Today the Nasdaq Composite ETF (ONEQ) 20-day EMA crossed up through the 50-day EMA (Silver Cross), generating an IT Trend Model "Silver Cross" BUY Signal. The PMO has turned up above its signal line which is bullish so let's hope for a test of the 200-day EMA.
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: BUY as of 11/15/2022
LT Trend Model: SELL as of 5/5/2022
SPY Daily Chart: Price bounced off the 20-day EMA yesterday and while we had a negative close, we have a much higher low and a higher high compared to yesterday.
Notice that price is about to breakout of the longer-term declining trend. A break above the September top would be very encouraging. The VIX moved again toward its upper Bollinger Band on the inverted scale but refrained from breaking it. A break above the Band would imply downside to come. It is also very interesting that people appeared less nervous today even on the decline given the VIX reading was lower today.
Here is the latest recording:
S&P 500 New 52-Week Highs/Lows: New Highs are about to erase a longer-term negative divergence. Despite the decline today we saw a great deal of New Highs.
Climax* Analysis: There were no climax readings today. Yesterday we had a strong belief that the monster pop was not a blowoff. (See comments below.) So far that seems like a good assessment. Today's market action was the kind of churn we expect to see, and today's SPX Total Volume was decent.
Yesterday's Comments: "Today [Wednesday] there were strong and unanimous climax readings, and SPX Total Volume was at blowoff levels. But was today a blowoff? We think not. The market has been consolidating for three weeks, and today was a breakout. That doesn't mean the market can't suddenly reverse downward, but a blowoff top would be a day like today happening at the end of a steady advance. That is so not what we have here. This was clearly an upside initiation climax."
*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 continue to fall. It's good because they were overbought, but bad because of course, they are declining. We lost some rising momentum within the SPY, but overall 72% is a good number.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT.
The ITBM/ITVM both rose again today confirming the intermediate-term rising trend. Unfortunately they are at overbought extremes so a downturn could mean a serious decline. So far so good. We still have fewer PMOs rising than PMO BUY signals. That means more BUY signals could be lost.
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 but overbought.
The intermediate-term bias is BULLISH as the SCI accelerates higher. Also there are still more stocks above their 20/50-day EMAs than those with silver crosses.
The long-term bias is BULLISH. Based on the rising GCI and higher percentages of stocks above their 50/200-day EMAs, we have to label the bias as bullish long term.
CONCLUSION: Today was a consolidation after yesterday's raucous rally. There will probably be additional price advance before the rally ends, but we do not think the back of the secular bear market has been, or will be, broken as a result. Don't let the tiny breakout above the long-term declining trend convince you the bear market is over. We still believe hard stops are in order especially given the declining STOs.
Erin is exposed 10%.
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Yesterday's comments still apply:
"Bitcoin enjoyed a strong rally and broke from its declining trend. It had been forming a bearish descending triangle (flat bottom, declining tops) but this breakout took that pattern out. We see Bitcoin likely staying within this new trading range, but we cannot discount the new PMO crossover BUY signal sitting alongside strongly rising Stochastics. More than likely this rally will fail, but we think it may eke out some more upside before that happens."
Yields spiraled lower today offering Bonds the opportunity to continue their rallies.
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 crashed today bringing it through one support zone and now testing the last line of support at 3.5%. The indicators are very negative suggesting more downside for yields. The PMO hit negative territory today and Stochastics topped well below 20. Next up would be a test of the long-term rising bottoms trendline and 200-day EMA.
IT Trend Model: NEUTRAL as of 11/14/2022
LT Trend Model: BUY as of 8/19/2021
UUP Daily Chart: The Dollar continued with a heavy decline that broke two lines of support at the 200-day EMA and last month's lows. $28 is the next available line of support, but given the PMO top beneath the signal line, negative RSI and topping Stochastics, we don't think it will hold. Downside potential in our minds lies at $27.25.
IT Trend Model: BUY as of 11/14/2022
LT Trend Model: SELL as of 6/30/2022
GLD Daily Chart: The Dollar's demise was Gold's good fortune. Huge gap up today that now has price already testing the August high. The indicators look fantastic and the $GVZ is oscillating bullishly above its moving average on the inverted scale.
GOLD Daily Chart: $GOLD is testing resistance at $1825. The RSI is now slightly overbought, but the PMO is accelerating higher and Stochastics turned up in positive territory above net neutral (50). Discounts are paring back as investors start to revisit Gold.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners are set up well. Gold is rallying and even the market looks short-term bullish. Today saw an excellent continuation of the rally. We now have 100% of Gold Miners with price above the 20/50-day EMAs. We're even seeing excellent breadth in the long term with almost 3/4ths of the group with price above their 200-day EMAs. We see an excellent run ahead for both Gold and Gold Miners.
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 rallied but ended up closing below today's open forming a bearish filled black candlestick. We have a small double-bottom that was technically confirmed at one point today, but price closed below the confirmation line. Indicators are showing improvement so we would look for the upside target of the pattern to be reached around $76.
IT Trend Model: SELL as of 8/19/2022
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: TLT broke out from the bearish rising wedge. A bullish conclusion to a bearish chart pattern is especially bullish and with yields looking so weak, we would expect to see TLT break above overhead resistance at $107.
Today's rally decisively broke above the long-term declining trend. With Stochastics oscillating above 80 and the PMO accelerating higher, we have to be bullish on Bonds right now.
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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