Today the Gold (GLD) 50-day EMA crossed up through the 200-day EMA (Golden Cross), generating an LT Trend Model BUY Signal. As long as price remains above both moving averages, the signal will remain intact. The PMO has been flirting with overbought territory for some time. Currently it is on a BUY signal, but with the margin so thin, we could see a SELL signal soon. We'll discuss Gold more in its section near the bottom of the report.
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
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 12/28/2022
LT Trend Model: SELL as of 5/5/2022
SPY Daily Chart: We've updated the trendlines to accommodate the recent tops. We have a symmetrical triangle which typically will break in the direction of the prior trend. In this case we have a flagpole attached giving us a reverse pennant chart formation. That tells us to expect a breakdown not a breakout.
The RSI remains negative and the PMO is falling on a SELL signal. Stochastics were beginning to firm up their rise, but have now decelerated and flattened. The VIX is oscillating below its moving average on the inverted scale. That suggests internal weakness.
Here is the latest recording:
S&P 500 New 52-Week Highs/Lows: The 10-DMA of the High-Low Differential nearly moved above the zero line today in spite of the decline. This is because we saw some New Highs today to counter the New Lows.
Climax* Analysis: There were no climax readings today. It appears yesterday's upside exhaustion climax was prescient.
*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 NEUTRAL.
STOs are rising. The STO-V looks more excited than the STO-B. The STO-B is mostly flat. It could be that with low holiday trading followed by normal trading fooled it a bit. We saw a decline in participation and rising momentum, but we still have a rising trend.
Intermediate-Term Market Indicators: The intermediate-term market trend is DOWN and the condition is NEUTRAL to OVERSOLD.
The ITBM/ITVM are rising, but most important is the increase in PMO BUY signals. This certainly alludes to there being pockets of strength within the index.
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 NEUTRAL.
The intermediate-term bias is BEARISH.
The long-term bias is NEUTRAL.
The IT bias has switched back to bearish because the SCI accelerated lower. We've moved the long-term bias to Neutral given there are fewer stocks above their 50-day EMA than those with golden crosses. The GCI could turn down, particularly if we see fewer stocks above their 200-day EMAs. Right now that percentage is equal to the percentage of those with golden crosses.
CONCLUSION: It is notable that sentiment indicators show that investors are quite bearish. Bearish sentiment should lead to an upside reversal. Also, the short-term and intermediate-term indicators show that the internals favor a move to the upside, if only in the short-term, but price has been running flat for two weeks. This does not bode well when the internals inevitably turn back down. We are in a bear market, and bullish expectations are disappointed more often than not. There are pockets of strength and maybe you have found one or more. Exercise caution. If the market takes a header, the baby will be thrown out with the bathwater.
Erin is 12% exposed with a 2% hedge.
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Bitcoin was basically unchanged today. The RSI is nearing positive territory now and the PMO is attempting to put distance between it and its signal. Stochastics are looking more bullish now, so we have to admit that Bitcoin could see a continuation and test of overhead resistance above the 50-day EMA around $17,500.
Interest rates are beginning to pullback more than we had expected. We do believe they will resume their rise, but first some downside.
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
$TNX rebounded slightly. It came right on support. We are looking for another test of the declining tops trendline. However, the decline hurt the indicators and with Stochastics looking so negative, we aren't overly bullish. The PMO has flattened and is no help.
IT Trend Model: NEUTRAL as of 11/14/2022
LT Trend Model: BUY as of 8/19/2021
UUP Daily Chart: The Dollar resumed its rally after forming a bullish hollow red candlestick. The RSI moved into positive territory, the PMO is moving higher on an oversold BUY signal and Stochastics just pushed past 80. It's time for the Dollar to rally again.
IT Trend Model: BUY as of 11/14/2022
LT Trend Model: BUY as of 1/5/2023
GLD Daily Chart: It took a lot of work to the upside to accomplish today's Golden Cross, and it is not uncommon for EMA crossovers to result in the beginning of a pullback. That seems to be the case. With the Dollar looking stronger, it is likely that Gold will weaken.
We have added a Relative Strength panel for GLD versus UUP. Since those symbols are negatively corellated, we get the relative strength by using a negative value for UUP. Gold strength is beginning to fade a bit. However, we note that currently there is no correlation between Gold and the Dollar (correlation is reading near zero) so it could travel inline with the Dollar.
GOLD Daily Chart: The Gold Volatility Index ($GVZ) is rising after tapping on the bottom Bollinger Band on our inverted scale. Typically a rising volatility index on the reverse scale implies price with rise too. However, we can't discount the large bearish rising wedge. While there are positives on the chart, we are still concerned about topping Stochastics and a topping PMO.
GOLD MINERS Golden and Silver Cross Indexes: The drop in both Gold and the market pressured Gold Miners lower. The good news is that they are holding short-term support. The RSI is positive and the PMO just had a crossover BUY signal. Stochastics are now rising above 80. While participation is strong, we have to wonder how they will handle more days with Gold and the market moving lower. We'd keep your Miners on a short leash or at least consider hard stops.
CRUDE OIL (USO)
IT Trend Model: NEUTRAL as of 11/21/2022
LT Trend Model: SELL as of 12/6/2022
USO Daily Chart: We had a nice rally in Crude Oil today, but it did nothing to undo the damage that was caused yesterday. We may've seen a higher high (barely), but we also saw a lower low. The obliteration of the short-term rising trend accompanied by a negative RSI, nearing PMO SELL signal and falling Stochastics has us looking for a test of support at the December low.
IT Trend Model: BUYas of 12/2/2022
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: We saw a nice rally on TLT after a second bearish filled black candlestick. The PMO has yet to turn back up, but we do see an RSI that is above net neutral (50) and rising Stochastics. However, we are looking for long-term rates to move higher soon, so we see this as a short-lived rally.
Good Luck & Good Trading!
Erin Swenlin and Carl Swenlin
Technical Analysis is a windsock, not a crystal ball. --Carl Swenlin
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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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