This three-day 5-minute bar chart shows how the Fed decision has injected volatility into the market.
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The S&P 500 (SPY) 50-day EMA crossed down through the 200-day EMA (Death Cross), generating an LT Trend Model SELL Signal. In spite of the dramatic crossover name, we note that all three of the three EMAs are extremely close together, and a price move in either direction could generate new signal changes.
The NYSE Composite Index ($NYA) also had a Death Cross SELL Signal. The EMA configuration here is more likely to succumb to price volatility, and this IT Trend Model SELL Signal is likely to stick.
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
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.
CLICK HERE for Carl's annotated Sector charts.
THE MARKET (S&P 500)
IT Trend Model: NEUTRAL as of 3/13/2023
LT Trend Model: SELL as of 3/23/2023
SPY Daily Chart: While the market managed a positive close, it formed a filled black candlestick which is bearish. These are formed when price closes beneath the open, but higher than the close of the prior day. It tells us that bears likely won the day. Although bears weren't able to really degrade the rising trend given the close above it.
The PMO actually turned up on today's action, but it was only a gain of 0.01. We consider it negative given it is still on a SELL signal. The RSI is still in negative territory below net neutral (50). Stochastics are pointed downward. The VIX is hovering around its moving average telling us there is no internal strength, but at the same time, no internal weakness. Not helpful unfortunately.
Here is the latest recording:
S&P 500 New 52-Week Highs/Lows: New Lows expanded a great deal today in spite of the positive close. The 10-DMA of the High-Low Differential, which had turned up yesterday, has turned immediately back down below the zero line.
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 DOWN and the condition is NEUTRAL.
STOs continue to move lower. No headway was made on participation or on Rising PMOs.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERSOLD.
It's hard to see, but we checked, the ITVM moved lower today and was joined by the ITBM as it declined as well. We lost a few PMO BUY signals given %PMO BUY Signals dropped slightly.
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 market bias is BEARISH.
The intermediate-term market bias is BEARISH.
The long-term market bias is BEARISH.
Yesterday's comments still apply:
"The short-term bias had just turned bullish, but it is back to bearish as participation was slashed on today's decline. The Silver Cross Index was beginning to turn back up, but instead it topped beneath the signal line which is especially bearish. There are fewer stocks above their 50/200-day EMAs than those with "Golden Crosses" (50-day EMA > 200-day EMA) and both of those conditions make the long term bearish."
CONCLUSION: The market attempted to recoup losses today, but ultimately finished only slightly higher. All of our primary indicators are in decline now in all timeframes. Yesterday's downside initiation climax didn't result in a day of lower prices, but the bearish bias weighed heavy as price was taken off the significant highs on the day. We expect this downside pressure to continue with tomorrow's trading. Indicators remain in agreement that the rally is off for the major markets. Pockets of strength are still available. Erin pointed out two in today's DP Diamonds Report.
IMPORTANT ANNOUNCEMENT: The DP Weekly Wrap will be published on Sunday instead of tomorrow. Erin is headed out to wine country to enjoy a little time off.
Erin is 15% long and 2% short.
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 reversed higher today but remains congested between 27,000 and 29,000. Indicators remain strong so an upside breakout is more likely than a downside reversal. The RSI is positive and not overbought. The PMO is rising on a BUY signal and isn't as overbought as it can get. Stochastics are oscillating strongly above 80. One issue would be the lackluster OBV that has a slight negative divergence with price (falling tops v. rising price tops).
INTEREST RATES
Rates continue to sink as Bonds find favor. Long-term rates are now testing support at December and January lows.
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 dropped heavily today but remain above support. It closed right on the 200-day EMA. This support level while strong based on the many "touches" by price, but with indicators configured so negatively, we expect a breakdown in the 10-year yield.
DOLLAR (UUP)
IT Trend Model: BUY as of 2/27/2023
LT Trend Model: BUY as of 2/24/2023
UUP Daily Chart: The Dollar rebounded slightly off support, but indicators are still weak which tells us to expect a breakdown. The RSI is firmly negative and the PMO will likely drop below zero soon. Stochastics did turn up, but remain in highly negative territory below 20. At best, we see consolidation along the current support level.
GOLD
IT Trend Model: NEUTRAL as of 3/7/2023
LT Trend Model: BUY as of 1/5/2023
GLD Daily Chart: Gold is back to the races. In spite of the Dollar closing higher, Gold broke to a new 52-week high. The rising trend softened, but remains fairly steep and vulnerable to a breakdown. However, with indicators so strong, we would expect a rising trend to persist.
GOLD Daily Chart: The strength of Gold to the Dollar is continue to increase. Not unexpectedly, discounts have thinned greatly. This means that traders are far more bullish on Gold than they have been. That bodes well for the metal.
GOLD MINERS Golden and Silver Cross Indexes: Yesterday's comments still apply:
"Gold Miners reawakened as Gold rallied. The PMO has just moved into positive territory. The RSI is positive and rising and Stochastics are firmly above 80. Participation remains very strong with the Silver Cross Index rising quickly. The Golden Cross Index has had a positive crossover its signal line. It doesn't look like the rally is over, they have more ground they can cover."
CRUDE OIL (USO)
IT Trend Model: SELL as of 2/2/2023
LT Trend Model: SELL as of 12/6/2022
USO Daily Chart: Crude Oil cooled today as they failed to overcome resistance. USO also formed a bearish engulfing candlestick that suggests this overhead resistance line will hold up for at least another day. Indicators want to get bullish. The PMO was starting to rise yesterday, but today it is declining again. Stochastics are at least rising, but are still in highly negative territory. We'd look for a trading range to materialize between 58 and 62.
BONDS (TLT)
IT Trend Model: BUY as of 3/17/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: The bullish engulfing candlestick from yesterday almost fulfilled with a rally today. We now have a symmetrical triangle formation. These are continuation patterns and the prior trend was up. This means we should expect an upside breakout. Indicators are in line with this thinking. The RSI is positive and the PMO is rising above the zero line. Stochastics, while not above 80, are above net neutral (50). Market weakness will likely get Bonds moving even higher.
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:
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)
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