Today the Consumer Discretionary Sector (XLY) 20-day EMA crossed down through the 50-day EMA (Dark Cross), generating an IT Trend Model SELL Signal. Had the crossover occurred above the 200-day EMA, it would have been a "NEUTRAL" signal which means a 'soft' SELL signal -- position is cash or fully hedged. Participation started tapering off this month and consequently, the Silver Cross Index began to drop quickly and is still falling. Even the Golden Cross Index is turning over on a negative crossover its signal line. Stochastics do suggest some upside is possible, but given the other indicators we believe it is doubtful any rally would catch on.
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: NEUTRAL as of 13/13/2023
LT Trend Model: BUY as of 2/9/2023
SPY Daily Chart: Looking at the last four trading days we can see a lot of volatility, but it has been confined to a trading range of about 3.5%. It's not going anywhere. We have to wonder if a bottom is in the making. We're not saying it is, but we need to acknowledge that the market is not falling apart like it was last week. Note that a 50EMA/200EMA downside crossover (Death Cross) is imminent. Today's bullish hollow red candlestick could result in rally tomorrow, but we don't see the market making much headway.
The PMO has yet to make the turn back up and is falling in negative territory now. The RSI topped in negative territory. Stochastics are rising which does suggest some internal strength might be available. The VIX closed beneath its lower Bollinger Band on the inverted scale. This usually leads to a day or two of upside but it has been puncturing that Band for the past four days and it hasn't resulted in much headway.
Here is the latest recording:
S&P 500 New 52-Week Highs/Lows: New Lows expanded which isn't a surprise. We are encouraged, however that New Lows didn't expand past the reading of two days ago.
Climax* Analysis: Today resembles Monday in that only two of the eligible indicators had a climax reading, and SPX Total Volume was at blowout levels. On Monday we thought that the high volume could be signalling a price bottom, which worked for one day. Possibly a repeat? Since the last climax was upside, we'll designate today as 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 DOWN and the condition is OVERSOLD.
Both STOs reversed the upside yesterday, but the STO-B was slightly lower on the day v. the STO-B which continued to rise modestly. Participation didn't take a big hit today on the decline. 23% are still showing positive momentum.
Intermediate-Term Market Indicators: The intermediate-term market trend is DOWN and the condition is OVERSOLD.
The ITBM/ITVM continue lower and are getting very oversold. We've seen lower readings so more downside could certainly be accommodated. Given there are 23% of stocks with rising momentum, we should continue to see %PMO BUY Signals improve.
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 bias is BEARISH in all three timeframes. No change.
We have anemic readings on %Stocks above their 20/50-day EMAs and they are well below the Silver Cross Index percentage. Similarly, we have both the Silver Cross Index and Golden Cross Index declining with not enough stocks above their 50/200-day EMAs to allow for improvement.
CONCLUSION: Yesterday's upside initiation climax did not result in higher prices and now we have a downside initiation climax. Market indicators like the STOs and ITBM/ITVM are not looking bullish nor are technical indicators like the PMO and RSI. On the flip side, we aren't entirely convinced this downside initiation climax will result in a decline tomorrow given today's bullish hollow red candlestick and the VIX's extremely high fear readings; nonetheless, we must continue to protect ourselves against further decline in the short term, at least until we see a rising PMO and expanding participation.
Erin is 10% long, 2% short.
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Bitcoin is beginning to digest its strong rally. Indicators are all very bullish with a new PMO BUY Signal, positive RSI and Stochastics which should get above 80 tomorrow barring a large decline. We see consolidation and digestion continuing for a few days before it begins rising again. If indicators turn south on a big decline, we will change our bullish tune.
Rates tumbled after rallying strongly yesterday. Time to start to watch for support levels to be tested at late 2022 and early 2023 bottoms.
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 collapsed after yesterday's big rally. Support is still holding at 2022/2023 lows, but indicators suggest we will see a breakdown below this support level. The RSI is very negative and falling again. The PMO is falling and Stochastics are in the basement. If Stochastics begin to rise higher, we will then look for a rebound. They are signaling internal weakness right now.
IT Trend Model: BUY as of 2/27/2023
LT Trend Model: BUY as of 2/24/2023
UUP Daily Chart: The surprisingly rallied today but couldn't prevent the PMO Crossover SELL Signal. Stochastics did tick up slightly and the RSI is back in positive territory. We do recognize a bearish filled black candlestick that could lead to a down day tomorrow. Overall the Dollar hasn't done much this month. We expect the Dollar to continue moving sideways.
IT Trend Model: NEUTRAL as of 3/7/2023
LT Trend Model: BUY as of 1/5/2023
GLD Daily Chart: Gold showed real strength today. GLD was up +0.78% and the continuous contract $GOLD was up +1.07%. With the negative correlation between Gold and the Dollar we would've expected a down day for Gold. The fact it rose tells us there is internal strength to be had.
GOLD Daily Chart: We may've seen a bearish filled black candlestick on GLD, but no such thing on $GOLD as it closed well above today's open. The indicators look excellent with a rising positive RSI, a new PMO BUY Signal and a PMO in positive territory, as well as strong Stochastics above 80. We like Gold right now.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners were unchanged today so yesterday's comments still apply:
"Gold Miners rallied again yesterday. Participation has shot straight to the sky which has the Silver Cross Index rising and the Golden Cross Index flattening. There is now internal strength that can be exploited."
CRUDE OIL (USO)
IT Trend Model: SELL as of 2/2/2023
LT Trend Model: SELL as of 12/6/2022
USO Daily Chart: USO obliterated support today and closed at New 52-Week Lows. There is a long tail on today's candlestick which implies quite a bit of improvement occurred to pare down even larger losses. It is "hammer-like" so we could see at least a pause in this decline. The RSI, PMO and Stochastics all imply more downside. We do think a rebound is likely tomorrow based on the enormously high readings on the Crude Oil Volatility Index ($OVX).
We decided to include the weekly chart today so that we can see where new support might lie. Interestingly, USO's low landed right on very strong support. There is still some room for $WTIC to drop lower. As bad as the daily chart looks we do find at least some comfort when we see how this support level sits on gap support from 2020, the 2021 high and end of year lows in 2022. The weekly PMO certainly doesn't inspire confidence as it dipped into negative territory. If this support level is taken out, we would look for support around 50.00.
IT Trend Model: SELLas of 2/21/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: Short-term support is holding for TLT, but we saw another bearish filled black candlestick and an inability to get above the 200-day EMA. Fortunately for Bonds, yields have started to dive lower. While we do expect Bonds to continue higher in the near term based on the PMO and RSI, we can't discount topping Stochastics which could imply resistance will hold a bit longer.
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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