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We reviewed every chart in our Golden/Silver Cross Index charts and found that only one Silver Cross Index (SCI) was holding above its signal line. Subscribers all have access to this and our other two ChartLists (DPA and Sector) on the top left of our Blogs and Links page.
For review, a "silver cross" is when the 20-day EMA crosses above the 50-day EMA. The Silver Cross "Index" looks at every stock within that index or ETF and tells us how many of the members have a 20-day EMA that is greater than the 50-day EMA.
The Utilities sector (XLU) is the only index/sector with a positive configuration on the SCI. It is not only above its signal line, it is also rising. Does this mean we should pour money into XLU? We don't think so. Notice that participation is thinning, particularly the %Stocks > 20-day EMA. This is a sector likely experiencing the beginning of a breakdown. However, it does tell us that money is "scared". XLU is one of the most defensive sectors out there. Clearly investors prefer to be seated in a defensive posture, if they're seated at all. Erin remains at 12% exposure with a 5% hedge.
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: The SPY continued to decline in earnest in spite of a downside exhaustion climax on Friday. We had thought at best, we would see prices move sideways. No such luck. The RSI is negative and falling. The PMO continues lower and Stochastics are pointed lower below 20.
Holiday trading is beginning to show as Total Volume was under its annual average. Internal strength is nowhere to be found. Not only are Stochastics declining below 20, the VIX is oscillating below its moving average on the inverted scale; both confirm internal weakness. Support has arrived at the early October high and May lows, but we aren't looking for an upside reversal.
Here is the latest recording:
S&P 500 New 52-Week Highs/Lows: New Highs/New Lows are an excellent tool in identifying negative divergences that warn of price weakness. The top last week set up a negative divergence between price tops and New Highs.
Climax* Analysis: We had two indicators with climax readings today, two without, and SPX Total Volume was short, so we'll call it a no 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 DOWN and the condition is OVERSOLD.
STOs have now hit oversold territory again. Note that they can get much more oversold so we aren't looking for an upside reversal at this point. Only 2% (yes, 2%) have rising momentum in the SPX. This is going to fuel the current decline.
Intermediate-Term Market Indicators: The intermediate-term market trend is DOWN and the condition is NEUTRAL.
The ITBM/ITVM are situated in neutral territory. They are on their way lower and thus confirming this decline is not likely over. Only 12% hold PMO BUY signals. Based on %Rising Momentum above being only 2%, we know that while this indicator is oversold, it will move lower.
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 market bias is BEARISH. Participation of stocks above their 20/50-day EMAs is slim and getting slimmer.
The intermediate-term market bias is BEARISH. While the SCI holds a reading above 70%, it is declining after a negative crossover. This indicators suggests the decline will continue for some time.
The long-term market bias is BEARISH. The GCI is beginning to turn over and there is not fuel to bring it higher given we have fewer stocks above their 50/200-day EMAs vs. those holding golden crosses.
CONCLUSION: We see no signs of Santa Claus. There are no positive indicators. Zero. We are seeing oversold conditions on many of the indicators, but remember these conditions can and will persist in a bear market environment. Currently, there are no sectors or industry groups with rising PMOs. With no rising momentum within, it will take a great deal of effort and plenty of buying to turn this ship around. With holiday trading easing in, we should expect volume to shrink and price to hopefully move sideways. However, we wouldn't be surprised to see more selling as traders move out of the market for a more stress-free holiday.
Erin is 12% exposed with a 5% hedge.
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After sinking on Friday, Bitcoin is digesting the move. The RSI is negative and falling. The PMO not only topped beneath the zero line, it is about to trigger a crossover SELL signal. Stochastics are below 20 and flat. At best we would expect more sideways consolidation.
The decline in rates is likely coming to a close with the 30-yr yield breaking its short-term declining trend. Don't forget there is the Interest Rate Hedge ETF (PFIX) which will move higher with rates.
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
The declining trend for $TNX has been broken. We see a tiny triple-bottom bullish chart pattern developing. The RSI is headed higher and the PMO has also turned back up. Stochastics are rising again, but are still in negative territory below net neutral (50). As noted above, it appears the correction in interest rates is about over. It's early based on the indicators, but the signs are starting to appear.
IT Trend Model: NEUTRAL as of 11/14/2022
LT Trend Model: BUY as of 8/19/2021
UUP Daily Chart: We have a bullish falling wedge developing on the Dollar chart and technically today we saw a confirmation breakout. We're not so sure give it was only a +0.02% rise today, but the bias is certainly bullish. The RSI may be negative, but the PMO is in the process of logging a crossover BUY signal. Stochastics are confirming the PMO BUY signal as they rise nicely. It isn't too late for the Dollar to reverse back down, but the indicators seem to favor a rally.
IT Trend Model: BUY as of 11/14/2022
LT Trend Model: SELL as of 6/30/2022
GLD Daily Chart: We have a bullish falling wedge on the Dollar and bearish rising wedge on Gold. Not surprising given their strong reverse correlation. The PMO has just given us a crossover SELL signal and Stochastics are confirming as they move toward negative territory. The RSI is still positive, but we don't think that is enough to cancel out today's PMO SELL signal.
GOLD Daily Chart: $GOLD has already confirmed the bearish falling wedge, but with the recent bottom, we will likely adjust the rising trendline. That won't change the bearish outlook. $GVZ is has started lower which suggests price will move lower.
GOLD MINERS Golden and Silver Cross Indexes: With Gold looking weak, Gold Miners will be pressured lower. The market is weak. That will also pressure GDX. This chart is breaking down. We have an overbought PMO SELL signal, a negative crossover on the SCI and thinning participation. Only 17% have price above their 20-day EMA. This is a group in decline with a high likelihood of moving even lower. Support isn't likely to hold at either the 50-day EMA or September/October tops ($26).
CRUDE OIL (USO)
IT Trend Model: NEUTRAL as of 11/21/2022
LT Trend Model: SELL as of 12/6/2022
USO Daily Chart: Crude Oil was higher on the day. The chart is attempting to firm up as the PMO and RSI are starting to rise. However, Stochastics have topped in negative territory. We also don't like that the declining tops trendline wasn't tested on last week's price top.
IT Trend Model: BUYas of 12/2/2022
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: As the 20-year yield begins to rise again, TLT has begun its decline. You can make out a small double-top that today was confirmed with the break of the confirmation line. The pattern suggests a minimum downside target around the 50-day EMA ($102.50)--keyword "minimum". Primary indicators are all moving lower with the PMO being particularly overbought. If the decline in yields is about over as we suspect, TLT will likely have to absorb further downside.
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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DecisionPoint Sector Chart List
Price Momentum Oscillator (PMO)
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