Today the S&P 400 Mid-Cap Index (MDY) and the Consumer Staples Sector (XLP) 20-day EMAs crossed up through the 50-day EMAs (Silver Cross) generating IT Trend Model BUY signals.
The PMO on MDY shows new acceleration higher on this bounce off the 50-day EMA. The PMO is not overbought. Overhead resistance is nearing at the 200-day EMA. With rising OBV bottoms confirmation and the PMO confirming the rally, price should scale the 200-day EMA.
The longer-term declining trend is still intact. Price is getting close to testing that declining bottoms trendline as well as resistance at the June high around $74. The SCI is accelerating higher and participation of stocks above their 20/50-day EMAs is robust. Stochastics have just turned up and the RSI rebounded in positive territory. XLP looks bullish.
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: The market is holding up and while volume was rather low today, we like the close above the 20-day EMA and the early October top. Our expectation is a move back above the 50-day EMA.
Indicators are confirming today's bullish activity. The RSI is back in positive territory and the PMO is rising again, bottoming above its signal line which is especially bullish. Stochastics have turned up. More importantly, the VIX continues to see relatively low readings and hasn't punctured the upper Bollinger Band yet. A puncture on this inverted scale to the upside would indicate a possible bearish pivot point--so far so good.
Here is the latest recording:
S&P 500 New 52-Week Highs/Lows: We saw about even New Highs and New Lows. The 10-DMA of the High-Low Differential looks very toppy in near-term overbought territory, but it has so far avoided a serious top.
Climax* Analysis: Only SPX Net A-D Volume had a climax reading today, not sufficient to declare a climax day.
*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.
We can breathe a sigh of relief seeing the STOs both reversing to the upside. Just over 3/4ths of the SPX have rising momentum, certainly enough to push price higher.
Intermediate-Term Market Indicators: The intermediate-term market trend is DOWN and the condition is SOMEWHAT OVERBOUGHT.
IT indicators continue to rise after their prior hiccup downward on last week's deep decline. We see fewer PMO BUY signals within the index and a negative crossover the signal line. Still the reading is strong.
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 BULLISH. Participation is expanding again for stocks above their 20/50-day EMAs.
The intermediate-term bias is BULLISH. We are calling the IT bullish today. The SCI is accelerating upward and we have far more stocks above their 20/50-day EMAs than those with Silver Crosses on their charts (47.4%).
The long-term bias is still BEARISH, but improving. The GCI had a positive crossover last week and it is still rising. There are more stocks above their 50/200-day EMAs than those with Golden Crosses. This suggests the GCI will continue to move higher.
CONCLUSION: The biggest news is that our STOs have turned back up. The ITBM/ITVM had already reversed upward so this short-term confirmation is excellent. The PMO has bottomed above its signal line which is especially bullish. Many are asking how the election will affect the market. We don't have a crystal ball and knowing how the market is basically a psychopath ("you're all instruments of my whim"), it is better to look inward rather than outward. Inward, the technicals suggest higher prices in the short term regardless of tomorrow's outcome.
Erin is 50% exposed.
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 email@example.com for more information!
Bitcoin broke out strongly last week, but has been taking back the gains slowly but surely. Indicators are deteriorating. The PMO has already topped and both Stochastics and the RSI are headed lower. The technicals haven't completely broken down yet so we believe support should hold at the 50-day EMA, but the weak indicators tell us a breakdown is not out of the question.
Yields are rising relentlessly again with numerous inversions. Imagine what this market could do if rates weren't shooting skyward.
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 threatened a breakdown last week but managed to right the ship. The rising trend is intact and indicators are beginning to turn back around. The PMO hasn't turned up yet, but both the RSI and Stochastics are very bullish so we believe rates will continue higher.
IT Trend Model: BUY as of 6/22/2021
LT Trend Model: BUY as of 8/19/2021
UUP Daily Chart: The bearish descending triangle continued to form after last week's failed breakout. The psychology of a descending triangle is bears pulling price lower (declining tops) while bulls keep it together with horizontal support. The expectation is a breakdown below horizontal support as the bears eventually take control. The indicators look terrible so we do expect to see the Dollar to breakdown.
IT Trend Model: NEUTRAL as of 5/3/2022
LT Trend Model: SELL as of 6/30/2022
GLD Daily Chart: Gold was weak today. With the Dollar down over a half percent, Gold should have been up by a half percent. For GLD, no such luck, there was an increase in selling pressure that brought it lower.
GOLD Daily Chart: $GOLD was up on the day, but not the full half percent that the Dollar handed to it. The 50-day EMA is holding as overhead resistance. However, indicators are very bullish. The RSI is now in positive territory, the PMO is accelerating higher and Stochastics are rising vertically. As of publishing we don't have the updated discount reading, but note the historically high levels that typically lead into rallies. The stage is set for Gold if the Dollar breaks down as we expect.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners giant rebound Friday saw some continuation. We don't see much to complain about except flat SCI and GCI. Price is back to testing overhead resistance and based on the greatly expanded participation, rising/positive RSI, PMO rising above the zero line on a BUY signal and Stochastics reversing higher, look for the rally to continue. Although we note that GDX is in a solid trading range and price is getting close to the top.
CRUDE OIL (USO)
IT Trend Model: BUY as of 11/4/2022
LT Trend Model: BUY as of 3/9/2021
USO Daily Chart: After Friday's giant gap up, it took the day off to digest the move. We are vulnerable to a possible reverse island which would mean a gap down that would leave Friday and today's price stranded on an island. The $OVX did puncture the upper Bollinger Band on our inverted scale and like the VIX punctures, it could suggest a move down to test the short-term rising bottoms trendline. We don't want to sound too bearish here, we are actually bullish on Crude Oil based on the strongly rising PMO, Stochastics above 80 and positive RSI. We just wanted to point out possible pitfalls.
IT Trend Model: SELLas of 8/19/2022
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: The strong declining trend in Bonds continues as yields march relentlessly higher. The PMO may be on a BUY signal, but that signal will likely be lost soon. There is short-term support available, but we aren't optimistic.
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. :