Last year the Homebuilders ETF (XHB) made a solid, broad double bottom, and it advanced well past the minimum upside target of about 73.00. Now it is approaching the resistance line drawn across the 2021 top, setting up a potential long-term double top. Currently, the weekly PMO is rising, with no sign of topping, but it is quite overbought. Just because there is resistance ahead doesn't mean that the advance will end, but remember, all the people that bought at the last top and endured a -40% decline will see this as an opportunity to exit without a loss. That is where the resistance comes from.
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: SPY made a new closing high today, but Fed Watch kept things pretty calm.
Here is the latest recording:
S&P 500 New 52-Week Highs/Lows: New Highs expanded today, and we still have a negative divergence.
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. The STO-V has topped.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT. We're still looking for tops on the ITBM and ITVM.
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.
These indicators are all overbought, yet they continue to move higher.
CONCLUSION: One more day of waiting for the Fed. We think most people are looking for a 25 basis point hike, and there are a lot of people who think this will be the last rate hike for a while. Deviations from these expectations will push the market one way or another, but we don't want to guess. The primary thing to keep in mind is that the market is very overbought and due for a correction. A rally continuation would be suspect. Comments from Chairman Powell will be of paramount importance, so it is probably best to wait until he is finished before taking any action.
Erin is 50% long, 0% short.
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BITCOIN
Bitcoin is holding on short-term support, and it is time to focus on the bearish rising wedge.
INTEREST RATES
Rates continued higher within the trading range. Waiting for the Fed tomorrow.
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
The saucer formation is bullish, and price is trending up from last week's low.
BONDS (TLT)
IT Trend Model: SELL as of 5/16/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: Price has been stuck in the bottom half of the trading range for two months. This implies that support at the bottom of the range will eventually fail.
DOLLAR (UUP)
IT Trend Model: NEUTRAL as of 7/13/2023
LT Trend Model: BUY as of 5/25/2023
UUP Daily Chart: The gap was filled yesterday, and UUP attempted to extend the gains today, but it closed below support.
GOLD
IT Trend Model: NEUTRAL as of 6/8/2023
LT Trend Model: BUY as of 1/5/2023
GLD Daily Chart: We're still looking at a bullish saucer with handle, and the expectation is that gold will move higher.
GOLD MINERS: We now have a bottom above the early-July bottom. When last week's top is exceeded, we'll have a new rising trend.
CRUDE OIL (USO)
IT Trend Model: BUY as of 7/12/2023
LT Trend Model: SELL as of 12/6/2022
USO Daily Chart: Yesterday's breakout was extended today. We'd like to see price reach the top of the rising trend channel, otherwise a bearish rising wedge will be formed. So far, we're thinking bullish outcome.
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 Golden Cross/Silver Cross Index Chart List
DecisionPoint Sector Chart List
Price Momentum Oscillator (PMO)
Swenlin Trading Oscillators (STO-B and STO-V)
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