Today the Chinese government barred government agency staff from using the Apple iPhone and other foreign branded devices at work. China is one of Apple's major markets for the iPhone. As a result, AAPL stock took a big hit. Looking at the original crash in early-August, one has to wonder if that story had been leaked early to a select few. It goes to show that stocks we think are "bullet proof" can be vulnerable in a big way. Next we look for the August low to be taken out.
The monthly chart shows a major parabolic arc, which broke down last year, but instead of price continuing downward, AAPL rallied for one last parabolic thrust this year. Now it appears to be testing that support, and parabolic advances are doomed to break. The monthly PMO has topped below the signal line, a very negative sign.
Today the Russell 2000 ETF (IWM) 20-day EMA crossed down through the 50-day EMA (Dark Cross), generating an IT Trend Model NEUTRAL Signal. Note that there was a double bottom, price rallied above the confirmation line to the minimum upside target, and has now fallen back to the confirmation line. The PMO top beneath the signal line is especially bearish.
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
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 has now fallen to short-term support. This would be an excellent area for a rally, but we have to wonder if Apple will prevent a rally at this level. The PMO Crossover BUY Signal is still intact, but the PMO topped today.
The VIX remains above its moving average on the inverted scale, but Stochastics dropped below 80. Internal strength is fading.
Here is the latest recording 8/28 - no recording on Labor Day:
S&P 500 New 52-Week Highs/Lows: New Highs were negligible today and New Lows have expanded into near-term oversold territory. The 10-DMA of the High-Low Differential topped on today's decline along with the PMO.
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 are moving lower quickly and are now sitting in neutral territory. More damage was done to %Stocks > 20EMA and %PMOs Rising. It wasn't as deep a decline as yesterday and over 1/3rd continue to hold rising momentum. Still, the breakdown of this chart is sobering.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
The ITBM continued to rise, but today the ITVM confirmed topping short-term indicators as it declined. The topping of %PMO BUY Signals below the 50% level is very bearish.
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 short-term bias is BEARISH.
The intermediate-term bias is BEARISH.
The long-term bias is BEARISH.
We have moved the bias to Bearish in all three timeframes. %Stocks > 20/50EMAs have dropped beneath our bullish 50% threshold. Additionally, the Silver Cross Index has topped beneath its signal line. The Golden Cross Index has also topped beneath the signal line and with fewer stocks above their 50/200-day EMAs versus the Golden Cross Index, we know it will continue lower.
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 Dow Jones Industrials (DIA) intermediate-term BIAS changed to bearish as the SCI crossed below its 10-day EMA. The long-term BIAS for the S&P 100 (OEF) and Regional Banking (KRE) changed to bearish as the GCI crossed down through its 20-day EMA.
CONCLUSION: Apple's demise likely led the market lower. Participation has shrunk on this market decline. While we are sitting on short-term support, the continued deterioration of all of our indicators and new today, the ITVM decline and topping 10-DMA of the High-Low Differential, have us thinking this support level won't hold. The bias is clearly bearish in all timeframes now. While there is still 1/3rd of the index showing rising momentum, we would begin sizing up your intermediate-term investments and make sure all positions have stops to weather a possible storm.
Erin is 40% long, 0% short.
Have you subscribed the DecisionPoint Diamonds yet? DP does the work for you by providing handpicked stocks/ETFs from exclusive DP scans! Add it with a discount! Contact firstname.lastname@example.org for more information!
Yesterday's comments still apply:
"Bitcoin is back in a trading range and based on the indicators we think it will continue. The RSI and Stochastics are negative, but the PMO is flat suggesting no momentum in either direction."
Interest rates are pressing higher after a brief decline. We expect this will 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
The PMO has now turned back up on $TNX. Stochastics have flown back into positive territory. The rising trend is holding up so we do expect the 10-year yield to continue moving higher. This isn't good for the market in general.
IT Trend Model: SELL as of 5/16/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: The 20-year yield took a break from its rally, affording TLT the opportunity to close higher on the day. This did nothing for the indicators which remain bearish. Stochastics dropped into negative territory and today's candlestick was bearish (filled black candlestick).
While support is available at 92, we see 90 as the more likely stopping point on this decline. A rally here would set up an interesting reverse head and shoulders, but it's too early to assume the pattern will gel.
IT Trend Model: BUY as of 8/3/2023
LT Trend Model: BUY as of 5/25/2023
UUP Daily Chart: Yesterday's comments still apply:
"The Dollar had a hiccup last week, but it has righted itself and looks as if it will continue higher. The RSI is now overbought so a pause would be welcome. The PMO has surged above the signal line (bottomed above the signal line) and Stochastics are back above 80."
IT Trend Model: NEUTRAL as of 8/2/2023
LT Trend Model: BUY as of 1/5/2023
GLD Daily Chart: Gold is back in decline on the Dollar's strength. Support has been reached at the 200-day EMA, but the PMO has topped and the RSI moved back into negative territory. Stochastics are a problem as they are in decline.
$GOLD Daily Chart: The declining tops trendline is intact. We would begin looking for another test of the 200-day EMA for $GOLD.
GOLD MINERS Golden and Silver Cross Indexes: Yesterday's comments still apply:
"Gold Miners appeared ready to rock but the decline in Gold and the market has hit them hard. Notice that what little participation they had has vanished. The RSI is negative, the PMO has topped and Stochastics have dropped below 80. Prepare for a short-term decline down to support."
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 bearish filled black candlestick meant nothing apparently and today we have a bullish engulfing candlestick. With indicators strong we don't see an end to this rally. It could use a pullback or at least a pause in order to bring the RSI out of overbought territory. It just doesn't seem likely right now given its internal strength.
Good Luck & Good Trading!
Erin Swenlin and Carl Swenlin
Technical Analysis is a windsock, not a crystal ball. --Carl Swenlin
(c) Copyright 2023 DecisionPoint.com
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.
DecisionPoint is not a registered investment advisor. Investment and trading decisions are solely your responsibility. DecisionPoint newsletters, blogs or website materials should NOT be interpreted as a recommendation or solicitation to buy or sell any security or to take any specific action.
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.
Helpful DecisionPoint Links: