Today the S&P 400 Mid-Cap ETF (MDY) 20-day EMA crossed down through the 50-day EMA (Dark Cross) above the 200-day EMA, generating an IT Trend Model NEUTRAL Signal. Again we have a market index that is moving sideways in a fairly narrow range, and the signal change doesn't look especially compelling.
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
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: Today's rally prevented a Price Momentum Oscillator (PMO) Crossover SELL Signal. It is now rising while the RSI is in positive territory. This is a good short-term sign.
The VIX is above its moving average on the inverted scale and Stochastics have turned up in positive territory. Internal strength is again visible.
Here is the latest recording from 9/11:
S&P 500 New 52-Week Highs/Lows: We saw a contraction in New Highs and New Lows. The 10-DMA of the High-Low Differential is flat and unresponsive. This chart is neutral.
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.
This is a good news/bad news chart. The bad news is that Swenlin Trading Oscillators (STOs) are continuing to decline. However, the good news is that we saw an expansion in stocks with rising momentum. We also saw a few move back above their 20-day EMAs.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
This is a good news chart. Both the ITBM and ITVM have turned back up which takes some of the sting away from STOs in decline. We also saw a bottom above the signal line for %PMO Crossover BUY Signals.
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 bias is BEARISH in all three timeframes.
Short term, we have %Stocks > 20/50EMAs below our bullish 50% threshold. Intermediate term, the Silver Cross Index is declining after topping beneath the signal line. The Silver Cross Index percentage is above %Stocks > 20/50EMAs so it will continue to decline. Long term, the Golden Cross Index is falling and we have %Stocks > 50/200EMAs reading lower. This means the Golden Cross Index will continue to fall.
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.
The Gold Miners Sector (GDX) Silver Cross Index crossed down through its signal line shifting the intermediate-term BIAS to bearish.
CONCLUSION: It was definitely a "good news/bad news" kind of day. The PMO avoided a Crossover SELL Signal on the rally, but short-term indicators are falling or non-responsive. We do believe that seeing our ITBM/ITVM rise again is very good for the market, but we really need those short-term indicators to turn back up as both STOs continue to decline. The bias is firmly bearish in all three timeframes, but we saw some signs of life today. With the mixed messages from our indicators, we would look for price to consolidate sideways versus a big upward thrust. If we see a thrust, it likely would be a blow-off move.
Erin is 40% long, 0% short.
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Bitcoin is about to break down below important support. The 25,000 level isn't just short-term support, our second chart below shows it aligns with multiple 'touches'. The PMO hasn't fallen apart, in fact, it holds a Crossover BUY Signal. However both the RSI and Stochastics have bearish configurations and do suggest this level won't hold. This is such an important psychological level for Bitcoin that we would look for this level to hold a bit longer. Once this support level is broken decisively (3%+), look out below.
Yields were mixed today. We expect the rising trends may soften, but remain intact.
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 took a breather. It appears we could have a reverse island formation which would imply a gap down. Neither the PMO nor Stochastics are somewhat directionless right now so it isn't out of the question.
IT Trend Model: SELL as of 5/16/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: TLT wants to form a reverse head and shoulders but today's decline looks suspicious and could mean the right shoulder isn't done developing. Stochastics are topping beneath net neutral (50) and the RSI is negative. There is a PMO Crossover BUY Signal, but the PMO is moving sideways. We would look for lower prices.
IT Trend Model: BUY as of 8/3/2023
LT Trend Model: BUY as of 5/25/2023
UUP Daily Chart: The Dollar was down today. Indicators are very strong. In fact, this decline did a favor for the RSI which had been hovering in overbought territory. Stochastics topped, but as long as they remain above 80, there is internal strength.
IT Trend Model: NEUTRAL as of 8/2/2023
LT Trend Model: BUY as of 1/5/2023
GLD Daily Chart: Gold mustered a rally, but given the Dollar was down almost half a percent, we should've seen prices move higher. GLD formed another bearish filled black candlestick.
GOLD Daily Chart: The correlation with the Dollar is now on the positive side. Remember all things being equal, Gold should be up as much as the Dollar is down. This isn't holding true right now. While the rally in the Dollar hasn't helped, it hasn't done as much damage as it could have. The Dollar has been moving up since mid-July and Gold is trading close to the same level it was trading at in July. Gold is overdue for a rally, but until the PMO builds margin between it and its signal line, we are expecting Gold to tend toward support at 1900.
GOLD MINERS Golden and Silver Cross Indexes: This reversal on GDX looks very interesting. The PMO is surging above the signal line (bottomed above signal line) and participation of stocks above their 20/50/200-day EMAs is inching higher. The Silver Cross Index did have a Bearish Shift today moving the IT Bias to Bearish so don't bet the house on this reversal. If the Silver Cross Index shifts above the signal line, then we might look for a longer lasting rally. This looks like a reverse head and shoulders.
CRUDE OIL (USO)
IT Trend Model: BUY as of 7/12/2023
LT Trend Model: BUY as of 8/3/2023
USO Daily Chart: Carl mentioned the bull flag forming on USO in this morning's DecisionPoint Trading Room. His caveat was that the best bull flag has a flag that slopes downward. Today USO formed a filled black candlestick that implies a decline ahead tomorrow. At this point it appears USO is digesting the prior rally in preparation for a move back up. With drilling being suspended in Alaska, we will likely see higher oil prices.
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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