The Golden Cross Index (GCI) measures how many stocks in an index/sector/group have a "golden cross" or a 50-day EMA above the 200-day EMA. It gives us keen insight on participation within for the long term.
Today the SPY saw a Bearish Shift on the Golden Cross Index (crossed below its signal line). The Nasdaq experienced a Bearish Shift yesterday. The NYSE is very close. We checked the other indexes and the Nasdaq 100 has had a Bearish Shift as well. The other indexes are getting close and we'll inform you when we see them.
What does this mean? It means that our bias in the long term is mechanically bearish. We say "mechanically" as we evaluate bias in the Bias section daily and it can see nuances when compared to other participation indicators. This will often have us stating a bias that may not mesh with the mechanical version.
We do note that last shift didn't amount to much and that is likely because we were in the midst of a nice bull market move. In the current case, we expect more decline to follow this shift as price action has been especially bearish in the shorter term. In any case, we would be more cautious based on this shift in the long-term bias.
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: The market finished lower today but did manage a higher low and higher high in the process. This means we still have a rising trend in the very short term. Filled red candlesticks are bearish and generally see followthrough to the downside so we wouldn't get too comfortable.
Stochastics are rising again and moved above 20, but we still read them as weak. The VIX remains below its moving average on the inverted scale and that implies internal weakness.
Here is the latest recording from 8/21:
S&P 500 New 52-Week Highs/Lows: The 10-DMA of the High-Low Differential has dropped below the zero line. This is a near-term oversold condition, but it has seen far lower readings. New Lows did not expand, but are still elevated in the near term.
Climax* Analysis: There were no climax readings today. It is notable that SPX Total Volume contracted, emphasizing that the rally early in the day did not have support.
*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 DOWN and the condition is OVERSOLD.
Both Swenlin Trading Oscillators rose today which is positive, but we aren't reading too much into them just yet, particularly given today's midday reversal. We need to see more in terms of rising momentum before we can start looking for a rally.
Intermediate-Term Market Indicators: The intermediate-term market trend is DOWN and the condition is OVERSOLD.
Intermediate-term indicators are not confirming the newly bullish STOs. On the bright side, given there are more stocks with rising momentum than those with PMO Crossover BUY Signals so that indicator could see improvement if those stocks can hold their rising PMOs.
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 market bias is BEARISH in all three timeframes.
We are ready to pivot bullish in the short term should we see an expansion of %Stocks > 20/50EMAs. In order to move bullish or even neutral in the intermediate-term timeframe, we will need those indicators to see higher percentages than the Silver Cross Index. Otherwise the SCI will continue moving lower. The GCI had a Bearish Shift.
CONCLUSION: This morning's rally failed to hold up. Yesterday we noted that the SPY had negative Net Advances-Declines on a rally day. STOs have both turned up but we aren't seeing any corroborating evidence to suggest a rally is on tap. IT indicators are not confirming STOs. Participation isn't expanding and has now caused a Bearish Shift on the Golden Cross Index to join the Bearish Shift on the Silver Cross Index which has been in place for a few weeks now. Caution is still warranted. When the market is weak we must consider all of our portfolio positions as short-term in nature.
Erin is 10% long, 8% short.
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BITCOIN
Bitcoin resumed its decline after attempting to recover from the huge decline we saw last week. The RSI is very oversold, but the PMO could move lower. Stochastics are very weak. At this point we think that support at 25,000 is in jeopardy.
INTEREST RATES
The rising trends in yields remain. We don't see an end to this anytime soon even though many are reaching toward resistance from March.
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
Yesterday's comments still apply:
"$TNX is now pushing past overhead resistance at the October high. This seemed a good place for it to digest the rally, but indicators are too positive to expect a decline right now. The RSI isn't even overbought yet."
BONDS (TLT)
IT Trend Model: SELL as of 5/16/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: Bonds rallied today but it did nothing to improve the chart in our opinion primarily because the steep declining trend remains intact. The PMO did flatten, but this doesn't look like a reversal point.
One reason we don't see this as a reversal point is that there really isn't any support to be found at this area. We don't see relief ahead until price gets back down to 90 and even then it could be dicey.
DOLLAR (UUP)
IT Trend Model: BUY as of 8/3/2023
LT Trend Model: BUY as of 5/25/2023
UUP Daily Chart: The Dollar continues to march higher. This is putting pressure on multi-national companies, specifically large caps. It has been tough on Gold as well. Unfortunately with Stochastics rising along with the PMO, the rally doesn't appear ready to end. Price is now overbought based on the RSI, but it could hold that condition given the strength of the Dollar right now.
GOLD
IT Trend Model: NEUTRAL as of 8/2/2023
LT Trend Model: BUY as of 1/5/2023
GLD Daily Chart: Finally a little good news for Gold. GLD managed to hold support at the June low and the PMO is flattening out. The RSI and Stochastics are still weak, but another rally day and it could be a new lease on life for Gold.
GOLD Daily Chart: This would be an excellent area for Gold to reverse. Erin noted in today's DP Diamonds report that Silver is looking bullish right now. It could be a harbinger for Gold so we will monitor it closely. We've included the Silver chart below $GOLD for reference.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners are reversing above support which is bullish. However, we aren't seeing any new participation of stocks above their 20-day EMA so we wouldn't bet on a long-term rally just yet. However, you may want to turn off your inverses, particularly if they are leveraged.
CRUDE OIL (USO)
IT Trend Model: BUY as of 7/12/2023
LT Trend Model: BUY as of 8/3/2023
USO Daily Chart: Crude Oil isn't sure what it wants to do right now. The rally did get extended and the pullback has occurred. We should then look for a rally after a pullback. Not so with USO right now given the PMO is still declining and Stochastics are topping. Support is holding at the 20-day EMA but it looks very vulnerable right now.
We see a complex bearish head and shoulders developing. Don't get too enamored with your Energy positions.
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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