We don't have a complete change in character for the market, but we do have a bearish signal that should be considered. The Silver Cross Index (SCI) measure how many stocks within an index/sector/industry group have a 20-day EMA that is above its 50-day EMA. Usually when the %Stocks > 20/50-day EMAs are higher than the SCI, the SCI will continue higher. That is currently not the case and is one of the first signs of internal weakness.
We'll discuss what this means for the market bias in the short and intermediate terms in the section on Bias Analysis.
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
For Today:
For the Week:
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.
For Today: 
For the Week:
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 declining trend continues as the market digests the parabolic rally. As we have been saying, when a parabolic formation is resolved to the downside, we usually see a 50% retracement. That would put price right on support around 420 - 425. That's when we would start looking for an upside reversal.
This decline has done wonders with our overbought indicators, but we must say that the PMO is still overbought. The VIX is hanging in positive territory above its moving average on the inverted scale. It is reading very low considering the pullback in price so market participants are likely in our camp, relieved that we are getting out of overbought conditions with the expectation the rally will resume once digested. Still, we should be somewhat leery given sentiment is contrarian. Stochastics are falling quickly and should move below net neutral (50) soon. It suggests more downside.
SPY Weekly Chart: After bullishly breaking out of a bearish rising wedge last week, price fell back within the pattern. The weekly RSI has moved out of overbought territory so that is a plus and the weekly PMO, while decelerating slightly, is rising and isn't overbought.
New 52-Week Highs/Lows: New Highs expanded and New Lows contracted on today's decline which is a positive development. However, this week the 10-DMA of the High-Low Differential topped in overbought territory.
Climax Analysis: There were climax readings on all four relevant indicators today, which gives us a downside exhaustion climax. SPX Total Volume was 20% higher than the one-year daily average volume, which underscores the blowout magnitude of the climax. The first thing we would look for is an upside reversal, but if that is not evident at Monday's open, prepare for churn ahead of more downside.
*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 OVERSOLD.
Yes! The Swenlin Trading Oscillators (STOs) moved into oversold territory today. Participation is thinning quickly so that indicator is neutral to oversold. %PMOs Rising took a huge hit this week and are now in near-term oversold territory.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT.
Our intermediate-term indicators began to decline this week, but all remain in overbought territory. It will take further decline to push these back down. %PMO BUY Signals is still reading somewhat overbought, but given the decimation of rising momentum on the above chart, we should see this one continue to dive lower.
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PARTICIPATION and BIAS Assessment: The following table 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 following table summarizes participation for the major market indexes and sectors. The 1-Week Change columns inject a dynamic aspect to the presentation. There are three groups: Major Market Indexes, Miscellaneous Sectors, and the eleven S&P 500 Sectors.
Real Estate (XLRE) holds the highest IT Bias reading, but this is not a sector moving in the right direction. It's chart and participation are terrible right now. XLRE may've only lost a few percentage points on the SCI and GCI, but prepare for it to lose even more based on its bearish chart HERE.
Gold Miners (GDX) have lost all internal strength and hold the worst IT Bias. It is especially skewed because this sector soared and pushed the GCI very high. It is taking time for the GCI to bleed off. Notice the SCI lost 22 points this week on GDX.
This table is sorted by SCI values. This gives a clear picture of strongest to weakest index/sector in terms of intermediate-term participation.
Semiconductors hold the top spot on the SCI, reading an incredible 96%. They also hold the top spot on the GCI reading. Currently we see this group pulling back off highs and that is evident by the four percentage point loss on the SCI. Internal strength is still there given the very high GCI reading.
Gold Miners (GDX) not surprisingly hold the bottom spot on the SCI with an incredible 22 point loss. Weakness still abounds in this group. Erin presented the inverse Gold Mining ETF (DUST) to Diamonds subscribers this week.
This table is sorted by GCI values. This gives a clear picture of strongest to weakest index/sector in terms of long-term participation.
As noted above Semiconductors hold the top GCI spot and while the shorter-term SCI lost four percentage points, the GCI gained four. Internal strength is available in this group. Keep it on the radar when the market finishes its digestion phase.
The Regional Banks ETF (KRE) hold the lowest GCI value and it didn't see any improvement this week. The group appeared to be on the mend, but it wasn't immune to this week's pullback as it lost SCI points. Be leery of this group.
The following chart objectively shows the depth and trend of participation in three time frames.
The market bias is NEUTRAL.
The short-term bias is BEARISH.
The intermediate-term bias is BEARISH.
The long-term bias is NEUTRAL.
The bias has taken a hit in the short- and intermediate-terms. %Stocks above their 20-day EMA has dropped below our 50% bullish threshold and as noted, the Silver Cross has topped. We have fewer stocks above their 20/50-day EMAs as compared to the SCI so we know that it will likely continue lower toward a possible Bear "Shift". We've moved the long-term bias to Neutral from Bullish. This is primarily due to the topping Golden Cross Index.
CONCLUSION: Today's downside exhaustion climax is good news, but many of our indicators still need more decline to move them out of overbought territory or into oversold territory. Remember, market climaxes are at their core exhaustion events; however, at price pivots they may be initiating a change of trend. We may see some upside price movement on Monday due to today's climactic activity, but we don't necessarily see this as the beginning of the next bull phase given a topping SCI and PMO. Additionally, the bias has moved bearish in the short term, we don't believe the digestion phase is complete.
Erin is 45% long, 0% short.
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BITCOIN
Bitcoin surprised us with a strong rally out of the bearish rounded top. It had even dropped below support briefly. Instead we saw a strong upside reversal. The RSI is overbought, but looking at the beginning of 2023, that really isn't a problem for Bitcoin. The PMO is rising strongly and is not at all overbought. Stochastics are oscillating above 80. The rally could use a pause, but this breakout takes price above longer-term overhead resistance at 30,000 so an upside continuation should be expected.
This chart is to show where some of the support/resistance lines come from.
INTEREST RATES
Longer-term yields are in a holding pattern, but shorter-term yields (1/2/3-year) are holding rising trends. The Bond picture is murky in the long term.
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 appears to be setting up a bearish Adam and Eve double-top. It's still very early for the possible formation, but it makes sense we would see this after it was unable to break out of the bullish falling wedge. Given the new PMO SELL Signal and dipping Stochastics, we think this pattern will materialize and we'll see a test the 200-day EMA.
MORTGAGE INTEREST RATES (30-Yr)**
**We watch the 30-Year Fixed Mortgage Interest Rate, because, for the most part, people buy homes based upon the maximum monthly payment they can afford. As rates rise, a fixed monthly payment will carry a smaller mortgage amount. As buying power has been shrinking, home prices have come under pressure.
--
This week the 30-Year Fixed Rate changed from 6.69 to 6.67.
BONDS (TLT)
IT Trend Model: SELL as of 5/16/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: Bonds broke out briefly and then settled back down below support. The bias is bullish on this chart given the rising PMO and positive RSI. Stochastics are flat and near 80. We are looking for an upside breakout.
TLT Weekly Chart: We don't see much upside potential for TLT on the weekly chart. It has been range bound most of the year. The weekly PMO is clinging to a Crossover BUY Signal after topping beneath the zero line. We see the trading range persisting.
DOLLAR (UUP)
IT Trend Model: BUY as of 5/18/2023
LT Trend Model: SELL as of 4/12/2023
UUP Daily Chart: Maybe we shouldn't have counted the Dollar out. Today it wiped out a short-term declining trend and the RSI moved above net neutral (50). The PMO has flattened and could begin rising soon. We still see the bearish double-top in place and while this was a positive move today, Stochastics are still in decline. They can be considered an 'early detection' indicator. They had no reaction to today's rally. We still have a bearish outlook on the Dollar.
UUP Weekly Chart: The positive close this week has caused the weekly PMO to "surge" or bottom above its signal line. While the Dollar may look weak in the shorter-term, overall we don't see a big breakdown in the intermediate term ahead.
GOLD
IT Trend Model: NEUTRAL as of 6/8/2023
LT Trend Model: BUY as of 1/5/2023
GOLD Daily Chart: The rounded top is still in force and throws a bearish bias on the chart. The bearish indicators don't help. The RSI is well below net neutral (50) and Stochastics are hovering well below 20. The PMO is in decline. We would look for the next level of support to be tested at the 200-day EMA and gap support from March. This will only make these indicators more bearish so we would prepare for a drop below that support level when it is reached.
It is incredible to see a positive correlation with the Dollar. They typically are near perfect inverses of each other. This would explain why the Dollar rose and Gold did too. They have 'decoupled' from each other so don't count on the Dollar to necessarily help Gold if UUP declines.
GOLD Weekly Chart: Strong support has been reached at the 2021 high, but the weekly PMO has just generated a Crossover SELL Signal. On the flip side, the weekly RSI is still positive and discounts have gotten very high. High discounts mean bearish traders. Sentiment is contrarian so an upside reversal off these oversold conditions is possible; however, we've seen discounts even higher than this, so we wouldn't count on sentiment to bail out Gold just yet.
GOLD MINERS Golden and Silver Cross Indexes: As noted in our bias tables, Gold Miners are very weak and getting weaker. Support may be near, but there is no strength under the hood to push prices higher from there. Clearly participation is at oversold levels, but in a bearish move those conditions can persist. Gold doesn't look particularly bullish so we would expect more headwinds for the Miners.
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 is range bound and the indicators are zero help. We would say there is a slight bearish bias to the chart based on Stochastics so we would look for the trading range to continue.
USO/$WTIC Weekly Chart: The weekly chart shows just how boring price action has been for the past nine months. The weekly PMO is flat and so near its signal line that it spells out more trading range movement ahead. The weekly RSI is negative so we are looking for that test of the bottom of the range.
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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