Not all of our indicators were affected by today's decline, but the Price Momentum Oscillator (PMO) tipped over. We'll look at the daily chart more closely further down.
Below is the 5-minute bar chart which shows that after gapping down at the beginning of the day, price seemed to find support, but by lunch, the decline was on. There was an attempt to settle things at the end of the day, but the final 10 minutes saw big drop. The 5-min PMO topped at the end of the day as well. The 5-minute RSI was in negative territory nearly all day. We see more decline in the future.
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: Support was lost today and price traded below that level nearly all day. The PMO did top today. There is a very thin margin between it and its signal line, so we expect a PMO SELL Signal will arrive shortly.
Internal weakness is clearly visible now that Stochastics have topped and moved below 80 and the VIX spent the day oscillating below its moving average on the inverted scale.
Here is the latest recording:
S&P 500 New 52-Week Highs/Lows: It wasn't surprising that we didn't see many New Highs, but it was surprising to see no New Lows when they have been visible for weeks. This suggested to us that the big cap leaders suffered more than the broader market and they were nowhere near new lows.
Looking at the top 10 capitalized stocks below, they suffered some serious losses on the day so no New Lows on this decline isn't a surprise.
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.
Swenlin Trading Oscillators (STOs) were not bothered by today's large decline which seemed to congregate around mega-caps. Participation slipped.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
The ITBM fell but the ITVM managed to inch upward. %PMO BUY Signals slipped to 40%, topping once again.
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.
Yesterday's comments still apply:
"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: We've said that when the big guys fall, the market won't handle it well. It didn't. The fact that on a day like today, we saw no New Lows, tells us that it was the leaders who were knocked off their feet. While STOs may be rising, the ITBM is not. Participation continues to thin from already anemic levels. Negative divergences are in play. If the mega-caps don't recover quickly, they will take the whole market down with them. This means that yes, the babies will be thrown out with the bathwater (really aging ourselves here). It's time to pare back exposure, tighten stops and consider shorts.
Erin is 16% long, 7% short.
(P.S. We apologize for the delay in tonight's report. Carl's first grandson (Erin's nephew) graduated from high school today. Erin is in Utah for the celebration. Tomorrow's report should go out at a more reasonable.)
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Yesterday's comments still apply:
"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."
Yields paused today. This doesn't appear to be anything more than that.
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 paused today and does not look weak. We expect to see a breakout above the bullish falling wedge annotated in red.
IT Trend Model: SELL as of 5/16/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: Bonds managed a rally as the 20-year yield halted its relentless climb. Indicators are dismal so this is likely a pause, not a place to look for a rebound.
IT Trend Model: BUY as of 5/18/2023
LT Trend Model: SELL as of 4/12/2023
UUP Daily Chart: Yesterday's comments still apply:
"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."
IT Trend Model: BUY as of 3/7/2023
LT Trend Model: BUY as of 1/5/2023
GLD Daily Chart: GLD managed a positive close even as the Dollar rose. Support is holding tight for GLD, but indicators are still very negative so more than likely we will see GLD break this level as $GOLD already has.
GOLD Daily Chart: Stochastics look encouraging, but that's about it. There is a large bearish rising wedge accompanied by a negative RSI and falling PMO. If this decline sees strong follow-through, Gold could get a new lease on life. For now, it looks bearish.
GOLD MINERS Golden and Silver Cross Indexes: Yesterday's comments still apply:
"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 Oil rallied and appears ready to resume the rally. Price pushed above the 20-day EMA which has been holding it hostage since late April. The PMO also triggered a Crossover BUY Signal. Stochastics are nearly above 80 and the RSI managed to move back into positive territory. Look to the Energy sector for leadership.
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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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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