We have important news regarding the Silver Cross Index (SCI) for the SPY. The reading has been steadily improving and today it saw a positive crossover. This sets up a bullish bias in the intermediate term. The SCI tells us how many stocks have a 20-day EMA above the 50-day EMA. This is very encouraging, but remember we still have a backdrop of a bear market.
The Real Estate Sector (XLRE) 20-day EMA crossed up through the 50-day EMA (Silver Cross), generating an IT Trend Model "Silver Cross" BUY Signal. While price is trending higher, the sector hasn't moved much in comparison to others. Defensive areas of the market simply aren't outperforming the market as much as others. XLRE doesn't look bad. There is a new PMO crossover BUY signal that triggered today. The SCI has crossed above its signal line and overall participation is growing among stocks above their 20/50-day EMAs. Stochastics are above 80 now. While this looks bullish, relative performance has been mostly flat. There are better places to invest.
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: It was a nice rally today but we saw a lower high and a lower low. Price did close above both the 20/50-day EMAs and resistance at the October high. The RSI is positive and the PMO should generate a crossover BUY signal tomorrow.
Stochastics have now moved above 80. They need to stay there. The VIX is now above its moving average on the inverted scale which implies internal strength. Total volume contracted on the rally.
Here is the latest recording:
S&P 500 New 52-Week Highs/Lows: Price moved up today, but 52-Week New Highs contracted.
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 OVERBOUGHT.
All of the short-term indicators are now in overbought territory. All of them could move higher based on history, but we do need to keep this in mind. In the meantime, they look very bullish as they rise. Three quarters of the index now have rising PMOs. All of this should move price higher.
Intermediate-Term Market Indicators: The intermediate-term market trend is DOWN and the condition is NEUTRAL.
All indicators are rising which is bullish. They are only in neutral territory and therefore could accommodate much more upside price movement. Over half of the index have PMO BUY signals.
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 number of stocks above both their 20/50-day EMAs. The SCI had a crossover its signal line which is 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: We are a little confused right now. All of the indicators have looked good for some time, but price action has been muted. At least we have seen the holiday trading range broken to the upside, but considering how participation has been expanding, we would expect more follow-through. Today's positive SCI crossover suggests this rally will get legs, but seeing so little follow-through on positive indicators is troubling.
Erin is 10% exposed but is eyeing three "Diamonds in the Rough" from today's DecisionPoint Diamonds report.
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Yesterday's comments still apply:
"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 may be in the works for yields as their slide continues. Today did see a bump, particularly in long-term 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
We noted yesterday that all was not lost for $TNX as it had reached multiple support levels including a test of the rising trend. The PMO is already beginning to flatten but remains on a SELL signal. The RSI is negative. This is the perfect place for the 10-year yield to bottom and continue higher, but indicators haven't firmed up yet.
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 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: Price is holding above June highs, but created another bearish filled black candlestick. It wasn't a problem yesterday and given the indicators I don't think it will be much of a problem tomorrow. The PMO continues to increase the margin between it and the signal line and the RSI is positive and not yet overbought. Stochastics are above 80 and oscillating.
GOLD Daily Chart: The ground is fertile for a rally continuation on Gold, but we are still worried about the bearish rising wedge. Also, $GVZ is oscillating beneath its moving average on the inverted scale and that implies internal weakness could still be an issue. At this point we are bullish on Gold and expect the rally to continue in spite of the rising wedge.
GOLD MINERS Golden and Silver Cross Indexes: Yesterday's comments still apply:
"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 82% of the group are above their 200-day EMAs. 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: Another bearish filled black candlestick for Crude Oil. Bulls keep trying to get a rally going and bears keep stamping it out during the day. The RSI is negative and not showing any improvement given the very slight price movement. The PMO remains on a SELL signal and continues to flirt with a crossover. Stochastics have turned up, but remain well into negative territory. The $OVX breaks the tie as it is above its moving average on the inverted scale. We are bullish on USO.
IT Trend Model: BUYas of 12/2/2022
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: TLT paused and has now formed a new short-term declining trend. Price remains above both the 20/50-day EMAs, but the PMO is already trying to top beneath the signal line. Stochastics still look good so we aren't ready to give up on TLT just yet.
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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