Today the NYSE Composite ($NYA) 20-day EMA crossed down through the 50-day EMA (Dark Cross) above the 200-day EMA, generating an IT Trend Model NEUTRAL Signal. A NEUTRAL Signal is a soft SELL Signal, meaning that the position is in cash or fully hedged.
Today decline took out the 200-day EMA support level. The PMO is now accelerating lower beneath the zero line. We would expect to see the December low tested at a minimum.
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
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: A giant bearish engulfing candlestick formed today. Today's candle body "engulfed" or covered yesterday's candle body. This implies a decline tomorrow.
Yesterday, the rising bottoms trendline drawn using closes and not intraday lows was intact yesterday. Today it was obliterated.
Our primary indicators look terrible. The RSI is negative, the PMO continues to fall after topping beneath the signal line and Stochastics are falling in negative territory. The VIX dove lower on our inverted scale. We saw a downside puncture of the lower Bollinger Band. Typically we will see an upside reversal, but we have also seen punctures that were followed by more punctures. We wouldn't count on a big upside reversal yet.
Here is the latest recording:
S&P 500 New 52-Week Highs/Lows: New Lows are expanding, confirming the current decline. The readings are not oversold. The 10-DMA of the High-Low Differential continues lower.
Climax* Analysis: Today there were strong climax readings on all four relevant indicators, giving us a downside exhaustion climax. SPX Total Volume was strong but still not at blowout levels, meaning that there is probably more downside to follow. Today's bearish engulfing candlestick increases that probability.
*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 STOs tumbled lower along with participation. We have oversold readings on %Stocks > 20-day EMA and %PMOs Rising, but as crazy as it seems, we've seen even lower readings. Certainly the STOs aren't oversold.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERSOLD.
The ITBM and ITVM confirm what the STOs are already telling us. The market is weak and should continue lower. They are not nearly as oversold as they can get. However, % PMO BUY signals are oversold. Only 8% have rising PMOs so at least 6% are vulnerable to losing those BUY signals given there are 14% with 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 bias of the market is BEARISH in all three timeframes.
Participation across the board is diving lower. This long-term chart makes it clear that none of these indicators are that oversold. More destruction is likely coming.
CONCLUSION: Today's downside exhaustion climax isn't likely to resolve with an upside reversal. We saw a bearish engulfing candlestick, a break of the rising bottoms trendline and we can see indicator after indicator in a bearish configuration. We do have the jobs report and CPI ahead that could shake things up, but the technicals tell us today wasn't the last of this decline. Erin won't be expanding her portfolio, although she is considering a hedge. One was presented in today's DP Diamonds Report.
Erin is 25% long, 0% short.
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The decline was deep today for Bitcoin, taking out very strong support at 21,500. We believe there is a double-top in play here. The measurement of the pattern suggests a minimum downside target around 18,500 or the December top.
Yields declined with shorter-term rates seeing steep declines. The 30-year yield was unchanged.
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 fell today but continues to stay above the confirmation line of the bullish double-bottom pattern. We have been expecting a rally, but the longer it goes without, the more negative the indicators become. The RSI is still holding in positive territory, but the PMO is topping and Stochastics are in free fall. A breakdown is starting to seem the likely conclusion here.
IT Trend Model: BUY as of 2/27/2023
LT Trend Model: BUY as of 2/24/2023
UUP Daily Chart: The bearish rising wedge remains on the Dollar. However, indicators are still quite positive so a breakdown isn't likely to arrive in the near term. The RSI is above net neutral (50), the PMO is rising and is not overbought, and Stochastics are comfortably above 80. We believe the Dollar will continue to dribble higher.
IT Trend Model: NEUTRAL as of 3/7/2023
LT Trend Model: BUY as of 1/5/2023
GLD Daily Chart: Gold made the most of a declining Dollar today with a nearly 1% gain for GLD. The PMO was unchanged today which is partially good news given it has been in decline. The RSI is still negative but rising.
GOLD Daily Chart: It is VERY early, but we are now on the look out for a bullish double-bottom on Gold. The Dollar chart isn't bearish enough to look for a rally continuation. Note that GLD already had a "Dark Cross" of the 20/50-day EMAs, $GOLD got its Dark Cross today. It is definitely wishful thinking that this will turn into a double-bottom, but as we said, we will monitor developments in the DP Alert as always.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners were lower. Participation remains in the basement with no improvement. The Silver Cross Index is now falling vertically. It was already at an unhealthy level. We only have a few stocks in the group holding above their 20/50-day EMAs. A bearish market combined with bearish Gold is poison for GDX. We still think 26.00 will be tested, likely unsuccessfully.
CRUDE OIL (USO)
IT Trend Model: SELL as of 2/2/2023
LT Trend Model: SELL as of 12/6/2022
USO Daily Chart: Yesterday's comments apply with the addition of a bearish engulfing candlestick today:
"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: Rates are cooling now so the rising trend will likely hold up. Erin noted many many Bond funds come up in her bullish scans today. The PMO is about to give us a crossover BUY signal and Stochastics are rising strongly. Look for TLT to continue to edge higher along the rising bottoms trendline.
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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