This doesn't happen often, but the Consumer Staples Sector 20-day EMA moved down to close exactly on the 50-day EMA. Since price is below both EMAs, it is guaranteed that a downside crossover will take place tomorrow (unless price closes on or above the two EMAs). The short-term trend is down, and a bearish reverse flag has formed, and a Dark Cross has taken place above the 200-day EMA, so we assume that an IT Trend Model NEUTRAL Signal has been generated.
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 1/12/2023
LT Trend Model: SELL as of 5/5/2022
SPY Daily Chart: The bearish short-term rising wedge continues to mature. The next level of overhead resistance is around 410.
The indicators are looking very good. The RSI is in positive territory and the PMO is rising and not overbought. The OBV has been somewhat lackluster as traders slowly inch back in. Stochastics are rising above 80 and the VIX is oscillating above its moving average on the inverted scale. Both imply internal strength.
Here is the latest recording from Monday (1/23):
S&P 500 New 52-Week Highs/Lows: Price closed higher today, but New Highs contracted from this week's high. This is relatively minor, but it could easily have negative short-term impact.
Climax* Analysis: Today only SPX Net A-D Volume had a climax reading (just barely). Certainly not enough to declare a climax day. SPX Total Volume was solid, which confirms the price advance, but adds nothing to the climax analysis.
*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.
STOs soared higher today which in our minds confirms the current rally. What's unfortunate is that they are already getting overbought. Considering it was an over 1% rally today, we would've expected to see more expansion in %Stocks with rising momentum. Still, the reading is strong at 67%.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT.
We would say that the ITBM and ITVM are overbought now. They certainly have more headroom, but these readings are definitely in overbought territory. %PMO BUY signals rose by a percentage point today so yesterday's decline was basically erased.
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.
The intermediate-term bias is BULLISH.
The long-term bias is BULLISH.
Yesterday's comments still apply:
"This second day of rally has pushed all timeframes into bullish biases. We have a solid amount of stocks above both their 20/50-day EMAs and the SCI has bottomed above the signal line. There are more stocks above their 50/200-day EMAs than those with Golden Crosses (50-day EMA > 200-day EMA). This means the already rising Golden Cross Index will likely continue higher."
CONCLUSION: Yesterday, while we were concerned with New Highs and the bearish rising wedge, we expressed that we were bullish based on the strength of all of our primary indicators (PMO, RSI, Stochastics, STOs, ITBM/ITVM). We feel the same today, but we will now add overbought STOs to the "worry column" with the New Highs contraction and bearish rising wedge. We expect higher prices, but it wouldn't surprise us if price tested the bottom of the rising wedge.
Calendar: There is an FOMC meeting next week with the announcement on Wednesday. The Fed is expected to raise rates again, but by only 25 basis points this time.
Erin is 15% exposed.
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Bitcoin is holding above prior resistance after a small decline today. Indicators remain strong, but we have a very overbought RSI and PMO. Stochastics are above 80, but have turned lower. We expect the digestion period will extend for Bitcoin.
Yields are beginning to show rising trends, suggesting we could see another test of 2022 highs.
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 has formed a very short-term rising bottoms trendline as it meanders out of the short-term declining trend (red). It has an uphill battle based on the indicators. The PMO is flat and Stochastics are already trying to turn over. The RSI is negative. Still, we like that the rising trend is still holding for now and price is above 3.4%.
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 now beginning to drift lower [although it had a small gain today]. It hasn't dropped below last week's intraday low, but it is on its way. The indicators are still very weak with the RSI in negative territory and the PMO on a SELL signal, also drifting lower. Stochastics, which we consider an early warning signal, are still below 20 and declining. We expect more decline.
IT Trend Model: BUY as of 11/14/2022
LT Trend Model: BUY as of 1/5/2023
GLD Daily Chart: Gold was down today, but is still holding its rising trend. The rising trend forms the bottom of a short-term bearish rising wedge. Gold got overbought and it is time for a pullback or at least digestion. We would expect GLD to test 175 soon.
GOLD Daily Chart: The RSI has now moved out of overbought territory on today's decline. The PMO is topping in overbought territory and we see a puncture of the upper Bollinger Band by $GVZ on the inverted scale. The Bands are very close together so we don't want to put too much emphasis on this puncture, but typically an upside puncture leads to a price decline.
GOLD MINERS Golden and Silver Cross Indexes: Miners pulled back after yesterday's breakout above strong overhead resistance. We aren't particularly worried as we see very little weakness on this chart; the PMO did technically top. However, it is still on a BUY signal so for now we aren't worried--not with 96.5% of stocks holding above their 20/50/200-day EMAs.
CRUDE OIL (USO)
IT Trend Model: BUY as of 1/23/2023
LT Trend Model: SELL as of 12/6/2022
USO Daily Chart: USO finished higher on the day, but created a bearish filled black candlestick today. Additionally, price hasn't managed a breakout yet. We are still bullish on Crude based on the positive RSI, accelerating PMO and Stochastics still in positive territory. Additionally, $OVX is oscillating above its moving average on the inverted scale and that implies internal strength.
IT Trend Model: BUYas of 12/2/2022
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: Yesterday's comments still apply:
"TLT is attempting a comeback after bouncing off the 20-day EMA and support at the mid-December low. Stochastics are beginning to see some improvement. The RSI is positive and the PMO is still on a BUY signal even if it isn't rising strongly. We still believe this is a last gasp for Bonds. A breakout above the 200-day EMA would raise our eyebrows though."
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 Golden Cross/Silver Cross Index Chart List
DecisionPoint Sector Chart List
Price Momentum Oscillator (PMO)
Swenlin Trading Oscillators (STO-B and STO-V)
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