The market certainly broadened in June, but the mega-cap stocks still hold an advantage. Relative performance of the equally-weighted RSP against the SPY has evened out, but the price chart still shows the SPY making new highs while RSP is still playing catch up. On the bright side, we do see the long-term declining trendline broken with price holding above. We should see higher prices, but we are in a period of unfavorable seasonality until November. As we move toward September/October all stocks are likely to struggle.
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: Resistance is holding strong. We see this as an excellent opportunity for a pullback to alleviate overbought indicators like the PMO. The RSI is close to overbought and could also use some unwinding.
For the first time since May, the VIX closed below its moving average on our inverted scale, but the reading remains very low. Stochastics are not showing any weakness. We still see internal strength.
Here is the latest recording on 6/23 (no show on 7/3):
S&P 500 New 52-Week Highs/Lows: New Highs fell again today, but it was a decline so it isn't unexpected. On a positive note, there were no New Lows.
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.
Swenlin Trading Oscillators (STOs) both fell today suggesting lower prices ahead in the short term. %Stocks with rising momentum is already paring back on today's small decline.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT.
While the short-term looks weak, IT indicators are continuing to rise. We have 79% of stocks with PMO BUY Signals, but given there are only 68% with rising momentum, we should see that indicator peak tomorrow barring a strong rally.
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.
The bias is BULLISH in all three timeframes.
We have very high participation of stocks above their 20/50/200-day EMAs and all of these readings are higher than both the Silver Cross Index and Golden Cross Index. They should continue higher even if participation slims. The Golden Cross Index is now above the 50% bullish threshold and is accelerating higher.
CONCLUSION: We had a small decline but it turned STOs down and plenty of stocks lost PMO BUY Signals and rising momentum. However, IT indicators are still rising and we have a bullish bias in all three timeframes. This tells us we have short-term weakness, but overall the intermediate and long terms look healthy. We expect today's decline to see follow-through, but it shouldn't ruin the bull market. We should keep in mind that we are in a period of unfavorable seasonality. This could cause intermediate-term issues later down the line, but at this point it isn't a problem.
Erin is 60% long, 0% short.
Erin's appearance was again postponed for Making Money with Charles Payne. They plan on getting her on next week. When we have the date, we'll let you know.
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BITCOIN
Bitcoin continues to consolidate just under overhead resistance. The PMO was looking alright, but it is now turning down. Stochastics have also dropped below 80. The RSI is positive, but we expect consolidation will continue.
INTEREST RATES
Interest rates are angling higher putting pressure on Bonds in 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 has now confirmed the bullish falling wedge so we are expecting rates to move higher from here. The RSI is positive and there is a new PMO Crossover BUY Signal. Stochastics have also jetted above 80. If you're interested in trading interest rates, you can take a look at the Interest Rate Hedge ETF (PFIX).
BONDS (TLT)
IT Trend Model: SELL as of 5/16/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: TLT is experiencing serious downside pressure as the 20-year yield pushes higher. We don't see rates falling anytime soon, so expect TLT and all Bond funds to decline further.
DOLLAR (UUP)
IT Trend Model: BUY as of 5/18/2023
LT Trend Model: SELL as of 4/12/2023
UUP Daily Chart: Yesterday's comments still apply:
"The Dollar is in a solid short-term rising trend. The RSI and Stochastics suggest this will continue. The PMO is nearing a Crossover BUY Signal, but is very flat and indecisive. We expect this rising trend to continue."
GOLD
IT Trend Model: NEUTRAL as of 6/8/2023
LT Trend Model: BUY as of 1/5/2023
GLD Daily Chart: We had annotated a bullish falling wedge yesterday, but with today's top, we now have a clear declining trend channel. Gold held up fairly well today consider the Dollar was up +0.46%. However, we are still bearish on Gold, particularly given the bullish Dollar charts.
GOLD Daily Chart: Discounts popped higher today which tells us that investors are getting bearish on Gold again. $GOLD still hasn't broken below the 200-day EMA and the bounce does look credible. We also note that the PMO has turned up and Stochastics are rising. We still expect Gold to struggle, at least while the Dollar continues to rise, but we are starting to see some bullish activity.
GOLD MINERS Golden and Silver Cross Indexes: Wow! What a difference a day makes. Yesterday we had 68% of Gold Miners above their 20-day EMA, today the number tanked. It clearly was a fragile rally. Gold is showing a few signs of life, but given we see the market ready to pullback, this group isn't likely to make much of it.
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 managed to move slightly out of its declining trend. The indicators suggest that Crude is going to continue its short-term rally. We have strong overhead resistance to deal with even if it does break from the declining trend. Indicators are positive enough to look for a move at least to test that resistance level.
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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DecisionPoint Sector Chart List
Price Momentum Oscillator (PMO)
Swenlin Trading Oscillators (STO-B and STO-V)
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