Looking at the 5-minute candlestick chart of this week we can see that the market spent the beginning of the week in consolidation mode, but on Friday we saw a breakout. We aren't thrilled with the double-top-ish pattern formed Friday, but overall it is positive that price broke out to finish the week. The 5-minute RSI and 5-minute PMO don't bode well going into Monday as they are negative and in decline, but that could resolve quite quickly on Monday back to the upside.
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
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: As noted in the opening, we can see that this week was mostly sideways consolidation followed by a breakout Friday. It is unfortunate that price formed a bearish filled black candle as that implies a down day ahead on Monday. A filled black candle is bearish because price closed below the open, even though it finished higher on the day.
The VIX is comfortably above its moving average and below the upper Bollinger Band. Stochastics are oscillating well above 80. Both suggest internal strength.
SPY Weekly Chart: We've annotated the breakout from the original bearish rising wedge which is especially bullish; however, we were able to annotated a longer-term bearish rising wedge. The weekly PMO and RSI are positive and does suggest price will test the top of this new wedge.
New 52-Week Highs/Lows: The negative divergences persist between New Highs and higher price highs. We do like that the 10-DMA of the High-Low Differential is rising so that takes some of the sting off the divergences.
Climax Analysis: There were no climax readings today. This is the first week in some time where we didn't see any climactic behavior.
*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 SOMEWHAT OVERBOUGHT.
Bad news on the short-term indicator chart. Both the STOs have contracted and participation contracted somewhat on a rally.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
The ITBM is now back in positive territory and both the ITBM/ITVM are rising still. We have nearly three quarters of the index holding PMO Crossover BUY Signals which can keep the market afloat.
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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.
NEW SECTORS ADDED! We have begun collecting SCI and GCI data for four new sectors: Biotechnology (IBB), Regional Banking (KRE), Retail (XRT), and Semiconductor (SMH).
The strongest IT Bias goes to XLRE which is beginning to show new strength in the intermediate term based on the gain of the Silver Cross Index. Given the Golden Cross Index is very low and the Silver Cross Index is increasing, we know this sector is on the way up.
The weakest IT Bias easily goes to Gold Miners (GDX). The reason it is so negative is that the Golden Cross Index is very high from the prior long-term rally and the Silver Cross Index was decimated on the correction. It will take some time for GDX to reach equilibrium.
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 still hold the top spot on the Silver Cross Index and it is still increasing. Though it hasn't increased to the same degree as the others, internal strength is quite visible.
Energy is at the bottom, but it saw an even larger increase than Semiconductors, this is a sector that is improving, not one that is weak.
This table is sorted by GCI values. This gives a clear picture of strongest to weakest index/sector in terms of long-term participation.
Semiconductors lead on the Golden Cross Index too. That value is still increasing as well so internal strength is very positive for this group.
Regional Banks are still trying to make their way out of the deep hole they fell in over the banking crisis. The group is looking interesting given the incredible increase in the Silver Cross Index. They still have work to do in the long term based on the Golden Cross Index percentage.
The following chart objectively shows the depth and trend of participation in three time frames.
The market bias is BULLISH.
The short-term bias is BULLISH.
The intermediate-term bias is BULLISH.
The long-term bias is NEUTRAL.
Participation of stocks above their 20/50/200-day EMAs are above our bullish 50% threshold. These readings are higher than both the Silver Cross Index (SCI) and Golden Cross Index (GCI) so we know that both can see improvement moving forward. Both the SCI and GCI are below are threshold, but both are now rising. We are leaving the long-term as "Neutral" as the %Stocks > 200-day EMA is still slim and could prevent the GCI from rising.
CONCLUSION: The market spent most of the week moving sideways, but we got a rally bump on Friday. Of primary concern is our Swenlin Trading Oscillators. Both have topped this week. With the Fed announcement coming next week, it would make sense to see the market pause and STOs are confirming this supposition. The bias is bullish in our estimation so we would expect the market to stumble without a deep decline. Participation isn't expanding, but readings remain robust enough to hold the market together. Expect sideways action next week.
Erin is 30% long, 0% short.
Calendar: There will be a Fed meeting on Tuesday, and the interest rate announcement on Wednesday. Expectations are for a pause.
Next week is options expiration week, and it is an end-of-quarter expiration. This means that we can expect low volatility on Thursday and Friday, and Friday's SPX Total Volume will be very high.
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BITCOIN
Bitcoin's bearish rounded top dominates the daily chart and it suggests further downside ahead. While the RSI and PMO remain flat, Stochastics are declining and that suggests sideways movement at a minimum, but we expect this rounded top to resolve as expected with a break in support.
This chart is to show where some of the support/resistance lines come from.
INTEREST RATES
Rates made their way higher this week with the exception of the shorter-term 1-year and 3-month yields which fell.
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
There has been a large bullish falling wedge on the daily chart. Price turned back up along the 50-day EMA and didn't need to test the bottom of the wedge. We favor an upside breakout right now. The RSI is in agreement and the PMO appears to be surging above the signal line (bottoms above the signal line). Stochastics are rising again after turning around in positive territory. All of this suggests and upside breakout.
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.
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This week the 30-Year Fixed Rate changed from 6.79 to 6.71.
BONDS (TLT)
IT Trend Model: SELL as of 5/16/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: We've been looking at what we think is a bullish cup with handle. Friday's candlestick was a bullish hollow red candle. Indicators aren't suggesting an upside breakout. The PMO is on a BUY Signal, but the margin is extremely thin between it and its signal line so a Crossover SELL Signal could be easily accomplished. Stochastics have just moved into negative territory below net neutral (50). The price pattern is really the only thing bullish here so we suspect price will get hung up at overhead resistance at the 50-day EMA and March/April lows.
TLT Weekly Chart: The weekly chart is interesting. The weekly RSI is negative, but the weekly PMO is attempting to surge above the signal line. At this point it is still in decline so we see a test of support at 2023 lows in the intermediate term.
DOLLAR (UUP)
IT Trend Model: BUY as of 5/18/2023
LT Trend Model: SELL as of 4/12/2023
UUP Daily Chart: The Dollar is looking bearish. There is a short-term double-top formation. Indicators just aren't swinging negative yet so a bounce off the 20-day EMA as we saw on Friday could mean some consolidation or even another attempt at overhead resistance. If the PMO reverses here it would be a "surge" or bottom above the signal line.
In the very long term, we see that the Dollar is in a bearish rising wedge.
UUP Weekly Chart: The weekly chart is decidedly bullish. We see the rising trend is intact and there is a bullish double-bottom. The weekly RSI is positive and the weekly PMO is on a new Crossover BUY Signal. While things look a bit bearish in the short term, the backdrop intermediate-term is clearly bullish. Based on where price is, we could see a test of that rising bottoms trendline and that would mean a short-term decline. Basically, we expect the Dollar to fall in the short term, but not compromise the rising trend on the weekly chart.
GOLD
IT Trend Model: NEUTRAL as of 6/8/2023
LT Trend Model: BUY as of 1/5/2023
GOLD Daily Chart: This week Gold saw a "Dark Cross" of the 20/50-day EMAs. There was already a bearish spin to this chart given the large rounded top, similar to Bitcoin's. Indicators are wishy washy at best. The RSI is negative, but the PMO is flat and is closing in on its signal line, albeit very slowly. Stochastics are flat but in a rising trend.
Discounts are expanding so sentiment is getting more bearish on Gold. Combine this with the truant indicators and we should expect a short-term decline. However, with the Dollar looking bearish short-term, Gold might get away with more sideways movement.
GOLD Weekly Chart: The bearish rising wedge on the weekly chart does tell us Gold is vulnerable to a breakdown. The weekly PMO looks particularly bearish as it hones in on a Crossover SELL Signal. Gold is likely to slog sideways.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners don't have Gold to help them right now. Participation is very thin and not really seeing much improvement. The RSI is negative and PMO flat. Stochastics just topped in negative territory. We would look for a test of support 30.00.
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 had a bad week, ultimately finishing down -1.90%. Short-term support was not lost, but the 50-day EMA held strong as overhead resistance. The indicators are leaning bearish with the RSI below net neutral (50) and Stochastics falling. The PMO is basically flat and it is on a Crossover BUY Signal. We would look for support to hold at 61.00 with a possible rebound at 62.00. At this point given the RSI and Stochastics, we would expect the 50-day EMA to hold as overhead resistance for a bit longer.
USO/$WTIC Weekly Chart: Not too much help on the weekly chart. Price is trapped within a sideways trading range, but has managed to hold the long-term rising bottoms trendline. With the weekly RSI negative and the weekly PMO flat and sitting on the zero line, we would look for this trading range to persist.
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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