Yesterday the Industrial Sector (XLI) switched to an IT Trend Model Neutral. Today the XLI 20-day EMA crossed up through the 50-day EMA (Silver Cross), generating an IT Trend Model BUY Signal. This is the seventh 20/50-day EMA crossover in a year, and it won't take much to generate another whipsaw. Obviously, this is a low-confidence signal. Participation is expanding on this rally, but we still have doubts about the market.
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
For Today:
For the Week:
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.
For Today: 
For the Week:
CLICK HERE for Carl's annotated Sector charts.
THE MARKET (S&P 500)
IT Trend Model: BUY as of 3/30/2023
LT Trend Model: BUY as of 3/29/2023
SPY Daily Chart: The market had another strong rally today. It managed to reach overhead resistance at the 2023 high. The rally pushed the PMO back up into a Crossover BUY Signal. The RSI remains positive and not overbought.
Stochastics are rising and the VIX fell heavily on today's action. While this does show us some internal strength, the puncture of the VIX upper Bollinger Band nearly always precedes a decline.
SPY Weekly Chart: The intermediate-term picture doesn't look that bad until you realize we have a symmetrical triangle forming. Since it is coming off a decline, the expectation is a break down from the pattern. The weekly RSI and weekly PMO still quite positive. The picture won't get that much better if price breaks out further as we then would have a bearish rising wedge.
SPY Monthly Chart: Upward price progress has held for eight months, but it has not been sufficient to turn the monthly PMO up.
New 52-Week Highs/Lows: New Highs really haven't expanded to the degree we would expect on such a forceful rally. Readings remain about the same as we saw on the last rally. We do see that the 10-DMA of the High-Low Differential is rising again, but it is getting very overbought.
Climax Analysis: Another day of unanimous climax readings on the relevant indicators, give us an upside exhaustion climax. SPX Total Volume is strong, but not at blowoff levels. The climaxes were weaker than yesterday's, so it it possible that the up move really is exhausted.
*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.
STOs began rising yesterday and continued to move higher today. Participation is finally expanding to bullish levels again.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT.
IT indicators did turn back up today. We aren't making a big deal about this right now primarily because the indicators are so overbought. It suggests that any upside would be abbreviated as they would run into extremely overbought territory quickly. Although we had 63% of stocks showing rising PMOs, the number of PMO BUY Signals didn't really change.
_______
PARTICIPATION and BIAS Assessment: The following table 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 following table summarizes participation for the major market indexes and sectors. The 1-Week Change columns inject a dynamic aspect to the presentation. There are three groups: Major Market Indexes, Miscellaneous Sectors, and the eleven S&P 500 Sectors.
NEW INDUSTRY GROUPS ADDED! We have begun collecting SCI and GCI data for four new sectors: Biotechnology (IBB), Regional Banking (KRE), Retail (XRT), and Semiconductor (SMH).
The strongest IT Bias goes to Utilities (XLU) this week. It is good to see expansion in the GCI, but that technically will lower the bias since the bias is determined by the SCI minus the GCI. It is critical that the SCI stay the same or move higher so that we know that internal strength is still available.
The weakest IT Bias belongs to Semiconductors (SMH). This industry group has seen major deterioration in the intermediate-term based on the SCI plunging 28 percentage points this week.
This table is sorted by SCI values. This gives a clear picture of strongest to weakest index/sector in terms of intermediate-term participation.
Gold Miners (GDX) still hold the highest SCI value, but it has deteriorated. On the bright side, long-term, the GCI did expand somewhat. Internal strength is available, but we need to see the SCI hold and not deteriorate.
Regional Banks (KRE) continue to be at the bottom. Despite some rallies by this industry group, the internals saw zero improvement this week. In fact the GCI contracted and the SCI was unchanged from the basement.
This table is sorted by GCI values. This gives a clear picture of strongest to weakest index/sector in terms of long-term participation.
The GCI table winner and loser are the same as above. We do note that XLU expanded its GCI greatly suggesting the internals are still very strong in all timeframes for Utilities.
The following chart objectively shows the depth and trend of participation in three time frames.
The market bias is NEUTRAL.
The short-term bias is BULLISH.
The intermediate-term bias is NEUTRAL to BEARISH.
The long-term bias is BEARISH.
The bias is a mixed bag in all timeframes currently, but overall we stand on Neutral ground for the market overall. We read the short term as BULLISH based on expanding participation of stocks above their 20/50-day EMAs. The IT is mostly BEARISH given the SCI is declining after a Bear Shift crossover its signal line. The SCI is below the %Stocks > 20/50-day EMAs, but not enough that we would see the SCI turning back up. We read the long term as BEARISH given the GCI is flattening and the reading is only slightly lower than the amount of stocks above their 50/200-day EMAs.
CONCLUSION: Carl wrote a free article about six-months of UNfavorable seasonality beginning next week. Be sure to read it. It would be so easy to just pivot into the bullish camp after our IT indicators turned up, but after discussing the conditions as a whole and seeing an upside exhaustion climax accompanied with a VIX puncture of the upper Bollinger Band, we see this rally as short-lived. Our IT indicators are simply too overbought to look for a lasting rally and internals while improving are shaky. The Silver Cross Index (SCI) sealed it for us as it remains on a Bear Shift meaning the SCI is below its signal line and is still in decline. Seasonality will also not work in the market's favor, remember "Sell in May and go away"? This rally may have taken investors' eyes off the ball or off weak internals. Play defense.
Erin is 30% long, 4% short. Stops are being raised as the market rallies.
Calendar: Next week the FOMC meets on Tuesday, and announces the interest rate decision Wednesday. We expect that another rate increase will result in a sharp decline, and no change will result in a big rally. Unfortunately we have to 'wait and see'.
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 bottomed this week on the 50-day EMA and moved back above resistance at the March high. The PMO is rising, but wobbled on just one day of decline. Stochastics are firmly positive so we lean toward more upside.
This chart is to show where some of the support/resistance lines come from.
INTEREST RATES
Rates were mixed this week. Most rising trends are intact, but a market decline will likely result in a rate decline as more investors move toward Bonds.
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
The 10-year yield was down three basis points this week. We have a messy reverse head and shoulders pattern, but indicators are soft. The RSI is below net neutral (50) and the PMO turned down. Stochastics are less than helpful right now.
MORTGAGE INTEREST RATES (30-Yr)**
**We watch the 30-Year Fixed Mortgage Interest Rate, because, for the most part, people buy homes based upon the maximum monthly payment they can afford. As rates rise, a fixed monthly payment will carry a smaller mortgage amount. As buying power has been shrinking, home prices have come under pressure.
--
This week the 30-Year Fixed Rate changed from 6.39 to 6.43.
BONDS (TLT)
IT Trend Model: SELL as of 2/21/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: Bonds finished higher on the week as the whipsaw in the market pushed investors around. We favor Bonds right now and the indicators agree. The RSI is in positive territory and the PMO is nearing a Crossover BUY Signal. Stochastics are rising.
There is a large bullish ascending triangle on TLT that suggests an upside breakout above strong overhead resistance.
TLT Weekly Chart: The weekly indicators are favorable with a positive weekly RSI and rising weekly PMO. This also suggests an upside breakout.
TLT Monthly Chart: The monthly chart is seeing improvement as the monthly PMO begins to rise. The monthly PMO is rising, although it remains in negative territory after the perilous decline out of the 2021 top.
DOLLAR (UUP)
IT Trend Model: NEUTRAL as of 3/28/2023
LT Trend Model: SELL as of 4/12/2023
UUP Daily Chart: The Dollar broke its declining trend, but it did so with a bearish filled black candlestick. The RSI remains negative and the PMO is absolutely unhelpful as it straddles its signal line. Stochastics are rising, but vigorously like they normally do. We see more sideways action with a possible trickle higher.
The long-term symmetrical triangle does favor a bullish breakout given the prior trend was rising.
UUP Weekly Chart: This week the Dollar nearly compromised a long-term rising bottoms trendline. This would be a good place for an upside reversal. The weekly PMO isn't looking healthy and dropped into negative territory this week. The weekly RSI is firmly negative below net neutral (50).
UUP Monthly Chart: The weekly chart isn't the only chart that looks suspect on the Dollar. The monthly PMO is still declining out of overbought territory. There is a very long-term rising trend coming out of the 2014 low that we are watching. A decline to that level is not out of the question. The IT and LT are not bullish for the Dollar, the short term looks more benign.
GOLD
IT Trend Model: BUY as of 3/7/2023
LT Trend Model: BUY as of 1/5/2023
GOLD Daily Chart: Gold like the Dollar is moving mostly sideways. The RSI is positive, but about to move negative. We do not like the PMO in decline and Stochastics which were looking hopeful are now pointed lower.
Discounts have been expanding somewhat this week suggesting traders are getting bearish on Gold. That sentiment isn't nearly bearish enough to expect an upside reversal. Like the Dollar, we see more sideways movement.
GOLD Weekly Chart: We do have a rising trend channel on Gold so eventually we do expect a breakout to new all-time highs. The weekly PMO and weekly RSI are in agreement.
GOLD Monthly Chart: The past three years has seen a trading range for Gold, but for the first time since 2019, we may get a monthly PMO Crossover BUY Signal. The long-term view of Gold is very bullish.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners are in pullback/consolidation mode. It really looks like a bottom developing on support. The problem remains that participation isn't expanding just yet. There is strength under the surface overall, but momentum is not on GDX's side right now. If the market starts lower again, Gold will likely find favor which will in turn help Miners. However, they are vulnerable to the market winds as a whole and a deep decline will take these guys down with it. It's too early to bank on a reversal here.
CRUDE OIL (USO)
IT Trend Model: BUY as of 4/10/2023
LT Trend Model: SELL as of 12/6/2022
USO Daily Chart: Crude Oil reversed on the market's strong rally. This occurred on short-term support at the January/February lows. We like how the chart is firming up, but price is below key moving averages and the PMO while decelerating, is still declining. Stochastics are interesting with a tick higher. We are looking for price to reverse at the 200-day EMA.
USO/$WTIC Weekly Chart: The weekly chart couldn't be more neutral. The weekly RSI is sitting on net neutral (50) and the PMO is flat and indecisive. Ultimately we don't trust Crude yet.
WTIC Monthly Chart: The monthly chart for $WTIC is quite bearish. Not only has support been compromised at the 2018 high, but the monthly RSI is in negative territory now and the monthly PMO is falling almost vertically.
Good Luck & Good Trading!
Erin Swenlin And Carl Swenlin
Technical Analysis is a windsock, not a crystal ball. --Carl Swenlin
(c) Copyright 2023 DecisionPoint.com
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)
DecisionPoint is not a registered investment advisor. Investment and trading decisions are solely your responsibility. DecisionPoint newsletters, blogs or website materials should NOT be interpreted as a recommendation or solicitation to buy or sell any security or to take any specific action.