8/19/2022
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: The fall in yields has sparked some bullish activity in Bonds. The 20-day EMA and declining tops trendline will likely be the sticking point, but if yields do break rising trends, we might finally see some relief for Bonds. TLT is looking up with a rising RSI, PMO and Stochastics. Still, we think upside potential is fairly limited with a likely reversal at $100 ahead.
Good Luck & Good Trading!
Erin Swenlin and Carl Swenlin
Technical Analysis is a windsock, not a crystal ball. --Carl Swenlin
(c) Copyright 2022 DecisionPoint.com
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.
Helpful DecisionPoint Links:
DecisionPoint Alert Chart List
DecisionPoint Golden Cross/Silver Cross Index Chart List
DecisionPoint Sector Chart List
Price Momentum Oscillator (PMO)
Swenlin Trading Oscillators (STO-B and STO-V)
DecisionPoint is not a registered investment advisor. Investment and trading decisions are solely your responsibility. DecisionPoint newsletters, blogs or website materials should NOT be interpreted as a recommendation or solicitation to buy or sell any security or to take any specific action.