Today the S&P 600 Small-Cap ETF (IJR) 20-day EMA crossed down through the 50-day EMA (Dark Cross) above the 200-day EMA, generating an IT Trend Model NEUTRAL Signal. As has been the case for about a year, this is another signal change within a fairly narrow trading range, which could prove to be another whipsaw. The drop beneath the 200-day EMA doesn't bode well, but support is still available at the April top.
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: Price dropped below important support, but did hold up on the 50-day EMA. Today's candlestick is hollow red so price did close above the open. The RSI did move below net neutral (50). The PMO is still holding a Crossover BUY Signal, but it is very close to a SELL.
The VIX stayed above its moving average on the inverted scale, but Stochastics are falling suggesting some internal weakness. Price fulfilled the bullish double bottom we've annotated so the pattern is essentially done.
Here is the latest recording 8/28 - no recording on Labor Day:
S&P 500 New 52-Week Highs/Lows: New Highs did expand today which does suggest that today's turnaround could take hold. New Lows are near-term oversold.
Climax* Analysis: There was only one climax reading today, so we can't call this a climax day; however, SPX Total Volume was strong, and with price closing near the day's high, there is the potential for downside exhaustion.
*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 now in negative territory. They are not oversold yet and suggest more downside. On an interesting twist of events, participation saw some expansion today as both %Stocks > 20EMA and %PMOs Rising improved on the decline.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
Both the ITBM and ITVM turned down in negative territory. This finally confirms declining short-term indicators. Over 1/3rd of the index hold PMO Crossover BUY Signals. This is only slightly lower than %PMOs Rising so while there is an opportunity to improve the number of BUY Signals, it is negligible.
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.
In spite of some improvement in %Stocks > 20/50EMAs, percentages are below our bullish 50% threshold, so we are leaving the short-term bias as BEARISH. The Silver Cross Index has topped beneath its signal line so the intermediate-term bias is BEARISH. 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 giving us a BEARISH bias in the long term.
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 Materials Sector (XLB) intermediate-term BIAS changed to bearish as the SCI crossed down through its 10-day EMA.
CONCLUSION: It's a 'good news, bad news' kind of day. The good news is the bullish hollow red candlestick, expanding participation (very slight) on a decline, expanding New Highs and a possible downside exhaustion climax. That is still slim for good news when the bad news is weighing heavy. Our short-term and intermediate-term indicators are in agreement as they move lower and the market bias is bearish in all three timeframes. It may be time for the decline to halt, but we don't see a major upside reversal on the horizon given the configuration of STOs and the ITBM/ITVM. Stay defensive, keep stops in play and focus on the PMO on your portfolio charts. It will give you warning if it turns down or particularly has a Crossover SELL Signal. It isn't time to wait for bad investments to get better, it is time to make sure good ones don't sour.
Erin is 40% long, 0% short.
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Bitcoin rallied today but it remains in its trading range between 25,000 and 26,500. The PMO has technically given us a Crossover BUY Signal, but given it is mostly flat, we expect this trading range to stay intact.
Interest rates dropped slightly today but all hold rising trends. We believe the rising rate environment will persist.
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 rising trend continues, but today's drop in $TNX caused the PMO to top beneath the signal line. Given the strength of the rising trend, we don't expect the decline to do more than tap the rising bottoms trendline. Stochastics are also strong and rising which suggests there is internal strength to overcome some short-term negative momentum. We reserve our right to change course if a large double top forms.
IT Trend Model: SELL as of 5/16/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: TLT held its own today. Interestingly if it can manage higher prices, it would form a reverse head and shoulders pattern. The PMO is surging above the signal line, but the RSI is negative and Stochastics are falling in negative territory. We doubt that bullish pattern will materialize and even if it does, it seems unlikely at this point to expect a big rally.
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: Despite a rally in the Dollar, GLD managed a positive close and $GOLD wasn't down as far as the Dollar's rally. Unfortunately, Gold's strength isn't materializing as we had hoped.
$GOLD Daily Chart: Stochastics look terrible and the RSI has dropped into negative territory. The PMO remains on a Crossover BUY Signal, but just barely. Gold appears ready to test support at the 200-day EMA.
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: It's really early, but we could see a bull flag developing. USO needed a pause given how overbought the RSI was. The PMO and Stochastics aren't showing any signs of internal weakness. The rally ran hot and now it is time to cool a little bit.
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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