At the open today we were wondering about yesterday's downside initiation climax as the market made its way higher into positive territory. However, by midday, the rally was over. The last 20 minutes of trading prices sailed lower pushing the 5-minute Price Momentum Oscillator (PMO) into negative territory. The 5-minute RSI is now very oversold, but given the momentum to the downside, we wouldn't look at that as a plus yet. Stochastics are stuck below 20 implying serious internal weakness. Ultimately we believe yesterday's downside initiation climax was confirmed today. Based on this intraday chart, we would look for more downside on Monday.
We see that the Russell 2000 (IWM) was up more than any index, but weakness seeped in at the end of the day. We don't believe small-caps will be immune to further decline despite showing relative strength to the SPY.
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: We are beginning to consider a short-term double-top. If we're correct about that chart pattern, we should see a drop beneath the confirmation line at 430.00 with a minimum downside target of 415.00. This seems about right given 415.00 lines up with April tops.
The VIX is still puncturing the lower Bollinger Band on our inverted scale. Typically we see a day or two of higher prices after a puncture. However, we expect the Bands will expand. The VIX is likely to move lower on our inverted scale if the decline continues as we expect. Stochastics have dropped below 80 suggesting internal weakness.
SPY Weekly Chart: Now that we have a price top, we can see that the SPY is actually in a rising trend channel now that the rising wedge resolved to the upside. Unfortunately, price has tapped the top of the trend channel so we should expect price to move lower within the channel. The weekly PMO is still bullish and not overbought.
New 52-Week Highs/Lows: Readings are intraday so we have a feeling that some of today's New Highs didn't survive through the close. In any case, they are trending lower. The 10-DMA of the High-Low Differential topped this week.
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 NEUTRAL.
Swenlin Trading Oscillators (STOs) have moved back into neutral territory. Participation was hit hard this week, but we still have over 50% above their 20-day EMAs which is bullish. Rising momentum contracted considerably this week and that is a big problem for the short term.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT.
We are still listing these indicators as "overbought". They continue to contract, confirming declining short-term indicators. What bothers us most about this chart are the negative divergences that have popped up on this second price top.
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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).
Real Estate (XLRE) has the strongest intermediate-term bias as we have seen a nice expansion in the Silver Cross Index. The Golden Cross Index is trying to catch up. This suggests internal strength in the intermediate term.
Gold Miners (GDX) not surprisingly hold the most negative IT Bias at -57. This group was decimated on its last decline and while it is trying to improve, a 0% reading on the Silver Cross Index tells us there is a lot of work to do. We'll discuss Gold Miners in their section below.
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) are holding onto their strong Silver Cross Index and Golden Cross Index readings. No improvements were made (they can't go much higher), but likewise we didn't see any weakness. This group is very overbought and extended so we believe they are vulnerable during a market pullback or correction.
Gold Miners hold the bottom spot as they lost the last few Silver Crosses within.
Financials (XLF) saw the greatest improvement to the SCI. This sector is building internal strength but we believe they will suffer with a broad market pullback or correction.
This table is sorted by GCI values. This gives a clear picture of strongest to weakest index/sector in terms of long-term participation.
Semis hold the top spot on the Golden Cross Index with Technology (XLK) not far behind. These two areas of the market have shown incredible leadership and these high GCI values confirm that.
Regional Banks (KRE) holds the bottom spot and saw no improvement to either the SCI or GCI. The IT Bias is strong at +24 so it has seen improvement, but it stalled this week.
The following chart objectively shows the depth and trend of participation in three time frames.
The market bias is NEUTRAL.
The short-term bias is NEUTRAL.
The intermediate-term bias is NEUTRAL.
The long-term bias is BULLISH.
We are moving the short and intermediate terms to a "Neutral" bias. Participation was slashed this week on %Stocks above their 20-day EMA which means there are short-term problems. The SCI is still on the rise, but it is limited by the %Stocks above their 50-day EMA. Price must be above the 50-day EMA to hold a "Silver Cross" and we almost the same amount of stocks above their 50-day EMA as Silver Crosses. The SCI won't be able to rise much longer. The long-term bias is still bullish given there are a higher percentage of stocks with price above their 200-day EMAs than stocks with Golden Crosses.
CONCLUSION: Today's late decline confirmed our downside initiation climax and suggests a difficult week ahead. The bias is breaking down from bullish to neutral. Participation is thinning and STOs continue lower suggesting internal weakness for the SPY in the short term. With negative divergences cropping up on IT charts, we believe the market is going to continue to pullback but is now vulnerable to a correction. At this point based on a double-top that is developing on the SPY we could see a move down to 415.00. It's a good time to set stops based on risk tolerance. Any positions that are showing weakness are likely to see corrections.
Erin is 60% long, 0% short.
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BITCOIN
Bitcoin's PMO looks very bearish right now. The RSI is holding up due to the current trading range. Stochastics are very negative. Given we haven't seen a breakout yet, we would prepare for a possible breakdown. For now it is holding support, but that PMO really suggests a breakdown ahead.
This chart is to show where some of the support/resistance lines come from.
INTEREST RATES
Yields were mixed today but spent most of the week soaring higher. Given the strong rising trends, we expect rising rates to continue.
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 hit resistance and was stopped. However, we are looking for a breakout. The large bullish falling wedge was confirmed this week on the breakout. Indicators are very bullish right now.
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 6.71 to 6.81.
BONDS (TLT)
IT Trend Model: SELL as of 5/16/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: Near-term support was lost today, but there is another layer of support at the March low. Expect TLT to test that level given the ugly indicators and the bull market in yields.
TLT Weekly Chart: Given this decline is occurring well below overhead resistance, we should expect support at the 2023 lows to break. The weekly RSI is negative and the weekly PMO is nearing a Crossover SELL Signal. We see TLT dropping to 2022 lows.
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 was holding a short-term rising trend, but today fell apart (Erin's trip looms closer, so a weakening Dollar isn't surprising). Today's heavy decline turned indicators bearish. The RSI dropped below net neutral (50). Stochastics are falling and the PMO has whipsawed into a Crossover SELL Signal. Looks like an initiation to lower prices given it closed beneath the 50-day EMA.
There is a large bearish rising wedge on the longer-term daily chart that certainly suggests more decline could follow.
UUP Weekly Chart: The rising trend is holding up on the weekly chart, but the weekly RSI has topped and the weekly PMO is nearing a Crossover SELL Signal. We should expect at least a test of the rising trendline.
GOLD
IT Trend Model: NEUTRAL as of 6/8/2023
LT Trend Model: BUY as of 1/5/2023
GOLD Daily Chart: A bearish Dollar made for a bullish Gold chart. We are finally starting to see signs of life with a short-term saucer-shaped bottom and rising Stochastics. Overhead resistance is still strong, but this looks like one of the best setups we've had in months. A PMO Crossover BUY Signal would confirm our bullish expectations.
The declining trend is still in force, but given the now rising PMO, we do expect a breakout. Indicators could look better as the RSI and Stochastics are below net neutral (50). Something bullish is brewing.
GOLD Weekly Chart: The weekly chart does not inspire confidence in Gold with the long-term breakdown from the bearish rising wedge, but it is holding above the 43-week EMA. The long-term picture is not yet bullish.
GOLD MINERS Golden and Silver Cross Indexes: This appears a good spot for a reversal for Gold Miners. However, we aren't getting the kind of participation we want to see. It improved, but the SCI remains at 0% and the GCI has topped beneath its signal line. A PMO Crossover BUY Signal would boost our confidence in a reversal play. A higher amount of stocks above their 20/50/200-day EMAs would firm the chart up. It is too early to bet on Gold Miners unless you have a healthy risk appetite.
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 broke through the declining tops trendline. It is now up against overhead resistance. The indicators look more positive than they have in some time with the PMO hitting positive territory. We believe this level of resistance will be difficult to break through, but based on the indicators, we should look for that breakout.
USO/$WTIC Weekly Chart: The weekly chart is neutral. The weekly PMO is flat and unresponsive and the weekly RSI is sitting in neutral. Price is below key moving averages currently. A breakout would do wonders for the weekly chart. We see support holding here with the tight trading range continuing.
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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Price Momentum Oscillator (PMO)
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