Yesterday we had an IT Trend Model "Silver Cross" BUY signal on the Dow Industrials (DIA) so it wasn't a surprise to see the Industrials Sector (XLI) garner the same signal today. The signal was generated when the 20-day EMA crossed up through the 50-day EMA (Silver Cross). The chart displays strong participation of stocks above their 20/50/200-day EMAs. In fact, the Golden Cross Index (GCI) had a positive crossover its signal line today giving us an improved long-term bias. We wouldn't go so far as to say the long-term bias is bullish, but it is certainly getting there. We'd like to see a higher reading on the GCI before we call it a bullish long-term bias.
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.
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 saw the market swing wildly upward in the morning and then slowly lose steam throughout the day. This formed a bearish engulfing candlestick. Within the original rising wedge formation, a rising tops line has formed making an even tighter wedge. While we normally expect the rising wedge to resolve downward, this tight formation seems to make a bearish resolution even more imperative. Even so, it would not negate the longer-term bullish picture.
The RSI, PMO and Stochastics are still positive. We note that the Bollinger Bands on the VIX are widening due to the upward volatility. Typically an expansion of the Bands is a bad thing, but in this case it is bullish. While the VIX remains above its average on the inverted scale, we have internal strength.
Here is the latest recording:
S&P 500 New 52-Week Highs/Lows: Similar to yesterday, we saw New Highs pull back slightly. Remember this is an intraday tally of stocks that made new 52-week highs. We still find it bullish that we have more new highs on a down day. The 10-DMA of the High-Low Differential continues higher which is also bullish.
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.
STOs dropped considerably today. That is excellent. We need them to leave overbought territory and this is occurring without harming the short-term rising trend.
Intermediate-Term Market Indicators: The intermediate-term market trend is DOWN and the condition is NEUTRAL to OVERBOUGHT.
Yesterday's comments still apply:
"We really like the look of the ITBM/ITVM. They've reached positive territory and are continuing to rise. This is one of the reasons we do have confidence (for now) in the current rally. 95% of the SPX are on PMO crossover BUY signals. That is plenty of support to keep the rally pushing 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 in the short term is BULLISH. We have strong participation of stocks above their key moving averages, particularly above the 20-day EMA.
The bias in the intermediate term is BULLISH. The SCI continues to rise strongly out of oversold readings.
The bias in the long term is NEUTRAL. We are waiting on the GCI to have a positive crossover its signal line before we can switch to a bullish long-term bias. We would also like to see slightly higher readings on the GCI.
CONCLUSION: While the market moved lower on the day, the short-term rising trend was not broken. We do have bearish wedges to contend with, but STOs are unwinding without need of a big market decline. The ITBM/ITVM continue to rise. We expected some churn on the way up and that is exactly what we are getting. Indicators in all timeframes remain strong and participation is positive enough to give us a bullish bias in both the short and intermediate terms. We wouldn't be surprised if we saw more sideways action as the market digests the recent rally, but overall we believe the bear market rally is still in force.
Erin is 50% exposed.
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Bitcoin is back to moving sideways. We did see an IT Trend Model "Silver Cross" BUY signal as the 20-day EMA crossed above the 50-day EMA. We still aren't bullish on Bitcoin. Yes, the RSI is positive, but Stochastics are falling and have dropped below 80 and the PMO is trying to top.
Interest rates were mixed on the day. The one-year yield is hitting multi-year highs again while most other yields paused.
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 is clinging to multiple support levels, but given the PMO, it isn't likely to hold. The rising trend was violated today. An upside reversal isn't out of the question given Stochastics have turned up and the RSI remains in positive territory above net neutral (50).
IT Trend Model: BUY as of 6/22/2021
LT Trend Model: BUY as of 8/19/2021
UUP Daily Chart: The Dollar turned lower before testing the top of the bearish descending triangle and that suggests to us a coming breakdown below $29.50. We do note that the RSI is positive and Stochastics are rising, but until the PMO turns up, we will remain short-term bearish on the Dollar.
IT Trend Model: NEUTRAL as of 5/3/2022
LT Trend Model: SELL as of 6/30/2022
GLD Daily Chart: GLD managed a positive close, but formed a bearish filled black candlestick that implies tomorrow won't be so positive. Indicators are mostly neutral, but the PMO is on a crossover BUY signal and attempting to rise. The RSI is rising, but in negative territory. Stochastics are not at all encouraging.
GOLD Daily Chart: As of publishing, we do not have today's Discount/Premium reading. If you're reading this later and click on the chart, you should see the updated reading.
GOLD MINERS Golden and Silver Cross Indexes: GDX is chopping again. The chart goes from good to bad, back to good nearly everyday. We are going to concentrate on participation which is expanding again. The SCI is rising nicely and today, the PMO moved above the zero line. The group is poised to rally further. If today's rally in Gold can be sustained, this group would be ready to move.
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 formed a bearish filled black candlestick today, but indicators continue to improve. The RSI is moving higher after reversing on net neutral (50). The PMO is flat but beginning to angle upward. Stochastics are rising after a brief bottom and should get above 80 soon. $OVX remains above its moving average on the inverted scale, suggesting internal strength is there. We also note a possible bullish reverse head and shoulders with a rising neckline. The pattern won't be confirmed until a break above the neckline.
IT Trend Model: SELLas of 8/19/2022
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: TLT had topped before testing the declining tops trendline so we were looking for another decline today. Instead it did test the trendline. Unfortunately it formed a filled black candlestick which suggests we will not get a break from the declining trend.
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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