Small-caps in general saw an excellent week. If you review the weekly table below, you can see that small- and mid-caps dominated, performing better than the SPX and the Nasdaq 100. This is more evidence that the current rally is very broad.
Today the Russell 2000 (IWM) 50-day EMA crossed up through the 200-day EMA (Golden Cross), generating an LT Trend Model BUY Signal. With price so far above all three key moving averages, this signal looks viable. It also is accompanied by a new PMO Crossover BUY Signal which bolsters the bullish case in the short to intermediate terms.
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: Today saw a gap up rally that took price to overhead resistance with the highest close we've seen in months. This does look like a good place for price to begin digesting this new rally, right below resistance. The PMO is rising setting up a PMO Surge or bottom above the signal line.
The rising trend is increasing the angle of ascent. We will be on the lookout for any parabolic activity in the intermediate term. The Bollinger Bands on the VIX have squeezed together given the lack of volatility. Investors are more confident than ever and sentiment is contrarian. The VIX is bullish and Stochastics are rising strongly so the market does have internal strength to accompany this bull market move.
SPY Weekly Chart: More than likely we will be able to annotate a rising trend channel given the breakouts above the bearish rising wedge. The weekly PMO is rising strongly and the weekly RSI isn't overbought yet. The intermediate term looks bullish.
SPY Monthly Chart: The monthly PMO turned up, which is very bullish in this time frame.
New 52-Week Highs/Lows: New Highs exploded higher in what definitely appears to be an exhaustive reading. The 10-DMA of the High-Low Differential is rising again but is near-term overbought.
Climax Analysis: Yesterday came close to being a climax day, but today made it all the way. There were unanimous climax readings on all four relative indicators, giving us an upside exhaustion climax. SPX Total Volume was solid, confirming the climax.
*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 OVERBOUGHT.
It didn't take long for the Swenlin Trading Oscillators (STOs) to return to overbought territory. Participation is on the overbought side as well, but %Stocks > 20-day EMA could expand further. We see a very strong bullish reading of 84% on rising momentum. This can easily fuel a rally.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is SOMEWHAT OVERBOUGHT.
We're listing these indicators as "somewhat overbought". They could certainly accommodate more upside and given both the ITBM and ITVM are rising now, we expect they will get more overbought than they currently are. Nearly 3/4ths of the index carry PMO Crossover BUY Signals. This is a broad rally and that many BUY signals is very bullish for the intermediate term.
_______
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).
Transports (IYT) had a great week as evidenced by the highest IT Bias. The Silver Cross Index is getting overbought on IYT, but there is plenty of room for improvement in the Golden Cross Index. We think IYT will move higher even from here.
Gold Miners (GDX) is the weakest of all industry groups, indexes and sectors, holding a very negative -53 IT Bias. Both the Silver Cross Index and Golden Cross Index continue to lose percentage points.
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 (SMH) continues to hold the top spot on both the Silver Cross Index and Golden Cross Index tables. It is seeing more strength as the Golden Cross Index increases its value. Clearly we have overbought readings, but in a group as strong as Semis, we could see those conditions persist.
Gold Miners (GDX) hold the bottom spot for obvious reasons. When we finally begin seeing some expansion in both the Silver Cross Index and Golden Cross Index, we can start looking for an oversold bottom. For now, both indexes are falling so this group should be avoided.
Energy (XLE) saw the biggest increase in its Silver Cross Index. While Crude Oil remains in a trading range, we aren't as interested in this sector.
This table is sorted by GCI values. This gives a clear picture of strongest to weakest index/sector in terms of long-term participation.
Regional Banks (KRE) hold the bottom spot on the Golden Cross Index. It did see a percentage point gain, but overall the group remains weak. In fact, the Silver Cross Index lost ground this week.
The following chart objectively shows the depth and trend of participation in three time frames.
The market bias is BULLISH in all three timeframes.
Participation remains strong and well above the 50% bullish threshold. With so many more stocks above both their 20/50-day EMAs, the Silver Cross Index will continue to rise. The SCI is far from overbought so we could see all-time highs eventually tested. The Golden Cross Index is just above our bullish 50% threshold and is rising. With %Stocks > 50/200-day EMAs being strong, the GCI should continue rising.
CONCLUSION: Today's upside exhaustion climax was punctuated by an exhaustive reading on New Highs. This climax is arriving just in time for the holiday trading next week. A pause in this rally is likely. Other than the bearish climax, indicators look very healthy. In particular, we have a PMO Surge above the signal line (bottom above the signal line) on the SPY and a bullish bias in all three timeframes. Look for what should be an uneventful Monday going into the holiday. Portfolio positions should be safe next week, but as always, consider cutting stocks with PMOs nearing Crossover SELL Signals. There are plenty of opportunities out there; don't hold onto a loser. Find stocks/ETFs with rising PMOs. With 84% of the SPY holding rising PMOs, they shouldn't be hard to find.
Erin is 60% long, 0% short. Erin will continue to expand her exposure next week.
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
Bitcoin rallied strongly and has been digesting that rally all week and part of the prior week. Indicators are positive enough to look for a breakout, but this level of resistance is exceedingly strong based on the longer-term chart. This looks flag-like, but the flag is moving sideways and those flags don't usually work out. We are looking for a breakout, but if the PMO turns down, we will move bearish on Bitcoin.
This chart is to show where some of the support/resistance lines come from.
INTEREST RATES
Long-term yields moved mostly sideways this week, but it was enough to prevent breakouts in TLT among other Bond funds. Short-term yields are continuing to rise, leaving the yield curve inverted in nearly all timeframes.
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 was lower. It brought the yield back within the bullish falling wedge. We still expect a breakout given the rising PMO that is nearing a Crossover BUY Signal. Stochastics are rising strongly in agreement.
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 6.61 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: The 20-year yield has not cooperated so TLT has been stuck beneath resistance. Yesterday's deep decline sent price below the 20/50-day EMAs. Today we did see those levels recaptured. Knowing that $TNX looks bullish, we have to believe that the 20-year yield will eventually start rising again. Stochastics are falling so TLT is likely to test recent bottoms from May and June.
TLT Weekly Chart: Ultimately price has been in a trading range. That range is narrowing. Based on the weekly PMO surging above the signal line, an intermediate-term breakout from the range is possible, but we don't favor that conclusion yet. For now, we are short-term bearish.
TLT Monthly Chart: The monthly PMO is very oversold, but flat. The monthly RSI is very negative. This dichotomy suggests we will more than likely see much from Bonds in the near future.
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 has been churning away this week, melting up. This push and pull has prevented the PMO from crossing above the signal line, but based on Stochastics and a positive RSI, we do expect the Dollar to hold the rising trend at least until overhead resistance is met.
Bigger picture we have a bearish rising wedge. This tells us to expect trouble at overhead resistance.
UUP Weekly Chart: The Dollar is also holding a longer-term rising trend. We expect that to hold up given the weekly PMO Surge above the signal line.
UUP Monthly Chart: The monthly PMO is overbought and while the weekly RSI is positive, we aren't looking for a retest of 2022 highs at this time.
GOLD
IT Trend Model: NEUTRAL as of 6/8/2023
LT Trend Model: BUY as of 1/5/2023
GOLD Daily Chart: The Dollar was down, but Gold was up more than the Dollar was down. This is why the relative strength line rose today. While it showed strength today, the overarching pattern is a rounded top which suggests more downside, at least until the declining trend is broken. Stochastics are inching higher, but the PMO is flat and mostly unresponsive. Until we see a PMO Crossover BUY Signal, we will remain bearish on Gold.
GOLD Weekly Chart: The intermediate-term chart is bearish. We have a bearish rising wedge confirmed with the decline. The weekly PMO is headed lower so we do expect Gold to continue lower.
GOLD Monthly Chart: The monthly chart is more bullish given the monthly PMO has had an upside crossover. However, this month it turned lower. Gold charts are negative across the board so we would look for a test of the rising bottoms trendline which would put price around 1750 or 1800.
GOLD MINERS Golden and Silver Cross Indexes: Erin was asked in today's subscriber-only Diamond Mine trading room what it would take for her to get bullish on Gold Miners. This is certainly an interesting bounce off support and the PMO has turned back up. However she needs to see participation expanding and a more bullish Gold chart. %Stocks above their 20-day EMA did expand appropriately today, but we need a pulse on %Stocks above their 50-day EMAs. We had plenty of rally to enjoy when participation shot up in March. We believe we'll get a similar attention flag.
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 remains within a trading range and currently it is ready to test the top of the range. This will offer opportunities within Energy, but it could turn back quickly once the top of the range is hit. The chart tells us to look for that test of overhead resistance at 66 given the rising PMO, positive RSI and rising Stochastics.
$OVX is rising off the bottom Bollinger Band and that is in line with our thesis that Crude will test 66.
USO/$WTIC Weekly Chart: There really isn't much to say about the weekly chart. The weekly RSI is negative and the weekly PMO is flat. This is indicative of the trading range. Support is very strong.
WTIC Monthly Chart: The long-term picture for Crude Oil is bearish. The monthly RSI is falling in negative territory and the monthly PMO is showing no deceleration on its decline. Support is strong based on the weekly chart, but we should be mindful of the steep declining trend on the monthly chart which gives Crude Oil a long-term bearish bias.
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.