Thanksgiving came and went and now the market appears to be suffering from a turkey hangover--you know the ones, too much turkey and then sleepiness. However, at the end of trading today we started to see a rising trend develop. The 5-minute PMO is back in positive territory for the first time since the Friday. The 5-minute RSI is positive and trending higher. Don't expect to see any earth shattering rallies tomorrow. The overall market is simply too weak based on our indicators.
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
SECTORS
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: BUY as of 11/15/2022
LT Trend Model: SELL as of 5/5/2022
SPY Daily Chart: Support at $390 is still holding, but now we have a small double-top pattern developing within an already bearish rising wedge. The PMO has now topped.
On the bright side, the VIX is hovering above its moving average on the inverted scale and that does imply there is some internal strength in the very short term. Stochastics also remain above 80 which also implies internal strength...although they are now pointed downward and at risk to lose support at 80.
Here is the latest recording:
S&P 500 New 52-Week Highs/Lows: No expansion in New Lows which is a plus. A big minus is the topping of the 10-DMA of the High-Low Differential. It is a pretty good indicator for catching market tops.
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 were mixed today with the breadth indicator continuing to decline and the volume indicator turning back up. The bleeding off of %PMOs Rising stalled today which is good and we actually saw a few more stocks get back above their 20-day EMAs. Still, with less than half of the SPY showing rising momentum we wonder how long support can hold.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT.
IT indicators continue to fall from overbought territory. As noted above with less than half of the SPY holding rising momentum, %PMO BUY signals will continue to be lost. Note the negative divergence between that indicator and price tops.
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 short-term bias is slightly BULLISH but deteriorating quickly as stocks begin to lose support at 20/50-day EMAs.
The intermediate-term bias is NEUTRAL to BEARISH. The SCI is still rising, but given the parity among %Stocks > 20/50-day EMAs and the SCI, it will be topping very soon. That will be when it slides into a BEARISH bias.
The long-term bias is NEUTRAL to BULLISH. Based on the rising GCI and higher percentages of stocks above their 50/200-day EMAs, we have to label the bias as at least partially bullish in the long term.
CONCLUSION: Yesterday's downside initiation climax was prescient as the market continued to slide today. While support is being held, the bearish double-top within a bearish rising wedge suggests lower prices will continue. Indicators are still bearish, although less so than yesterday. At best, we see the market moving sideways while the worst case scenario is a loss of support and the short-term rising trend. We favor the latter.
Erin is exposed 10%.
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BITCOIN
Bitcoin is in the process of forming a bearish descending triangle (flat bottom, declining tops). The PMO did cross over its signal line, barely. Stochastics did turn up in positive territory which is good, but the RSI remains negative and price action is less than stellar right now. A new trading range is developing but we still believe Bitcoin is vulnerable to a break below $15,500 based on the bearish chart pattern.
INTEREST RATES
Yields turned up slightly today.
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 rallied today, but it did little to improve the indicators. The RSI is rising again, but remains firmly ensconced in negative territory below net neutral (50). The PMO is about to move below the zero line. This is a strong area of support obviously, but indicators tell us the decline isn't over quite yet.
DOLLAR (UUP)
IT Trend Model: NEUTRAL as of 11/14/2022
LT Trend Model: BUY as of 8/19/2021
UUP Daily Chart: Yesterday's comments still apply:
"The Dollar is holding support at $28.50 for UUP. Indicators are undecided right now. Given support is holding, we see a possible very short-term double-bottom shaping up. It's early and indicators aren't quite bullish yet, but we should prepare for a rally."
GOLD
IT Trend Model: BUY as of 11/14/2022
LT Trend Model: SELL as of 6/30/2022
GLD Daily Chart: Gold attempted to recapture the short-term rising trend but failed quickly. While the RSI is positive, the PMO has topped and Stochastics look very bearish. The Dollar appears ready for another short rally and that will put downside pressure on Gold.
GOLD Daily Chart: $GOLD is still holding the short-term rising trend and indicators look less bearish. The PMO is bottoming above the signal line and the RSI is positive. We would like to see confirmation from Stochastics. They still look very negative. Discounts remain high so trader sentiment remains very bearish. While that can work in Gold's favor, a strong Dollar will likely undo this rising trend.
GOLD MINERS Golden and Silver Cross Indexes: We talked about vertigo yesterday as Gold Miners continue to bounce around violently. While today's rally looks solid, the PMO has topped and more importantly, the Silver Cross Index (SCI) has topped. It appeared we had a double-top in the making, but we're now watching for a bullish ascending triangle (flat top, rising bottoms). Entering this group right now is risky, but holding onto your miners is also risky right now. Consider tightening up the stops and we'll see if this rocky ride will resolve upward in spite of the PMO and topping SCI.
CRUDE OIL (USO)
IT Trend Model: NEUTRAL as of 11/21/2022
LT Trend Model: BUY as of 3/9/2021
USO Daily Chart: Crude Oil closed higher today, but the short-term declining trend is still intact. Stochastics have turned up, but the PMO has not. The RSI is also negative. The $OVX is rising on the inverted scale after a puncture of the lower Bollinger Band so we could see some continuation of today's rally, but given the impending "death cross" of the 50/200-day EMAs, we don't see it making that much headway.
BONDS (TLT)
IT Trend Model: SELL as of 8/19/2022
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: As expected, the bearish rising wedge resolved to the downside. Indicators remain very bullish and we aren't looking for a big rally in interest rates just yet so Bonds do have a somewhat bullish outlook. Today's breakdown does put a large crack in the foundation but support is near at the 50-day EMA and $100.
Notice that this top has kept the long-term declining trend alive. We'd be careful with Bonds as they do look ready to resume their decline in earnest.
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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