Below is a 5-minute chart of the SPY. Today price spent the morning in positive territory and the afternoon in negative territory. Ultimately bulls were able to pull price back into the green. The result today was a lower high and a lower low. The 5-minute PMO seems to think the rally will continue, but we do note that the 5-minute RSI is overbought currently. The chart tells us to think rally in the morning. Past that, our other indicators aren't so optimistic.
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: BUY as of 1/12/2023
LT Trend Model: BUY as of 2/9/2023
SPY Daily Chart: Today, Erin was a guest on The Final Bar with Dave Keller on StockChartsTV. He pointed out the crazy amount of trendlines he's been drawing on his own charts, so we're not alone with trying to decipher what the market is actually up to based strictly on price.
If you take the chart above and use just closing prices, the rising trend actually remains intact. This should give bulls something to hang onto. Volume was thin today which tells us the rally wasn't supported much.
The rising wedge is bearish but price hasn't quite decided whether it wants to break down. Typically we look for a "decisive" break which means 3% or more. We aren't there. The indicators turned south yesterday and nothing improved with today's positive close (well, one thing did, but we'll chat about that later). The PMO top beneath the signal line looks particularly deadly. Stochastics have topped in negative territory which suggests internal weakness. Of course, the VIX is still above its moving average on the inverted scale and that flashes internal strength. The internals are still leaning bearish in our minds given the look of the rest of our indicators.
Here is the latest recording:
S&P 500 New 52-Week Highs/Lows: The rally didn't shake up much. New Lows were at the same level and we saw fewer New Highs. A similar reading on New Lows on a rally day doesn't inspire confidence.
Climax* Analysis: There were no climax readings today on the four applicable indicators.
*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 NEUTRAL.
The STO-B turned back up, but the STO-V did not. The STO-B is the one highlight today. We did see an improvement in the internals with %Stocks > 20-day EMA seeing a tick up and %Rising PMOs up 7 percentage points from yesterday.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERSOLD.
The STO-B's rise was not confirmed by either the STO-V or the ITBM/ITVM. %PMO BUY signals has dropped below the signal line.
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 of the market is BEARISH in all three timeframes.
The Silver Cross Index is accelerating its decline and with fewer stocks above their 20/50-day EMAs, we know that will not improve. When you look at participation on this longer-term chart, you can see that the improvement in %Stocks > 20/50-day EMAs was truly negligible.
CONCLUSION: It's a mostly 'bad news' day. The STO-B turned back up but all other indicators continue lower. Yesterday's downside initiation climax did not result in lower prices today and the rising trend on closing prices is still intact, so bulls could take that as a positive. However, bears hold all the cards right now given the PMO top beneath the signal line, Stochastics topping in negative territory and essentially every indicator moving lower. Erin has opted not to expand her portfolio.
Erin is 25% long, 0% short.
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Yesterday's comments still apply:
"After brief consolidation, Bitcoin broke down and is about to test support at the 200-day EMA and 21,500. This looks like a bearish double-top. A drop below the February low will confirm it. Given the very negative indicators, falling/negative RSI, falling PMO on a SELL signal and Stochastics topping below 20, look for the pattern to execute."
The yield curve continues to invert further given long-term rates in short-term rising trends and long-term rates are in declining trends. Inverted curves often lead to recession so check that box on your "Are we going into a recession?" checklist.
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
Support is still holding at the December top so we believe the bullish double-bottom pattern is still viable. The PMO did top today and Stochastics look ugly as they fall further. Still, the RSI is firmly positive. Support is holding so we are looking for rates to continue rising after this period of consolidation.
IT Trend Model: BUY as of 2/27/2023
LT Trend Model: BUY as of 2/24/2023
UUP Daily Chart: The Dollar was mostly unchanged today, but it did form a much higher low and a higher high. The RSI is positive and the PMO is rising. Stochastics are also rising above 80. With the indicators so bullish we should be too; however, the bearish rising wedge could still be a factor.
IT Trend Model: NEUTRAL as of 3/7/2023
LT Trend Model: BUY as of 1/5/2023
GLD Daily Chart: We believe the good news for Gold is that it did pause with the Dollar today rather than push even lower. GLD is holding support at last months low. However, indicators do suggest a breakdown ahead given the negative RSI, falling PMO on a SELL signal and Stochastics quickly moving lower.
GOLD Daily Chart: We haven't talked about the premium and discount readings for some time. They remain historically high. It isn't that obvious because they have been elevated for so long. We will discuss this more on Friday when we review the weekly chart.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners slowed the decline, but the picture is bleak. The RSI is very negative and not oversold. The PMO topped beneath its signal line and participation continues to deflate with less than 7% of Gold Miners holding above their 20/50-day EMAs. This would be a great place for a reversal, but there is no support underneath to propel them upward. We are looking for a test of 26.00.
CRUDE OIL (USO)
IT Trend Model: SELL as of 2/2/2023
LT Trend Model: SELL as of 12/6/2022
USO Daily Chart: This is exactly why we didn't get very bullish on the Energy sector and Crude Oil. The PMO is in decline alongside a negative and falling RSI. Stochastics have topped and are also moving lower. The sideways trading range continues. This is the second top that didn't make it to overhead resistance. We thought we'd see a breakdown after the last top beneath resistance. At this point look for USO to test the bottom of the range.
IT Trend Model: SELLas of 2/21/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: TLT formed a bearish filled black candlestick today. This means a close that was below today's open, but a close higher than yesterday's close. Short-term interest rates are on the rise and we believe we will see the same from long-term rates shortly. While the PMO is technically rising with Stochastics, we aren't expecting the rising trend to hold up too much 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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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:
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DecisionPoint Golden Cross/Silver Cross Index Chart List
DecisionPoint Sector Chart List
Price Momentum Oscillator (PMO)
Swenlin Trading Oscillators (STO-B and STO-V)
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