Today we were alerted that both the S&P 400 (IJH) and S&P 600 (IJR) had PMO crossover BUY signals.
Looking specifically at IJH, we can see a strong breakout above key moving averages, but more importantly, the Silver Cross Index (SCI) has crossed above its signal line. The SCI measures how many stocks within an index or sector have the 20-day EMA above the 50-day EMA or a "silver cross". This gives us a new bullish bias and possible entry point.
IJR looks very similar, but its SCI has not yet had the positive crossover its signal line. We also don't have price above the 200-day EMA yet. On the bright side, the Golden Cross Index (GCI) recently crossed above its signal line. %Stocks > 20/50-day EMAs are expanding and aren't yet overbought. These participation numbers should continue to push the SCI higher.
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: The day started strongly, but ultimately the bears pulled price below the open and Friday's close. The RSI is still positive and the PMO is still rising so we could see higher prices. It is encouraging to see the breakout from the trading range of the past two weeks.
Stochastics were not bothered by today's negative finish, they continue to rise almost vertically. The VIX isn't very enlightening as the Bollinger Bands have squeezed together to a point where it wouldn't be too hard for it to puncture either of the Bands. We do know that it is below its moving average and that typically indicates internal weakness.
Here is the latest recording:
S&P 500 New 52-Week Highs/Lows: New Highs were still prominent despite the decline. The 10-DMA of the High-Low Differential continues to rise bullishly.
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 SOMEWHAT OVERBOUGHT.
All of these indicators are overbought, but not as overbought as they can get given we can easily see higher readings. Nearly 3/4ths of the index hold rising momentum and that could push prices higher in the short term.
Intermediate-Term Market Indicators: The intermediate-term market trend is DOWN and the condition is NEUTRAL.
These indicators are bullish. The ITBM/ITVM are rising in neutral territory and we see a nice expansion of PMO BUY signals within the index. They suggest higher prices ahead.
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.
The bias has moved to bullish in all three timeframes. We have a robust amount of stocks above both their 20/50-day EMAs. The SCI is rising again and nearly saw a crossover its signal line which would be especially bullish. The GCI is flat, but we see more stocks above their 50/200-day EMAs than those with golden crosses. That implies the GCI will begin rising again.
CONCLUSION: The day started strong, but ultimately the rally fizzled. If short-term indicators were struggling we'd feel differently about today's reversal. As it stands, with positive and rising indicators across the board, we should look for a rally. If we only see sideways price movement that would speak volumes regarding internal weakness. However, a look at the sector charts tells us there is strength out there, particularly in Consumer Discretionary and Technology. Given rotation is moving toward those aggressive sectors, investors are possibly more bullish than they may appear. When money rotates to growth, the market usually benefits.
Erin is 10% exposed.
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The rising trend continues for Bitcoin. Overhead resistance is nearing, but given it has moved above both the 20/50-day EMAs and is accompanied by positive indicators, we would expect an eventual breakout. We should keep an eye on Stochastics. They are above 80 which is bullish, but they have tipped over. They tend to give us early warning.
Another correction is may be in the works for yields as their slide continues.
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
All is not lost for $TNX. Currently it is holding the intermediate-term rising trend and there are multiple levels of horizontal support available should the trend be broken. Given the negative RSI, falling Stochastics and nearing PMO crossover SELL signal, those levels will likely be tested. The 200-day EMA and 3.3% seem to be the strongest and last lines of support.
IT Trend Model: NEUTRAL as of 11/14/2022
LT Trend Model: BUY as of 8/19/2021
UUP Daily Chart: The Dollar is in a trading range. The declining trend was broken, but price has done nothing.
This support level is critical for UUP and it is already attempting to break it. The indicators look terrible. The RSI is negative and the PMO has topped well beneath the zero line which is especially bearish. Stochastics are dropping quickly. We are bearish on the Dollar.
IT Trend Model: BUY as of 11/14/2022
LT Trend Model: BUY as of 1/5/2023
GLD Daily Chart: A bearish Dollar should lead to bullish Gold. The gently rising trend accelerated at the end of December. That trend seems safe given the strong indicators. The PMO is even putting distance between it and its signal line.
GOLD Daily Chart: We still should be on our toes. There is a large bearish rising wedge still visible on the Gold chart. $GVZ is also oscillating beneath its moving average on the inverted scale and that implies there is still some internal weakness. Discounts are trending lower overall which tells us investors are getting less bearish on Gold.
GOLD MINERS Golden and Silver Cross Indexes: GDX is enjoying the ride as Gold and the market trend higher. Participation is crazy strong. 100% have silver crosses, 97% are above their 20-day EMAs and 100% are above their 50-day EMAs. Even the long term is shaping up as over 3/4ths of the group are above their 200-day EMA. The GCI is only at 55%, but given the much higher number of stocks above both their 50/200-day EMAs, we should see it gain strength quickly.
CRUDE OIL (USO)
IT Trend Model: NEUTRAL as of 11/21/2022
LT Trend Model: SELL as of 12/6/2022
USO Daily Chart: USO was higher on the day, but closed beneath its open to form a filled black candlestick. Those are bearish one-day patterns. Of course, Friday's didn't result in a big decline. The indicators haven't firmed up. The RSI is still negative below net neutral (50) and the PMO is on a recent crossover SELL signal. Stochastics have tipped upward. We expect to see more oscillation within the symmetrical triangle.
IT Trend Model: BUYas of 12/2/2022
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: TLT's rally is getting legs as yields continue lower. We didn't expect this level of overhead resistance to even be tested, but here we are. Given the positive RSI, rising PMO which bottomed above the zero line and bullish Stochastics, it appears we could see the next level of overhead resistance tested at the December highs.
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)
Swenlin Trading Oscillators (STO-B and STO-V)
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