We are adding a new BIAS Assessment table to the DecisionPoint ALERT. Its purpose is to highlight how shifting participation could be affecting the price trend. This will be a daily assessment with the weekly details of percentage points listed in the DP Weekly Wrap.
We will give you our analytical review of the bias for the SPY as usual in the Bias Assessment section.
BIAS Assessment: The following table expresses the current BIAS of various price indexes based upon the relationship of their Silver Cross Index to its 10-day EMA (intermediate-term), and of their Golden Cross Index to its 20-day EMA (long-term). When the Index is above the EMA it is bullish, and it is bearish when the Index is below the EMA. The BIAS does not imply that any particular action should be taken. It is information to be used in the decision process.
We won't always comment on the table, but we will point out when we get signal changes.
Looking at the table there is currently a bearish bias in all but Energy (XLE) which has enjoyed a longer-term rally. Of interest are the bullish biases for the SP400, SP600, Industrials (DIA) and SP100 on the Golden Cross Bias. While they are listed as bullish, participation is still deteriorating in this timeframe.
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: Price is holding onto a rising trend after bouncing off strong support at 430. The RSI is about to enter positive territory. The PMO unfortunately remains in decline. Overhead resistance has arrived so we could see some sideways movement versus a strong rally upward.
Stochastics are looking stronger but remain in negative territory. The VIX is rising after puncturing its lower Bollinger Band on the inverted scale; however, it remains beneath its moving average. We don't see internal strength, but we do see internal weakness dissipating.
Here is the latest recording from 8/21:
S&P 500 New 52-Week Highs/Lows: New Highs expanded to confirm this rally with New Lows contracting somewhat. The 10-DMA of the High-Low Differential is below zero and still declining, but readings are near-term oversold. A bottom on this indicator would be significant in our opinion.
Climax* Analysis: There were no climax readings today, but the market made a noble effort with readings that were very close to climactic on three indicators. We think it would be reasonable for us to have upside initiation climax expectations.
*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 NEUTRAL.
Swenlin Trading Oscillators are very bullish right now and gave us the high sign that the market was ready to bounce off support. Participation is now broadening a bit more but is still somewhat anemic. The significant increase in %Stocks with PMOs rising is very encouraging.
Intermediate-Term Market Indicators: The intermediate-term market trend is DOWN and the condition is OVERSOLD.
IT indicators did not reverse, but the decelerated their decline. We know that %PMO BUY Signals should begin expanding given 23% have rising momentum.
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 seeing an improvement in the short-term market bias given more stocks are moving back above their 20/50-day EMAs, but not enough to move out of a bearish stance. You could consider it more neutral. Our bullish threshold is 50% and readings aren't even close. The declining SCI and GCI as well as their Bearish Shifts beneath the signal line leave us bearish in the intermediate and long terms.
BIAS Assessment: The following table expresses the current BIAS of various price indexes based upon the relationship of the Silver Cross Index to its 10-day EMA (intermediate-term), and of the Golden Cross Index to its 20-day EMA (long-term). When the Index is above the EMA it is bullish, and it is bearish when the Index is below the EMA. The BIAS does not imply that any particular action should be taken. It is information to be used in the decision process.
We won't always comment on the table, but we will point out when we get signal changes.
Currently, looking at the table there is an intermediate-term bearish bias in all but Energy (XLE) which has enjoyed a longer-term rally. Of interest are the bullish biases for the SP400, SP600, Industrials (DIA) and SP100 on the Golden Cross. While they are listed as bullish, participation is still deteriorating in this timeframe.
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CONCLUSION: The PMO hasn't turned up yet, but we are seeing some short-term bullish indications. The Swenlin Trading Oscillators are believable now particularly given the expansion in participation. While this was the perfect place for a bounce, we're now at a perfect place for another pullback given price is up against resistance. Given the near upside initiation climax and indicators beginning to rise from oversold depths, we expect more follow-through on today's rally. Until we have some confirmation from IT indicators, we don't want to count on this rally lasting. Shorts should be managed carefully. While the decline isn't likely finished in the intermediate term, there is no need to be on the wrong side of this short-term rising trend.
Erin is 8% long, 0% short.
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BITCOIN
Support did hold for Bitcoin and it rallied nicely today. We do see what we think will be a new trading range between 25,000 and 26,500. Should the PMO right itself and Stochastics show some life, the range could be extended to the 200-day EMA.
INTEREST RATES
Yields fell perilously in the long term, but rising trends were not compromised. It does make sense that we would see some cooling given they've been running so hot.
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
After this week's breakout, we weren't really expecting this huge decline. It has given the opportunity to the RSI to leave somewhat overbought territory. The PMO and Stochastics were shaken a bit on the decline, but we feel the rising trendlines will stay intact on this necessary pullback.
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 strongly on falling yields and it broke its short-term declining trend. Indicators are improving in the short term so we could see more upside, but we think that it will be limited by overhead resistance at the prior August top and 99.00.
We do admit that this rally could actually get some legs based on the breakout from the bullish falling wedge.
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 looks vulnerable right now. Today UUP formed a big bearish engulfing candlestick that implies more downside tomorrow. The PMO is now topping in overbought territory. Stochastics remain strong though so support could hold a bit longer.
GOLD
IT Trend Model: NEUTRAL as of 8/2/2023
LT Trend Model: BUY as of 1/5/2023
GLD Daily Chart: Gold has a new lease on life with today's gap up. The PMO has finally reversed and Stochastics have moved above 20. Price even vaulted the 200-day EMA.
GOLD Daily Chart: Gold also showed significant internal strength given the Dollar was only down -0.35% and Gold was up a whopping +1.15%. $GOLD saw the RSI move into positive territory above net neutral (50). Metals in general look positive and Gold is no exception.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners have hit short-term overhead resistance. We will see what they are made of now. Participation expanded nicely for %Stocks > 20/50/200EMAs so we have to take this rally seriously, but also temper expectations. We know how GDX can fool. This is why a rise in the Silver Cross Index would have us more confident given they are at resistance.
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 could be forming a bull flag and the 'flag' is a bullish falling wedge. Today saw a bullish hollow red candlestick. We can't count out USO, but indicators are very negative right now. Stochastics look particularly dreary. The 50-day EMA is here for support. If it fails or we see USO drop beneath this bullish falling wedge, we will move bearish. For now, we are neutral given the dichotomy between the bullish wedge and bearish indicators.
We see a complex bearish head and shoulders developing and today's decline confirmed it.
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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