We've noticed that depending on what index you're in, price is holding up or not. The SP500 (SPY) (pink solid line) tested February highs, but the SP600 has been angling lower. Today we saw disparity again as the SPY was up slightly while SP600 (IJR) was down on the day.
For IJR, overhead resistance is strong at the 50-day EMA, the declining trend out of the February high has not been overcome as it was for the SPY coming out of March lows. IJR's PMO saw a top beneath the signal line earlier and while it is currently rising, another decline will likely have it top beneath the signal line. The Silver Cross Index has topped twice beneath its signal line and the Golden Cross continues to deteriorate. Participation is high enough to turn the Silver Cross Index up, but it has been unable to reverse suggesting internal weakness.
Conclusion: Without broad market participation, we should expect most indexes to succumb to gravity.
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: The SPY is stuck in a trading range and right now it is ready to test the top of the range. If we do see more upside, we should expect that level to pose problems. On the bright side, the bearish double-top formation is busted.
The PMO is technically rising and the RSI is in positive territory. Stochastics are rising (albeit in negative territory) and the VIX is above its moving average on the inverted scale. This suggests there is some internal strength which could mean a test of the top of the current range.
Here is the latest recording:
S&P 500 New 52-Week Highs/Lows: New Highs were about the same today and we did see more New Lows. The main problem with the chart is the decline of the 10-DMA of the High-Low Differential. The market is generally weak when this indicator begins falling.
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 NEUTRAL and the condition is NEUTRAL.
Swenlin Trading Oscillators (STOs) were mixed today so we won't read too much into the STO-V's rise. Overall these indicators are sitting in neutral. We do see an increase in %PMOs Rising, but it is still beneath our 50% bullish threshold.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
We had mixed readings on the ITBM/ITVM with the volume indicator rising (same with STOs) and the breadth indicator continuing to decline.
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 NEUTRAL.
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. We hesitated to move the short-term bias out of the BEARISH column, on the positive side, %Stocks are above or at the 50% bullish threshold. Given we technically have a higher percentage of stocks above their 20/50-day EMAs v. Silver Cross Index percentage, we could actually see the Silver Cross Index turn back up. We don't believe that will happen so we went Neutral. 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.
CONCLUSION: Indicators are mixed. It appears to us that the market is about to turn over. There's still room for price to move to overhead resistance at the 2023 top given half of the indicators looked okay today. However, we have negative divergences in play and not enough broad market participation (look at IJR) to expect this leg up to last. We have been given an opportunity to sell weak positions into this last bit of strength. We would like to see a breakout, but participation tells us it isn't as likely to happen as a decline is.
Erin is 18% long, 7% short.
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BITCOIN
Bitcoin didn't surprise. It broke down heavily, bring price back to strong support at 27,000. The PMO topped beneath the signal line twice. The RSI is now in negative territory below net neutral (50) and Stochastics are falling almost vertically. While this indicates a likely breakdown at this support level, we know this level is very strong over the longer-term. We would prepare for a breakdown based on these weak technicals.
INTEREST RATES
The 1-month yield has been all over the place but the 3.4% level does appear to be strong support.
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
As with most yields, $TNX is holding its ground. The technicals are firming up with the RSI just moving into positive territory, the PMO turning up and Stochastics rising strongly. It appears it will be on the rise for some time, but a deep decline would likely push rates lower as the flight to Bonds would keep yields lower.
BONDS (TLT)
IT Trend Model: BUY as of 3/17/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: Long-term Bonds have failed to get going. TLT is about to drop beneath strong support and in particular, the rising trend in the short-term, shown here and the longer-term rising trend on the 1-year chart. Indicators are leaning bearish, but as noted before, a market decline will change the landscape.
We've been watching a bullish ascending triangle on the 1-year chart, but price never reached overhead resistance on the last try, suggesting the rising trend is definitely in jeopardy. We would look for a the pattern to be busted, but support holding at 98.00 keeping price within the trading range established this year.
DOLLAR (UUP)
IT Trend Model: NEUTRAL as of 3/28/2023
LT Trend Model: SELL as of 4/12/2023
UUP Daily Chart: We have two symmetrical triangles and we confused a few folks last time we discussed them because each gives a different expected resolution. Short-term price is weak. Symmetrical triangles are "continuation" patterns, meaning they need to break in the direction of the trend prior to the formation of the pattern. On this chart, the prior trend was down. Indicators are not helpful. We suggest that the Dollar will continue to meander sideways, ultimately busting the current symmetrical triangle.
When we look at the larger symmetrical triangle, the prior trend was up so ultimately in the intermediate term, we should expect a breakout. Confusing, right? The point is likely to be moot as both patterns are in the process of busting. Why? Chart patterns, particularly symmetrical triangles, need to break in one direction or the other before price travels or drifts out of the pattern. We expect neither of these triangles to execute now; more than likely we will see price move sideways as it is now. Indicators are no help right now.
GOLD
IT Trend Model: BUY as of 3/7/2023
LT Trend Model: BUY as of 1/5/2023
GLD Daily Chart: Both the Dollar and Gold were higher which implies Gold showed strength. The correlation is generally a near perfect inverse between the Dollar and Gold. Currently, given the new strength in Gold, that correlation is easing. This means that Gold is decoupling from the Dollar.
GOLD Daily Chart: Indicators are mixed. The PMO is mostly flat now. The RSI is positive and yet, Stochastics are falling. Like Bonds, Gold will likely rally on a market decline as the flight to safety ensues. In the meantime, we see Gold staying above current support with a likely break higher on a market decline.
GOLD MINERS Golden and Silver Cross Indexes: Gold didn't really hold up its end of the bargain today and the market was mostly neutral overall. This had GDX finishing its day down just slightly. We need to see this current rising trend hold as a drop right now would form a bearish double-top. However, participation is strong and getting stronger. The Silver Cross Index is above its signal line and holds an incredible 93% reading. This looks like a bull flag that has been confirmed on the breakout from the 'flag'. Expectation is higher prices.
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 strongly today but did ultimately form a bearish filled black candlestick. While the PMO hasn't warmed to this rally, "early detection" Stochastics are rising again with the RSI.
We know this is a strong area of support when we look at the 1-year daily chart. Additionally, we see the Oil Volatility Index and Stochastics rising suggesting internal strength is in on this move.
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.
Helpful DecisionPoint Links:
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DecisionPoint Sector Chart List
Price Momentum Oscillator (PMO)
Swenlin Trading Oscillators (STO-B and STO-V)
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