As the market rallies, we have been seeing new "Shifts" by the Silver Cross Index and Golden Cross Index. "Shifts" are generated when the Silver Cross Index crosses above its 10-day EMA and when the Golden Cross Index crosses above its 20-day EMA. A Shift above the signal line gives us a bullish Bias in the intermediate term for the Silver Cross Index and in the long term for the Golden Cross Index.
The SP100 (OEF) saw a long-term Bullish Shift on the Golden Cross Index. A Bullish Shift is nearing for the Silver Cross Index. Participation is expanding, but we don't think this Shift will hold up given there are far fewer stocks with price above their 50/200-day EMAs versus those with Golden Crosses. The Silver Cross Index has an opportunity for a Shift given there is a higher percentage of stocks above their 20/50-day EMAs versus the Silver Cross Index percentage. While we like the rally and broader participation, it isn't much higher than our 50% bullish threshold.
The Nasdaq 100 (QQQ) and Biotechnology (IBB) both saw Bullish Shifts on the Silver Cross Index. In both cases we should see these Shifts stay given there are more stocks above both their 20/50-day EMAs than the Silver Cross Index percentages.
The double bottom on QQQ combined with the new PMO Crossover BUY Signal suggests more rally ahead.
IBB looks less appetizing in the intermediate and long terms in spite of the Bullish Shift. Price is in a sideways trading range and EMAs are configured negatively. While we see an expansion in participation, %Stocks > 20/50/200EMAs are below our 50% bullish threshold. This is a lukewarm signal at best.
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: We've just about hit the minimum upside target of the bullish double bottom so this is a good place to see a pause like we saw today. The upside target is determined by the height of the double bottom which is added to the confirmation line along the middle of the "W". The PMO is in the process of triggering a Crossover BUY Signal and the RSI remains positive above net neutral (50).
The VIX continues to puncture the upper Bollinger Band on the inverted scale as the Bands continue to expand outward. Punctures do tend to lead to a pause or decline in the very short term. Stochastics are rising strongly so we do see internal strength overall.
Here is the latest recording from 8/28:
S&P 500 New 52-Week Highs/Lows: While the market traded higher intraday, the number of New Highs contracted.
Climax* Analysis: There were no climax readings today; however, SPX Total Volume expanded significantly. With the market trading higher, but closing lower, we see this as a mild blowoff, possibly marking a rally top.
*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) rose today and are now overbought. While participation thinned, it remains above our 50% bullish threshold. We lost some rising momentum but %PMOs Rising is above the 50% bullish threshold.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERSOLD.
IT indicators are rising out of oversold territory and do suggest we will see higher prices in the intermediate term. They are all confirming rising STOs.
PARTICIPATION: 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 BULLISH in the short term.
The market bias is NEUTRAL in the intermediate term.
The market bias is BEARISH in the long term.
We are listing the intermediate-term as "Neutral" given the SCI is rising, but we don't have it above its 10-day EMA yet. That would shift us to BULLISH in the intermediate term. We do have readings in %Stocks > 20/50EMAs that are above 50% bullish thresholds. The long-term is still being read as bearish given %Stocks > 50/200EMAs are still less than the Golden Cross Index percentage.
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.
Today the long-term BIAS for the S&P 100 Index ETF (OEF) changed to BULLISH as the Golden Cross Index moved above its 20-day EMA.
Additionally, the intermediate-term BIAS for the Nasdaq 100 (QQQ) and the Biotechnology ETF (IBB) switched to BULLISH as their Silver Cross Indexes moved above their 10-day EMA.
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CONCLUSION: Primary indicators are rising, but we noticed a few problems today with fewer New Highs and a mild blow-off level of volume. Short-term indicators are now getting overbought. While we believe we have a bullish Bias in the short term, a pause or decline to digest the recent rally is on our radar. Given participation remains above our 50% bullish thresholds and IT indicators are rising, we think that this will be more of a hiccup than a deep decline. It could offer better entries. Staying exposed to the market or adding positions should be done with stops in place in case a short-term decline catches hold.
Erin is 40% long, 0% short.
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BITCOIN
So much for a new trading range on Bitcoin. After shooting higher on news of a Bitcoin ETF by Grayscale, the wind was pulled from the sails and Bitcoin tumbled today. The PMO has topped beneath the signal line and the RSI has been pulled into negative territory below net neutral (50). Stochastics weren't damaged by much so we would look for more sideways consolidation between 25,000 and 26,500.
INTEREST RATES
Yields are now declining in earnest giving Bonds an opportunity to rally further.
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 has now hit support, but given the now negative RSI, diving Stochastics and recent PMO Crossover SELL Signal, we would look for this level to be broken."
BONDS (TLT)
IT Trend Model: SELL as of 5/16/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: TLT has built a nice base for price to rally higher from. The RSI has entered positive territory for the first time since July and Stochastics are above 80 for the first time since June. This rally is credible with yields showing significant weakness right now.
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 bounced off support today and the PMO is beginning to surge (bottom) above the signal line. Stochastics are still weak and falling so we still see internal weakness, leaving UUP vulnerable to another test of support.
GOLD
IT Trend Model: NEUTRAL as of 8/2/2023
LT Trend Model: BUY as of 1/5/2023
GLD Daily Chart: Gold was down today, but not as much as the inverse correlation suggests it should be since the Dollar was up almost half a percent. GLD was only down -0.17% and $Gold was only down -0.36%. Indicators remain bullish and we like the bullish double bottom that would be confirmed with a break above the July top.
GOLD MINERS Golden and Silver Cross Indexes: Yesterday's comments still apply:
"Gold Miners paused after coming up against overhead resistance. Participation was not hampered by this development and with Gold looking bullish, we are expecting a breakout above the 200-day EMA."
CRUDE OIL (USO)
IT Trend Model: BUY as of 7/12/2023
LT Trend Model: BUY as of 8/3/2023
USO Daily Chart: Yesterday's comments still apply:
"Crude Oil confirmed the bullish falling wedge with a breakout. This looks like a bull flag breakout and would suggest even higher prices ahead. Indicators seem to be on board with that." **The upside target of the pattern would have price reaching 89.00.
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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