The Price Momentum Oscillator (PMO) has been twitchy, but today it made up its mind and crossed below its signal line for a PMO Crossover SELL Signal. We've already been pointing out the weakness in the Technology sector so this isn't a surprise. We also saw a Bearish Shift on the Silver Cross Index as it dropped beneath its 10-day MA. The RSI has just now moved into negative territory and Stochastics are nearing negative territory. While the 50-day EMA may be holding as support, it looks highly vulnerable.
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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MARKET/INDUSTRY GROUP/SECTOR INDEXES
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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: As we noted in the opening, the PMO has been flat and twitchy leaving us with little to go on. Currently it is holding a Crossover SELL Signal. The RSI is now in negative territory. Support is holding right now, but we spy a bearish double top sitting on this support level.
Stochastics have dropped below net neutral (50) suggesting internal weakness. The VIX remains above its moving average on the inverted scale so there is a little internal strength showing. This leaves us with a market that is seeing weakness seeping in.
Here is the latest recording:
S&P 500 New 52-Week Highs/Lows: New Lows expanded on today's minor rally, but we saw far fewer New Highs. The 10-DMA of the High-Low Differential has now moved into negative territory signaling internal weakness.
Climax* Analysis: There were no climax readings today. Friday's downside initiation climax didn't see follow-through, but ultimately a lower high and lower low were set on this meager rally.
*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) declined for a second day and both are in negative territory again. We didn't see any real improvement to participation as measured by %Stocks > 20EMAs. %PMOs Rising saw no improvement either.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
The ITBM and ITVM are confirming the declining STOs as they also are declining. %PMO Crossover BUY Signals are vulnerable given there are only 43% of stocks with rising momentum.
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 BEARISH in all three timeframes.
Our bullish threshold of 50% is not being met by %Stocks > 20/50EMAs making the short-term bias Bearish. We also are seeing no improvement to those indicators. We were happy to see the Silver Cross Index turn up last week, but now we have a top beneath the signal line which is very bearish in the intermediate term. The Golden Cross Index is in decline.
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 we saw a number of biases change in the intermediate term and long term.
The Dow Industrials (DIA) and Financials (XLF) saw their Silver Cross Indexes move above their 10-day EMAs switching them to Bullish Biases in the intermediate term.
The Nasdaq 100 (QQQ) and Real Estate (XLRE) Silver Cross Indexes moved below their 10-EMAs switching them to a Bearish Bias in the intermediate term.
Utilities (XLU) Golden Cross Index moved above its 20-day EMA to give XLU a Bullish Bias in the long term.
CONCLUSION: Friday's downside initiation climax didn't see follow-through, but that doesn't make us less bearish given the configuration of our indicators. In particular, STOs and ITBM/ITVM are declining in unison. Given the market was up most of the day, we should've seen some expansion in participation, but we did not. All of the major indexes with the exception of the Dow (DIA) have Bearish Biases IT and LT. Keep your portfolio protected with stops or hedges.
Erin is 40% long, 2% short.
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The indicators were beginning to firm up on Bitcoin and now we have a resulting breakout. If it can trade above the 200-day EMA it will avoid the Death Cross of the 50/200-day EMAs. Stochastics did top but they are above 80 for now. The RSI finally found positive territory and the PMO is rising out of oversold territory. This trading range could expand up to the late August top or develop a new one between 26,500 and 29,000.
Rates were mixed with longer-term rates moving lower and short-term rates edging higher. The rising trends are intact so we do expect to see them continue rising.
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 continues to avoid forming a bearish double top. Stochastics and the RSI suggest a breakout ahead, but we'd like to see some confirmation from the PMO which hasn't given us a Crossover BUY Signal yet.
IT Trend Model: SELL as of 5/16/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: TLT saw a rally today. That has pulled the PMO back up giving us a "PMO Surge" above the signal line (bottom above the signal line). Stochastics and the RSI are not confirming the rally and we do expect rates will continue rising. If we do see some follow-through, we don't expect it to last very long.
IT Trend Model: BUY as of 8/3/2023
LT Trend Model: BUY as of 5/25/2023
UUP Daily Chart: The Dollar is finally pausing, but it hasn't done anything to destroy the rising trend. The indicators are also bullish. Look at this as a pause and not the beginning of a damaging decline.
IT Trend Model: NEUTRAL as of 8/2/2023
LT Trend Model: BUY as of 1/5/2023
GLD Daily Chart: We're starting to get bullish again on Gold. The PMO is on a Crossover BUY Signal and Stochastics are rising. The RSI is now positive. This looks like a bullish double bottom forming.
GOLD Daily Chart: In the intermediate term, we have a symmetrical triangle. These are continuation patterns so given the prior trend was UP, we should expect an upside breakout. $GOLD is just now seeing the PMO crossing above its signal line.
GOLD MINERS Golden and Silver Cross Indexes: With Gold looking bullish, we feel pretty good about Gold Miners. Participation is expanding and the Silver Cross Index looks very bullish as it has shifted above its signal line. We are expecting a breakout move on GDX.
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 is likely to move much higher given production cuts globally. This is going to continue to put pressure on Transports and consumers alike. It certainly could use a pause, but the PMO and Stochastics aren't deteriorating. The RSI tells us how necessary that pause is, but in a bullish environment like Crude is in, we expect that condition to persist.
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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