Today the Semiconductor (SMH) Price Momentum Oscillator (PMO) generated a crossover BUY signal as it crossed above its signal line. Good news abounds on this chart. We didn't need a PMO BUY Signal to know that Semiconductors (SMH) are leading the technology space. Notice the amount of stocks above their 20/50/200-day EMAs. They are reading well above 50% which is considered a bullish threshold. The Silver Cross Index (SCI) measure how many stocks have their 20-day EMA above their 50-day EMA. 80% are holding that bullish configuration. The SCI is also about to give us an upside crossover its signal line. The RSI is positive and not overbought. Stochastics are above 80 and rising. And, of course, relative strength is excellent against the SPY.
Be aware that not all Semiconductors are the same. In this morning's trading room Erin analyzed at least four: ON, TSM, NVDA and AMD. They are not equal. A quick relative strength line against the group will tell you if you have a leader. AMD and NVDA are the leaders while ON and TSM are weak in comparison.
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: NEUTRAL as of 3/13/2023
LT Trend Model: BUY as of 2/9/2023
SPY Daily Chart: Yesterday and today's candlesticks are engulfed by Thursday's candle body. This is a sign of indecision by market participants who are likely holding their breath in anticipation of the FOMC's rate increase or possible punt.
Today's rally did get the PMO to turn back up, but the RSI is still below net neutral (50). Stochastics are very encouraging as they are back above 50 for the first time since mid-February. The VIX punctured its lower Bollinger Band for the sixth time in seven trading days on our inverted scale. These punctures usually lead to higher prices.
Here is the latest recording:
S&P 500 New 52-Week Highs/Lows: New Lows are contracting and therefore confirming the short-term rising trend. However, we do note that the 10-DMA of the High-Low Differential is falling below zero, setting up a negative divergence with price.
Climax* Analysis: Two of the four applicable indicators had climax readings and SPX Total Volume was above the one-year daily average, so we will declare today as an upside initiation climax. The puncture of the lower Bollinger Band by the VIX also signals a continuation of today's rally.
*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 have now made it into positive territory. This is good news, but we do note that it was the kiss of death for the last two rally attempts. Very good to see a solid expansion in stocks with rising momentum. That can carry the market higher.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERSOLD.
IT indicators are all confirming the rising short-term indicators. While only 22% of the index have PMO BUY Signals, we know that with 42% holding rising momentum, that will continue to 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 market bias is BEARISH in all three timeframes.
The short term is lined up to improve to at least Neutral. We have nearly the same amount of stocks above their 20/50-day EMAs as those with Silver Crosses (20-day EMA > 50-day EMA). The Golden Cross Index is falling and is well above the percentage of stocks above their 50/200-day EMAs, so it will continue to decline.
CONCLUSION: Barring the bank crisis, the market looks healthy. The technicals are getting stronger. Intermediate-term indicators are now confirming rising short-term indicators and participation is expanding enough to nearly clear the short-term bearish bias. Problems we foresee are going to be related to "noise". Nearly everything is already baked into the chart regarding the FOMC, but we all got surprised by the Banks, including, we'd guess, the FOMC. This is likely to mean a 25 bps versus 50 bps rise. Investors will like anything under 50 bps, so we do expect today's upside initiation climax to resolve upward with prices likely to rally into the end of the week, unless we see more damage done to the banking system.
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The rally in Bitcoin is softening, but given current investor sentiment that Bitcoin and Gold are 'stores of value' or at least a better (in their minds) alternative to the Dollar. The indicators are strong. The RSI is slightly overbought, but given how overbought it can stay (look at January), we don't see this as a negative. The PMO is rising strongly and isn't overbought. Stochastics are oscillating above 80. While price has gotten stretched, we do see Bitcoin moving higher from here.
Rates saw a rally today. Longer-term rates are testing support levels.
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 continues to hold horizontal support, but so far it isn't making much headway. We saw a "Dark Cross" of the 20/50-day EMAs today which signifies 'correction mode'. The indicators also favor a breakdown. Today the PMO hit negative territory. Stochastics are in the basement and the RSI is in negative territory.
IT Trend Model: BUY as of 2/27/2023
LT Trend Model: BUY as of 2/24/2023
UUP Daily Chart: The Dollar broke out of its rising trend channel. Price closed right on the 200-day EMA. The PMO is in decline and is starting to see some margin between it and its signal line. Stochastics couldn't look too much worse. Look for the Dollar to continue breaking down.
IT Trend Model: NEUTRAL as of 3/7/2023
LT Trend Model: BUY as of 1/5/2023
GLD Daily Chart: Gold is in a steep rising trend. Friday saw a breakout above the February high. The PMO is rising strongly and Stochastics are above 80. Gold volatility is high so the Bollinger Bands on $GVZ have expanded greatly. Remember punctures of the lower Bollinger Band on the inverted scale is bullish for volatility indexes.
GOLD Daily Chart: We don't have updated sentiment, but it should be noted that on Friday discounts spiked. History shows that when we get very high readings on discounts, price will rise. Also, Gold's relative strength to the Dollar is improving quickly. The rally in Gold should continue.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners are making their way back to the January high. Participation is incredibly high with 100% above their 20-day EMAs and nearly 90% above their 50-day EMAs. The Golden Cross Index has made its way back above its signal line and the Silver Cross Index is rising strongly. With so many stocks above their 20/50-day EMAs, the Silver Cross Index will likely begin moving upward very quickly. With Gold doing well and the market likely to do well this week, this group should continue to shine.
CRUDE OIL (USO)
IT Trend Model: SELL as of 2/2/2023
LT Trend Model: SELL as of 12/6/2022
USO Daily Chart: The daily chart indicators on USO look pretty terrible, but price is managing to find support. Stochastics look ready to bottom and the RSI is heading back up. More punctures of the lower Bollinger Band by the Crude Oil Volatility Index suggests more upside to come. This may not be the actual bottom on Crude Oil, but we sense it is already getting close.
IT Trend Model: BUY as of 3/17/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: TLT stalled out at the 200-day EMA and overhead resistance at the December/February highs. The PMO is still technically rising and the RSI/Stochastics are in positive territory. Yields look weak, but they are sitting on support. We will go with an upside breakout because there is a short-term symmetrical triangle. These are continuation patterns and since the prior trend was UP, we should expect this triangle to resolve to the upside.
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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