Today the Financial Sector (XLF) 50-day EMA crossed up through the 200-day EMA (Golden Cross), generating an LT Trend Model "Golden Cross" BUY Signal. While that is bullish, we aren't thrilled with the possible Price Momentum Oscillator (PMO) top and topping Silver Cross Index (SCI). Price is still struggling somewhat with resistance at the August top. We don't have a decisive breakout. Participation is strong, but relative strength is beginning to fade.
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
For Today:
For the Week:
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.
For Today: 
For the Week:
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 5-Minute Chart: Today there was some pushback against Wednesday's strong advance. The employment reports showed a little stronger than expected, so investors fear of bigger rate hikes by the Fed kicked in again, and the market opened down over one percent; however, throughout the day things gradually improved and the market closed slightly down. We were gratified to see this because it reinforces our assertion that Wednesday's rally was not a blowoff.
SPY Daily Chart: We've adjusted the rising wedge to account for the lower high. The formation is bearish. The PMO is acting a bit toppy.
The PMO does have two PMO bottoms above the signal line which is very bullish, but it is now getting overbought. The VIX nearly punctured the upper Bollinger Band. The rally is vulnerable based on complacent sentiment.
SPY Weekly Chart: Price is so far holding below the long-term declining trend. The weekly PMO is still rising strongly and the weekly RSI just entered positive territory above net neutral (50). There appears to be a bullish bias on the weekly chart.
SPY Monthly Chart: The month of November ended on Wednesday, but we like to do monthly chart analysis at the end of the week when possible. After a breakdown from a parabolic advance we expect price to decline to the prior basing pattern. That would put price anywhere between $325 and $185. The monthly RSI is positive so the bottom half of that range could be avoided for now. The monthly PMO is still in decline so a drop to $350 in the longer term seems the most likely.
New 52-Week Highs/Lows: The negative divergence between New Highs and price tops is still technical visible but a decent rally should take it out.
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 NEUTRAL.
We have a strong negative divergence between STOs and price. In the short term, we note it keeps declining even as price pushes higher. In the intermediate term, a negative divergence is also a problem.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT.
The ITBM and ITVM were mixed today. The ITBM continued higher while the ITVM tipped over. That suggests volume is no longer confirming the rally. We are continuing to lose PMO BUY signals and there is a negative divergence with price.
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 following table summarizes participation for the major market indexes and sectors. The 1-Week Change columns inject a dynamic aspect to the presentation.
Gold Miners still have the strongest IT Bias at +80. The group continues to look strong.
This table is sorted by SCI values. This gives a clear picture of strongest to weakest index/sector in terms of participation.
Energy is the only issue holding a negative IT Bias. The sector looks sickly given the big rounded top on price. Consumer Staples has the highest SCI reading suggesting immense internal strength.
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 remains bullish given strong participation of stocks with price above their 20/50-day EMAs.
The intermediate-term bias is bullish given the high 82% reading on the SCI. We do note that it is getting very overbought for this bear market. With only a fraction more stocks above their 20/50-day EMAs, the SCI is vulnerable to a top.
CONCLUSION: Investors are frantically reacting to bits of news -- getting overly optimistic in most cases. That is where Wednesday's pop up came from -- something miniscule in Fed Chair Powell's statement that started a buying stampede. (Don't ask me what it was.) While the rally may well continue, we do not expect to see a new bull market. We must qualify that statement, because the Dow has already advanced slightly over 20% from the October low (and is now in a bull market), and many of the market indexes we track are within about three percent of doing the same. We do not expect the market to rally into the end of the year, but it could easily rally enough to get some broad market indexes into bull territory. At this moment, we think that would be a bull trap, and that we will see a quick reversal before year end. In fact, we have prices rising in the face of falling STOs and very overbought ITBM and ITVM Oscillators. That is a dangerous condition.
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BITCOIN
Bitcoin has established a new trading range between $15,500 and $17,500. The RSI is in negative territory, but the PMO is rising and Stochastics are above 80. This tells us there is a chance that this trading range will either stretch or be abandoned for a little while.
This chart is to show where some of the support/resistance lines come from.
INTEREST RATES
Yields were either unchanged or continued their decline.
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
Support is holding for $TNX but given the very negative RSI, PMO and Stochastics, we expect a test of the rising trend and 200-day EMA.
MORTGAGE INTEREST RATES (30-Yr)**
**We watch the 30-Year Fixed Mortgage Interest Rate, because, for the most part, people buy homes based upon the maximum monthly payment they can afford. As rates rise, a fixed monthly payment will carry a smaller mortgage amount. As buying power has been shrinking, home prices have come under pressure.
--
This week the 30-Year Fixed Rate fell from 6.58 to 6.49.
DOLLAR (UUP)
IT Trend Model: NEUTRAL as of 11/14/2022
LT Trend Model: BUY as of 8/19/2021
UUP Daily Chart: The Dollar lost support this week, aborting a bullish double-bottom possibility. Price is now hovering below the 200-day EMA. Indicators are negative so we would look for a test of $28.
UUP Weekly Chart: Price dropped below the 43-week EMA for the first time since 2021. The weekly RSI is moving lower in negative territory and the weekly PMO is moving vertically lower. We would expect the decline in the Dollar to continue.
UUP Monthly Chart: The monthly RSI may be positive, but the monthly PMO has topped. Price is below the 10-month EMA. Solid support on this chart doesn't appear until price reaches $26. It has already lost the 2020 top.
GOLD
IT Trend Model: BUY as of 11/14/2022
LT Trend Model: SELL as of 6/30/2022
GOLD Daily Chart: Gold rallied strongly as the Dollar retreated this week. While price closed lower, GLD formed a bullish hollow red candlestick. The PMO is rising and the RSI is positive. Stochastics have just reached territory above 80.
Discounts continue to pare back suggesting investors are finally getting at least a little bit more bullish on Gold. We aren't happy with the formation of a bearish rising wedge, but for now Gold looks poised to move higher in the short term.
GOLD Weekly Chart: The weekly PMO and RSI look very favorable. It appears we may be seeing an intermediate-term reverse head and shoulders. The left shoulder is the July low. The head is the 2022 low and the right should was formed on this week's bottom. The upside target of the pattern would take price to all-time highs.
GOLD Monthly Chart: We have a large cup with handle pattern. These formations are bullish. The monthly RSI is back in positive territory and the monthly PMO is turning back up. The reverse correlation is visible currently with the Dollar. This tells us that Gold is more dependent on the Dollar (as it normally is). Long-term, Gold looks bullish.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners made that breakout move this week. Participation is strong. We even have the SCI bottoming above its signal line. The PMO bottomed above its signal line, but it is overbought. Participation is robust and Stochastics are above 80. We see GDX testing $34 in the intermediate term.
CRUDE OIL (USO)
IT Trend Model: NEUTRAL as of 11/21/2022
LT Trend Model: BUY as of 3/9/2021
USO Daily Chart: USO very nearly broke out this week above all three key moving averages. Unfortunately a bearish filled black candlestick formed and price topped as foretold by the candlestick. Now price has closed beneath all three moving averages.
Price has been traveling in a trading range and indicators are flat leaving us uncertain on Oil. Our best guess based on Stochastics and the $OVX trending higher, Crude Oil should rally back above the moving averages. But remember the PMO is about to top beneath its signal line. All bets are off if we see that happen next week.
USO/$WTIC Weekly Chart: The long-term rising trend is still intact on USO's weekly chart. The weekly RSI is negative but rising slightly. The weekly PMO, however is moving lower.
WTIC Monthly Chart: We have a steep correction on the monthly chart with very important support being tested as we write. The 2018 top needs to hold. Given the steep declining in the monthly PMO we should expect the breakdown in the long term despite the winter.
BONDS (TLT)
IT Trend Model: BUY as of 12/2/2022
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: Today the TLT 20-day EMA crossed up through the 50-day EMA (Silver Cross), generating an IT Trend Model BUY Signal. Given the correction in yields and the current breakout from a bearish chart pattern, we believe Bonds do have upside potential. The RSI is overbought, but the PMO and Stochastics suggest this rally will continue. Overbought conditions can persist in a strong rally higher.
TLT Weekly Chart: The long-term declining trend was technically broken today. We also saw a new weekly PMO crossover BUY signal. The weekly RSI is about to move into positive territory. The rally in Bonds looks like it will see a continuation past the short term.
TLT Monthly Chart: The monthly PMO is decelerating which is bullish and the monthly RSI while negative is moving higher. It will take much higher prices to completely turn the PMO back up and while we are bullish, we aren't so sure we'll see the rally continue in the longer term.
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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Price Momentum Oscillator (PMO)
Swenlin Trading Oscillators (STO-B and STO-V)
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