We have begun collecting Silver Cross Index and Golden Cross Index data for four new industry groups, and StockCharts.com back-calculated data for two years: Biotechnology (IBB), Regional Banking (KRE), Retail (XRT), and Semiconductors (SMH). Let's take a look at the charts.
Since mid-January, we have seen the relative strength line falling. However, notice what was going on 'under the hood'. Participation was increasing and the Silver Cross Index was rising. Relative strength was misleading. During this same period, IBB has been in a rising price trend.
Regional Banks (KRE) has seen participation shooting skyward. The relative strength line is in line with participation which to us suggests overall strength. Notice the Silver Cross Index moving vertically higher. This is an industry group to pay attention to.
The Silver Cross Index and Golden Cross Index are rising nicely on XRT. Participation is robust. Notice that when the Silver Cross Index turned up, relative strength had not begun to show. Participation began to improve even before the Silver Cross Index, getting us into the rally sooner.
The SMH chart is bit disjointed mainly because there are fewer members in this industry group ETF. We know this group has shown amazing leadership and looking at the participation numbers it's still going strong. Notice we just got a LT Trend Model "Golden Cross" BUY signal as the 50-day EMA crossed above the 200-day EMA. This is one reason we see the vertical rise in the Golden Cross Index. If the group is getting a Golden Cross, the stocks within the ETF are likely seeing the same thing. Currently all of them have price above their 20/50-day EMAs and that has pushed the Silver Cross Index to 100% as well. What this tells us is that we should see a rally continuation. As soon as the participation numbers begin to crack, we will be warned.
Conclusion: Adding participation to charts gives you advance notice of internal strength. We now have Golden Cross Indexes and Silver Cross Indexes for all of the major indexes, all sectors and now, and six industry groups (Gold Miners (GDX), Transportation (IYT) and now Regional Banks (KRE), Semiconductors (SMH), Retail (XRT) and Biotechs (IBB)).
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
For Today:
For the Week:
SECTORS
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.
For Today: 
For the Week:
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 upside breakout from a bearish rising wedge was particularly bullish. Bullish conclusions to bearish patterns are highly bullish. Today saw a pullback toward the breakout area of 410.
Indicators are still going strong. The RSI is positive as it sits above net neutral (50). The PMO is rising and while overbought, it's not at extremes yet. The VIX is oscillating above its moving average on the inverted scale and Stochastics continue to oscillate above 80, both imply internal strength.
SPY Weekly Chart: Last week's breakout saw strong follow-through on the weekly chart. The weekly RSI remains positive and the weekly PMO should hit positive territory next week barring an unusually large decline.
New 52-Week Highs/Lows: New Highs contracted as expected. This week the negative divergence between price tops and New Highs was mitigated. The 10-DMA of the High-Low Differential began to rise this week.
Climax Analysis: Only SPX Net A-D Volume and NYSE UP/DOWN Volume Ratio had climax readings today, which is a toss up, but SPX Total Volume was well above the one-year daily average, which we think indicates conviction behind the decline. Therefore, we think today is a downside initiation climax.
*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.
STOs turned down today and hold strong negative divergences with price. %Stocks > 20-day EMA and %PMOs Rising also hold negative divergences.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT.
Intermediate-term indicators saw slight deterioration. The ITBM and %PMO BUY Signals both topped and hold negative divergences with price. So far the ITVM is rising with no negative divergence.
_______
PARTICIPATION and BIAS Assessment: The following table 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 following table summarizes participation for the major market indexes and sectors. The 1-Week Change columns inject a dynamic aspect to the presentation. There are three groups: Major Market Indexes, Miscellaneous Sectors, and the eleven S&P 500 Sectors.
NEW GROUPS ADDED! We have begun collecting SCI and GCI data for four new sectors: Biotechnology (IBB), Regional Banking (KRE), Retail (XRT), and Semiconductor (SMH).
Looking at the intermediate-term bias, Real Estate holds the highest reading. It is showing improvement to both the SCI and GCI. Not far behind is the Comm Services sector (XLC). XLC is not showing improvement, but slight deterioration to SCI and no change on GCI.
Last place goes to Energy (XLE) whose SCI is deteriorating quickly.
This table is sorted by SCI values. This gives a clear picture of strongest to weakest index/sector in terms of intermediate-term participation.
New group Semiconductors (SMH) and Real Estate (XLRE) hold the top spots for the SCI values. Clearly these groups are seeing strength in the IT. In fact XLRE saw a 17 point increase and a 10 point increase on the GCI.
This table is sorted by GCI values. This gives a clear picture of strongest to weakest index/sector in terms of long-term participation.
Energy (XLE) may hold the top spot on the GCI table, but this is a sector in decline. It lost 13 points on its SCI. It will take longer to siphon off the GCI given the length of the rally in that sector over time. Industrials (XLI) are showing improvement under the surface and hold second place on the GCI table. Transportation (IYT) is showing incredible strength as both the SCI and GCI jumped 15 points this week.
The following chart objectively shows the depth and trend of participation in three time frames.
The market bias is NEUTRAL to BULLISH.
The short-term bias is NEUTRAL.
The intermediate-term bias is BULLISH.
The long-term bias is BULLISH.
Based on the contraction and negative divergences of stocks above their 20/50-day EMAs and the fact that those percentages are less than the SCI reading, we believe the short term is beginning to deteriorate. The SCI is rising and at a healthy 80% so we consider that bullish. There are more stocks above their 50/200-day EMAs than those with golden crosses so the GCI should continue to rise.
CONCLUSION: It was a good week, but we are seeing a few problems. Negative divergences have not all cleared and leave us less confident about a rally continuation to start next week. Topping STOs and a downside initiation climax don't help. However, the PMO, RSI, VIX and Stochastics are behind this week's upside breakout from the bearish wedge. Semiconductors and the SPY are seeing SCI and GCI improvement and that bodes well. We do remain bullish, but also remain cautious given the divergences and STOs.
Erin is 18% exposed.
Have you subscribed the DecisionPoint Diamonds yet? DP does the work for you by providing handpicked stocks/ETFs from exclusive DP scans! Add it with a discount! Contact support@decisionpoint.com for more information!
BITCOIN
Bitcoin is consolidating its parabolic rally. We are waiting for a breakdown given the ugly PMO top, but this consolidation could be just unwinding the PMO. The RSI has also been given a chance to exit overbought territory. Stochastics are angling down. Price will likely continue sideways or decline so that these indicators can continue to unwind.
This chart is to show where some of the support/resistance lines come from.
INTEREST RATES
Yields finished the week with a bang. We may be seeing Adam & Eve double-bottoms developing.
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
Just when you think yields are going to break down, they cling to life. $TNX bounced off support. The PMO was pulled higher today on the rebound. Stochastics even ticked up. Looks like they will test the declining trend. Indicators aren't ripe enough to call for a breakout there.
MORTGAGE INTEREST RATES (30-Yr)**
**We watch the 30-Year Fixed Mortgage Interest Rate, because, for the most part, people buy homes based upon the maximum monthly payment they can afford. As rates rise, a fixed monthly payment will carry a smaller mortgage amount. As buying power has been shrinking, home prices have come under pressure.
--
This week the 30-Year Fixed Rate fell from 6.13 to 6.09.
DOLLAR (UUP)
IT Trend Model: NEUTRAL as of 11/14/2022
LT Trend Model: SELL as of 1/31/2023
UUP Daily Chart: The Dollar really tricked us on Wednesday with its breakdown. Today UUP popped and broke above short-term resistance at the August/December lows. The RSI is now in positive territory and the PMO is putting distance between it and its signal line as it begins to rise more strongly. Stochastics peeked into positive territory above 50. We would look for a rally to test the next level of overhead resistance at $28.25.
We have an intermediate-term declining trend channel and the 50-day EMA crossed below the 200-day EMA. It is time to test the top of this channel. A move like we mentioned above to $28.25 would mean a break from the decline trend.
UUP Weekly Chart: Based on the prior parabolic advance, we should see price move even lower. We need to see a break away from the declining trend. Weekly indicators aren't particularly favorable, but at least the weekly RSI is beginning to rise.
GOLD
IT Trend Model: BUY as of 11/14/2022
LT Trend Model: BUY as of 1/5/2023
GOLD Daily Chart: Gold was already sputtering but today punctuated a rough week for Gold. Indicators are dropping out of the sky just like price.
The rising trend channel is about to be busted as Gold clings to support at June highs. Notice that discounts had begun to pare back, but are now rising. That is indicative of a sentiment turning too bullish and the decline being so strong. The strong reverse correlation is killing Gold as the Dollar rallied, but we also see that Gold's strength is bleeding off. Look for Gold to continue lower.
GOLD Weekly Chart: The weekly chart shows the failure at overhead resistance. The weekly RSI is tumbling and we're seeing a bit of deceleration from the rising weekly PMO. Fertile ground for more decline.
GOLD MINERS Golden and Silver Cross Indexes: With Gold getting smashed, Gold Miners were hit even harder, breaking down as expected from the bearish rising wedge. Participation dropped out of the sky. The 50-day EMA and December highs could hold, but given the loss of support at the 20-day EMA by so many stocks, we wouldn't hold out hope.
CRUDE OIL (USO)
IT Trend Model: SELL as of 2/2/2023
LT Trend Model: SELL as of 12/6/2022
USO Daily Chart: On Wednesday, Erin presented an Ultrashort Oil & Gas ETF (DUG) as Crude Oil was already looking vulnerable. We still don't like it. The daily chart is terrible with negative RSI, falling PMO and Stochastics below 20. On top of all this bearishness, the short-term rising trend was broken as well.
We annotated a symmetrical triangle. They are continuation patterns and given the prior trend was down, this downside break makes sense.
USO/$WTIC Weekly Chart: The very long-term rising trend was also breached. The weekly RSI is negative and the weekly PMO has topped beneath its signal line which is especially bearish.
BONDS (TLT)
IT Trend Model: BUYas of 12/2/2022
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: TLT made a go at breaking out of the symmetrical triangle, but formed a bearish filled black candlestick suggesting a decline would occur today. It is mostly moving sideways so the indicators aren't revealing much, but the PMO and Stochastics have topped. The RSI is positive, but declining too.
TLT Weekly Chart: The weekly PMO is still rising strongly and the weekly RSI while positive is flat. A breakout doesn't seem imminent, but it is viable based on the weekly chart.
Good Luck & Good Trading!
Erin Swenlin And Carl Swenlin
Technical Analysis is a windsock, not a crystal ball. --Carl Swenlin
(c) Copyright 2023 DecisionPoint.com
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.
Helpful DecisionPoint Links:
DecisionPoint Alert Chart List
DecisionPoint Golden Cross/Silver Cross Index Chart List
DecisionPoint Sector Chart List
Price Momentum Oscillator (PMO)
Swenlin Trading Oscillators (STO-B and STO-V)
DecisionPoint is not a registered investment advisor. Investment and trading decisions are solely your responsibility. DecisionPoint newsletters, blogs or website materials should NOT be interpreted as a recommendation or solicitation to buy or sell any security or to take any specific action.