Nvidia's earnings report yesterday included super forward guidance. This resulted in a monster advance in the stock (NVDA) to new, all-time highs, as well big moves in the Semiconductor and Technology Sectors. Note that NVDA is approaching the $1 trillion mark for market capitalization, the first chip stock to do so. With such a huge gap to reconcile, it is probable that some churn will soon take place while the market digests this move. A pullback into the gap is also possible. NVDA was in a rising trend, but there is nothing on the chart that would suggest a one-day move of this magnitude.
However, there was little, if any, halo effect beyond the tech-centric advance.
Here are the primary market indexes.
And finally, the Dow 30.
Also today, the U.S. Dollar (UUP) 50-day EMA crossed up through the 200-day EMA (Golden Cross), generating an LT Trend Model BUY Signal. We'll do a bit deeper analysis in the Dollar section below.
The Health Care Sector ETF (XLV) 20-day EMA crossed down through the 50-day EMA (Dark Cross) above the 200-day EMA, generating an IT Trend Model NEUTRAL Signal. It is Neutral because the crossover occurred above the 200-day EMA, it doesn't mean that the chart is any less bearish. The Silver Cross Index is now moving almost vertically downward and participation is slowly bleeding off. The PMO just dropped below the zero line which is very bearish and Stochastics are falling below 20. Support is near at 122.50, but given the bearishness of the chart, we doubt it will hold there.
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
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: With major help from NVDA and Technology, the market closed above the 20-day EMA, essentially holding support at the 50-day EMA. That EMA has held up well as support, but we doubt it will hold much longer when the NVDA rally is behind us.
The VIX, after puncturing its lower Bollinger Band on the inverted scale, could also have helped out today. We were looking for a pause not a rally, but NVDA spoiled that. Still, the VIX is below its moving average and Stochastics are falling vertically in negative territory. Internal weakness is definitely visible.
Here is the latest recording:
S&P 500 New 52-Week Highs/Lows: On a strong rally day we saw a huge expansion of New Lows which proves the point that the broad market by itself is hurting. New Highs were likely logged on tech stocks that were already trading near New Highs.
Climax* Analysis: There were no climax readings today, not even close. In fact, in spite of a strong price advance, SPX Net A-D and SPX Net A-D Volume came in negative! More proof of the narrowness of this 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.
The Swenlin Trading Oscillators (STOs) were negative today, again, in spite of the strong SPY price advance. Notice also that we didn't see any marked improvement on participation of stocks above their 20-day EMA. Neither did we see much of an expansion in %PMOs Rising. This is unusual for a strong rally.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
Both the ITBM and ITVM dropped heavily again even on the rally. There was zero improvement on %PMO BUY Signals.
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.
Participation of stocks > their 20/50/200-day EMAs did nothing today. The Silver Cross Index continues to fall. The Golden Cross Index has topped beneath its signal line which is very bearish. With anemic participation, both the Silver Cross Index and Golden Cross Index will continue to fall.
CONCLUSION: We don't think we have ever seen a large-cap stock like NVDA have a one-day advance of this magnitude (+24.37%). It's like a Black Swan event. Of course, the effect has bled over into other large-cap tech stocks, but no farther, causing an extremely narrow advance for the NDX, SPX and Nasdaq where these stocks reign. Whether this is going to eventually result in a broader rally taking place remains to be seen, but there was little evidence of any broadening today. Quite the opposite, in fact -- today's indicator readings were more typical of a down market day. As noted in yesterday's conclusion it is important for you to monitor all of your investments more closely than usual. There are no long- or intermediate-term investments in an environment like we have now. What to look for? Topping or falling PMOs for a start. Stochastics are often considered an early warning indicator. If they are reacting poorly, it could be another indication that profits should be locked in.
Erin is 14% long, 7% short.
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Bitcoin closed beneath prior support again today. The RSI is negative, but did rise slightly as expected on a rally. The PMO is flat, not rising and Stochastics have topped in negative territory. Stochastics were not impressed with the rally. We would look for a breakdown below support at the 200-day EMA.
Yields turned it on today rising strongly in all timeframes.
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 popped higher today. It is about to reach the top of a bullish falling wedge pattern so the expectation is an upside breakout. Indicators couldn't be much more positive so we would look for that pattern to confirm shortly.
IT Trend Model: SELL as of 5/16/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: The rally in the 20-year yield pushed TLT lower today. Support will arrive at 98.50, but if the indicators don't show signs up life there, a breakdown isn't out of the question.
IT Trend Model: BUY as of 5/18/2023
LT Trend Model: SELL as of 4/12/2023
UUP Daily Chart: As noted in the opening, UUP had a LT Trend Model "Golden Cross" BUY Signal. The RSI is now in overbought territory as overhead resistance approaches so a pullback could happen before a breakout; although the PMO is rising strongly so it will likely mean a pause. Stochastics are very strong so ultimately we do believe that we'll see a breakout.
IT Trend Model: BUY as of 3/7/2023
LT Trend Model: BUY as of 1/5/2023
GLD Daily Chart: We've redrawn support to match up with the late March lows and that level of support is holding for GLD. However, we think it will be short-lived unless the market starts a strong decline. Gold is often thought of as a safe haven so a deep decline could attract investors. The indicators currently suggest a breakdown as the RSI is negative and falling, the PMO is nearing negative territory on a SELL Signal and Stochastics topped in highly negative territory below 20.
GOLD Daily Chart: $GVZ moved above its moving average today on our inverted scale so there is a glimmer of hope that a reversal will begin soon. A bounce off the rising trend would fit that bill.
GOLD MINERS Golden and Silver Cross Indexes: Yesterday's comments still apply:
"Gold Miners were hit particularly hard today with a double whammy of Gold declining and the market declining. We have zero percent with price above their 20-day EMAs and the rest of the participation numbers look very weak. The Silver Cross Index has topped beneath its signal line. Support is now available but with the PMO moving below the zero line today, we think this is going to be a drawn out decline."
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 hit particularly hard as traders flocked to Technology and left the Energy space. The rising trend is being compromised. Indicators didn't like today's strong decline, but they aren't terribly negative all things considered. We are still looking for Crude to resume this week's strong rally.
Good Luck & Good Trading!
Erin Swenlin and Carl Swenlin
Technical Analysis is a windsock, not a crystal ball. --Carl Swenlin
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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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