Today the NYSE Composite Index ($NYA) 20-day EMA crossed down through the 50-day EMA (Dark Cross) above the 200-day EMA, generating an IT Trend Model NEUTRAL Signal. Again, we're looking at tightly woven moving averages that can easily reverse into another whipsaw so the signal is useful information, but no action is indicated. Participation is rather narrow given we don't have any participation readings above the 50% bullish threshold. There is another top below the signal line by the Silver Cross Index and the Golden Cross Index continues its way down. The RSI is negative and PMO is accelerating lower with Stochastics tipping over in negative territory below net neutral (50). The broad market is underperforming the SPY.
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
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: We still see a topping formation within a trading range. The PMO did continue lower today and while the RSI is positive, the double-top is quite ominous. Clearly the mega-cap stocks are leading given the outperformance of the SPY against the equally-weighted RSP. When they give way a decline will likely start in earnest.
Stochastics have finally topped well below 80. The VIX isn't revealing much as it hovers around its moving average on our inverted scale. We've now identified a bearish rising wedge annotated in green.
Here is the latest recording:
S&P 500 New 52-Week Highs/Lows: New Highs/New Lows did what we would expect on a down day with New Highs contracting and New Lows expanding. The 10-DMA of the High-Low Differential is moving toward zero which is likely to be a problem for the SPY.
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 FLAT and the condition is NEUTRAL.
The STOs started rising two days ago and they continue higher. Instead of prices rising, they've stayed about the same. Participation is shrinking even more. We now only have 1/3rd of the SPX holding rising momentum.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
IT indicators were down yet again. We see that PMO BUY Signals are slowly bleeding off. Given only 33% have rising momentum, we expect to see fewer BUY signals moving forward.
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 in the short term is BEARISH.
The market bias in the intermediate term is BEARISH.
The market bias in the long term is BEARISH.
Negative divergences are stark on this chart, particularly the SCI and GCI. Shrinking participation is also a problem. %Stocks above the 20/50-day EMAs has now dropped below our 50% bullish threshold. The Silver Cross Index is falling and we have %Stocks above their 50/500-day EMAs below the 50% bullish threshold leaving us bearish in the IT and LT. The GCI saw a Bear Shift as it dropped beneath its signal line.
CONCLUSION: The market continues to look toppy while moving within the current trading range. STOs may've started rising, but price hasn't responded. This makes sense given IT indicators have never stopped falling during this time. Participation continues to shrink with fewer and fewer stocks left to keep the market rising. Most of the leaders are mega-cap stocks, but the broader market is not seeing the same success. It's a matter of "when", not "if", the market will see much lower prices. When these big cap stocks begin to fade, we expect the decline to begin in earnest. We will reevaluate our bearish stance should IT indicators turn back up and we see broader market support. For now, it's best to keep your stops in play.
Erin is 18% long, 7% short.
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
Yesterday's comments still apply with the addition that there is a large rounded top:
"Bitcoin is now testing strong support at 27,000. Indicators are negative enough to expect this level not to hold. The RSI is negative and the PMO continues to decline. Stochastics are now in particularly weak territory below 20."
INTEREST RATES
Yields continue to hold support. Bearish underpinnings are at work though as the move to Bonds begins.
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 when it instead moves downward.
10-YEAR T-BOND YIELD
$TNX is in a trading range between 3.4 and 3.7. Stochastics topped and are looking particularly bearish. The RSI is negative and the PMO is approaching a Crossover SELL Signal. So far support is holding, but we are expecting rates to slow on more investors moving toward Bonds. However, we could see that change quickly if the debt ceiling issues aren't resolved in time.
BONDS (TLT)
IT Trend Model: BUY as of 3/17/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: TLT rallied again today, but formed a bearish filled black candlestick that implies we'll see a decline tomorrow. This reversal came at a fortuitous point as it held up support and avoided damaging the rising trend. Stochastics are rising and the RSI hit positive territory today. We would look for another move to test overhead resistance at the top of the current trading range.
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 out of the short-term declining trend and closed above both the 20/50-day EMAs. The 200-day EMA is up next as resistance. Indicators are looking good with the RSI above net neutral (50), the PMO rising above its signal line and Stochastics rising strongly in positive territory. We now see a saucer shaped bottom in the short term which is bullish. We expect more upside.
Yesterday's comments still apply:
"There is a large symmetrical triangle on the 1-year daily chart. The prior trend was up so ultimately in the intermediate term, we should expect a breakout. However, we do note that this triangle is beginning to disintegrate. Price is so close to the apex, a break in either direction will have to happen. We see a high likelihood that price will simply drift sideways out of the pattern as it holds within the current trading range."
GOLD
IT Trend Model: BUY as of 3/7/2023
LT Trend Model: BUY as of 1/5/2023
GLD Daily Chart: Gold didn't like the rising Dollar today even though the inverse correlation is relaxing. It showed significant weakness today by falling much further than the Dollar rallied. We still very much like Gold moving forward. Indicators don't look great, but if the market begins to decline as we believe it will, Gold will find favor. In the shorter term while we wait for the market decline, Gold will likely continue in this sideways trading range.
GOLD Daily Chart: $GOLD actually looks a bit more bearish than GLD. While the RSI is positive, Stochastics for $GOLD have dropped below net neutral (50) and the PMO is dropping on its current Crossover SELL Signal. As noted above, we would look for GLD to move mostly sideways, but this chart suggests we will see support tested down at 1980 for $GOLD.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners dropped out of the sky today. We now see that participation of stocks above their 20/50/200-day EMAs have dropped below the participation levels we had at the last test of support. The chart also now features a double-top developing. This suggests that the current level of support will not hold this time around.
CRUDE OIL (USO)
IT Trend Model: SELL as of 5/3/2023
LT Trend Model: SELL as of 12/6/2022
USO Daily Chart: We noted yesterday that Crude was acting fishy. It is now looking very bearish to us. The RSI continues to fall in negative territory and the PMO topped beneath the signal line. Stochastics topped below net neutral (50). Support is arriving at 62.00, but given particularly Stochastics configuration, we would look for price to test the earlier May low.
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.