We received a recent email asking whether we would add the Nasdaq ($COMPQ) to our daily analysis. While we can't do that, it did prompt us to look more closely at both the Nasdaq 100 (QQQ) and the Nasdaq Composite (ONEQ) today.
Both ONEQ and QQQ are in rising trends and performing better than the SPY. The Silver Cross Index is what stood out. The Silver Cross Index reads 37.55% on ONEQ and it reads 60% on QQQ.
%Stocks above their 20-day EMA on ONEQ is above our 50% threshold, but no other indicator is.
The QQQ has readings greater than 64% for %Stocks above their 20/50/200-day EMAs. All percentages are well above our 50% bullish threshold. Ultimately, it isn't Tech leading the charge, it is Big Tech. It should also be no surprise that the top 10 capitalized stocks in the S&P are mostly in the Technology sector. Technology (XLK) is one of the strong (if not strongest) sectors. Again, no coincidence in our opinion.
Weak participation is plaguing the market except for those mega-cap stocks and indexes like the QQQ and SP100. Those stocks can't go up forever and with the debt ceiling ever approaching, Technology is in the crosshairs.
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.
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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 Market Index, Sector, and Industry Group 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 finished mostly unchanged today so we saw little change on all of our indicators. We start the week off with a PMO Crossover BUY Signal in effect and a positive RSI. Support held today.
The VIX is currently unhelpful as it sits right on its moving average. Stochastics do suggest some internal strength is available.
Here is the latest recording:
S&P 500 New 52-Week Highs/Lows: New Highs contracted on today's mostly positive day. A rising 10-DMA of the High-Low Differential is favorable.
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 UP and the condition is NEUTRAL.
The STO-B turned down today, but the STO-V continued higher. We also see less than 50% of stocks above their 20-day EMA. We do have over 50% with rising momentum, but given we are getting ready to reach the August high, that number should be much higher. It was reading above 90% back in August.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
We added the thumbnail today so that you could see that the ITBM/ITVM are still technically rising. We have only 43% with PMO Crossover BUY Signals which below our 50% bullish threshold. That indicator could continue to rise given there are more stocks that have rising PMOs.
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.
We have less than 50% of stocks above their 20/50/200-day EMAs. The Silver Cross Index continues to fall. Notice when price was at the August top (which is only slightly below where we are right now), the SCI was at 80%. Big difference. The Golden Cross Index is flat, but given there are fewer below their 50/200-day EMAs than those with Golden Crosses, it will begin moving lower soon.
CONCLUSION: The market opened the week with a whimper not a roar. There are positive indicators like a rising PMO and rising ITBM/ITVM. However, the Silver Cross Index and participation tell the story here. The numbers are anemic compared to last August's top and we have plenty of evidence that the mega-caps are holding things together. With the debt ceiling discussion heating up, we've been told the Technology Sector (the majority of mega-caps) could see subsidies dry up. When the big guys fall, it will get ugly. We don't see any leadership in the broader markets to fill that vacuum.
Erin is 16% long, 7% short.
(P.S. We apologize for the delay in tonight's report. Carl's first grandson (Erin's nephew) is graduating from high school tomorrow. Erin was making her way to Utah for the celebration. Tomorrow's report will likely be delayed.)
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BITCOIN
Indicators on Bitcoin are mixed to say the least. The RSI is negative, the PMO is flat and yet, Stochastics are rising. With indicators this mixed, we expect more sideways movement.
INTEREST RATES
Yields are rising and we don't see any reason why they won't continue to. A flight to Bonds would help, but no one is interested right now. The debt ceiling discussion isn't helping.
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 march higher after breaking above resistance on Friday. We have a large bullish falling wedge that suggests we will see an upside breakout from the gently declining tops trendline that forms the top of the wedge. Indicators are very positive. The RSI is not overbought, which is saying a lot given $TNX has been in a near vertical rally.
BONDS (TLT)
IT Trend Model: SELL as of 5/16/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: Bonds are tumbling lower on rising yields. The indicators are very negative so we should expect price to continue to fall, likely to test support at 98.50.
DOLLAR (UUP)
IT Trend Model: BUY as of 5/18/2023
LT Trend Model: SELL as of 4/12/2023
UUP Daily Chart: The Dollar is on the move higher and given the positive indicators, we expect overhead resistance to be tested at the March top. A Golden Cross is on the way as the 50-day EMA narrows on the 200-day EMA.
GOLD
IT Trend Model: BUY as of 3/7/2023
LT Trend Model: BUY as of 1/5/2023
GLD Daily Chart: Considering how bullish the Dollar looks we would expect Gold to look quite negative. Currently GLD is holding support even through the pressure of the Dollar. The RSI is negative, but the PMO is flattening out on GLD.
GOLD Daily Chart: Stochastics have turned back up so while the PMO is technically falling, there is a glimmer of internal strength on the horizon.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners are in free fall. Participation dropped off the map and it hasn't recovered. The PMO is headed for negative territory, Stochastics turned down while below 20 and the RSI is negative and not oversold. We don't see this decline stopping until the 200-day EMA is at least tested.
CRUDE OIL (USO)
IT Trend Model: SELL as of 5/3/2023
LT Trend Model: SELL as of 12/6/2022
USO Daily Chart: Crude was mostly unchanged on the day. This appeared to be a solid support level, but price found resistance at the 20-day EMA to be too much. Now we worry about a possible double-top in the very short term. For now we are bullish as the RSI is mostly neutral, the PMO is rising toward a Crossover BUY Signal and Stochastics are rising.
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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