Today the SPY and the Russell 2000 ETF (IWM) 20-day EMAs crossed down through the 50-day EMAs (Dark Cross) above the 200-day EMAs, generating IT Trend Model NEUTRAL Signals on both indexes. Had the crossovers occurred beneath the 200-day EMA it would have been a SELL Signal.
Speaking of IT Trend Model SELL Signals v. Neutral Signals, the SP500 ($SPX) had its own "Dark Cross". However, in the case of the SPX, it was an IT Trend Model SELL Signal as the 20/50-day EMA negative crossover occurred beneath the 200-day EMA. It's an eye test so it is best seen in the thumbnail.
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: Here is another view of the Dark Cross of the 20/50-day EMAs. We have a bullish hollow red candlestick which suggests a possible upside reversal tomorrow.
Indicators are quite ugly. The RSI is falling in negative territory, the PMO has moved below the zero line and is falling and Stochastics are moving downward. The one bright spot would be the VIX puncturing its lower Bollinger Band on the inverted scale. These punctures generally occur before upside reversals. Just keep in mind the signal is only good for a day or two. Certainly a rally could catch on, but the signal doesn't infer that.
Here is the latest recording:
S&P 500 New 52-Week Highs/Lows: New Lows expanded greatly, but they are still nowhere near prior oversold readings.
Climax* Analysis: Carl suspected that we would get another climax day today, but it didn't happen. SPX Net A-D Volume had a climax reading, but that was it. SPX Total Volume was at blowout levels, so it is possible that could signal a short-term price bottom.
*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.
While STOs could get more oversold, the lowest readings we've had since August and September when they became extraordinarily oversold. It is a positive that we saw an increase in Rising Momentum and a few more stocks moving above their 20-day EMAs on a decline for the SPY.
Intermediate-Term Market Indicators: The intermediate-term market trend is DOWN and the condition is OVERSOLD.
These indicators are definitely oversold, but we do see they were far lower last year. We now have 13% of stocks showing rising momentum in the above chart so we know that %PMO BUY Signals on this chart should start rising again.
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.
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.
Note: While we saw an expansion of stocks above their 20-day EMA today, we did not see improvement on stocks above their 50/200-day EMAs.
CONCLUSION: The market did manage to shore up losses before the close. Due to this, we got a bullish hollow red candlestick to accompany blow out volume and oversold indicators. We do expect a day or two of upside based on the intensity of the selling and previous downside exhaustion climaxes on Thursday and Friday. We are skeptical past that. We continue to be asked what we need to see before we get bullish. A rising PMO would be nice and certainly an upside reversal on the STOs and ITBM/ITVM would make a difference. At this point the rubberband has stretched about as far as it can go. A release of that tension should result in a nice snapback this week.
Erin is 13% long, 2% short.
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Bitcoin was headed toward the downside target of the bearish double-top, but this weekend reversed strongly. We aren't sure why this happened, but a Forbes.com article said this:
...as the U.S. government announced its intentions over the weekend to cover debts from Silicon Valley Bank and Signature Bank, consumer confidence has sent Bitcoin's price soaring...
This is the life of trading Bitcoin, lots of volatility. It was looking dead on its feet, but this rally has improved the indicators significantly so we have to be on the lookout for higher prices.
Rates fell out of the sky offering Bond Funds the opportunity to continue higher. We will be watching support at prior 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 dove lower after holding support for a few weeks. Price has basically confirmed the bearish rising wedge with the intraday low. Strong support is available, but given the vertical decline, we expect a breakdown here.
IT Trend Model: BUY as of 2/27/2023
LT Trend Model: BUY as of 2/24/2023
UUP Daily Chart: The rising wedge was confirmed with Friday's decline which saw continuation today. The 200-day EMA is nearby for support, but given the deterioration of all of our primary indicators, we are looking for the decline to continue.
IT Trend Model: BUY as of 11/14/2022
IT Trend Model: NEUTRAL as of 3/7/2023
GLD Daily Chart: The minimum upside target of the bullish double-bottom has now been met and exceeded. Gold is reclaiming its status as "safe haven" in a bear market and with yields dropping Bonds will find favor as well.
GOLD Daily Chart: The indicators are excellent. The RSI is rising strongly and the PMO just gave us a crossover BUY signal. $GVZ spiked well below the lower Bollinger Band and that implies more upside ahead. A declining Dollar will be good for Gold, but even better, it is showing relative strength against the Dollar and the reverse correlation is easing up. We see Gold moving even higher from here.
GOLD MINERS Golden and Silver Cross Indexes: With Gold enjoying a strong rally, the runway was cleared for Gold Miners to takeoff. We have a bullish double-bottom and participation shot up on the day. The double-bottom's minimum upside target would take GDX easily over 32.00.
CRUDE OIL (USO)
IT Trend Model: SELL as of 2/2/2023
LT Trend Model: SELL as of 12/6/2022
USO Daily Chart: USO continues to be confined within a trading range. Today's hollow red candlestick suggests we will see a rebound off the current support level at 64.00. However, it is still vulnerable to test 62.00 based on the negative RSI, PMO SELL Signal and falling Stochastics. Today's high volume does have us leaning toward a rebound rather than a decline.
IT Trend Model: SELLas of 2/21/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: TLT has now hit resistance and formed a giant bearish filled black candlestick. It begs for a pause or pullback here. However, with yields in freefall, a breakout wouldn't surprise us at all. The indicators are on the side of a breakout and today's intraday pullback could be all the relief it needed before rising even higher. Bottom line, expect a breakout near-term.
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.
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