The market advanced steadily from the open, and another new high was made; however, the final push up was followed by an unraveling in the last hour of trading during which almost half the day's gains were lost.
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
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: We note that the PMO has been moving sideways for about a month. With the PMO well above the zero line, this reflects steady upward pressure on price.
The Relative Strength panel shows that the cap-weighted SPY and equal weighted RSP have been making equal progress for over a month. Prior to that SPY was leading, so cap-weighted stocks have lost their leadership, though not to any significant degree.
Here is the latest recording:
S&P 500 New 52-Week Highs/Lows: New Highs expanded today, but there is still a negative divergence versus today's new high for SPY. These negative divergences, though very short-term, can signal sharp reversals in that time frame.
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 OVERBOUGHT. Today the STO's topped again, so the scene is set for a pullback.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT. Again we look for a pullback in this time frame.
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.
Participation continues to improve. It is still short of the February top, but not by very much. Again, all participation indicators are overbought and are due to contract, taking prices down.
CONCLUSION: It is only six trading days until the next Fed interest rate announcement, a fact that seems to be inhibiting the market somewhat. It doesn't help that internals are overbought and need to be relieved. We're in a bull market, so short selling is not appropriate. This fact is emphasized by the impotence of the negative divergences shown on the above chart for this year -- they failed to have any significant impact. That doesn't mean we're immune from any downside, but it is not something to bet on.
Erin is 50% long, 0% short.
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BITCOIN
Bitcoin has been testing the overhead resistance for about a month, but on the weekend trading got very narrow below the resistance, and it continued that way through today.
INTEREST RATES
Rate have been rising within the trading range since the May lows.
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
We have proposed a saucer formation, and now we wait for the handle to form. or for the saucer to break down.
BONDS (TLT)
IT Trend Model: SELL as of 5/16/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: TLT rallied off the July lows and has formed a bullish flag/pennant.
Price remains within an seven-month trading range.
DOLLAR (UUP)
IT Trend Model: NEUTRAL as of 7/13/2023
LT Trend Model: BUY as of 5/25/2023
UUP Daily Chart: UUP has found short-term support at about 27.58.
UUP is currently testing the bottom of a five-month trading range.
GOLD
IT Trend Model: NEUTRAL as of 6/8/2023
LT Trend Model: BUY as of 1/5/2023
GLD Daily Chart: Gold continues to form a handle on the bullish, short-term cup/saucer formation.
GOLD Daily Chart: The continuous contract $GOLD chart is also bullish, showing a consolidation (bullish flag formation) following the break above the declining tops line.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners is also bullish in the short term with a double bottom followed by a flag formation.
CRUDE OIL (USO)
IT Trend Model: BUY as of 7/12/2023
LT Trend Model: SELL as of 12/6/2022
USO Daily Chart: After breaking above short-term resistance, USO is making a technical pullback.
We're showing a triangle formation, but we think that horizontal support and resistance will prove to be the more relevant factors.
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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Price Momentum Oscillator (PMO)
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