New Highs have been expanding all month, but they have now reached near-term overbought territory. The positive spin on the chart is a rising 10-DMA of the High-Low Differential. Typically the market is in good health while that indicator is rising. We do need to exercise caution, as you can see, when New Highs hit overbought territory the market is vulnerable to a decline. Just look at the red vertical lines that mark cardinal tops in the market and note that New Highs were overbought leading into declines.
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
For Friday:
For the week:
SECTORS
Each S&P 500 Index component stock is assigned to one, and only 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.
For Today: 
For the Week:
RRG® Chart: The sectors to watch based on the RRG would be XLRE, XLK and XLY. However, notice that XLU has turned around and is now moving in the bullish northeast direction. That implies new strength. Be careful with investments in XLC and XLP given their position in Lagging and southwest heading. XLE and XLF are weakening, but they are still fairly healthy.
CLICK HERE for an animated version of the RRG chart.
CLICK HERE for Carl's annotated Sector charts.
THE MARKET (S&P 500)
IT Trend Model: BUY as of 10/18/2021
LT Trend Model: BUY as of 6/8/2020
SPY Daily Chart: The market paused today as we expected after 7 straight trading days of rally. Resistance was technically broken yesterday, but more than likely we will see some chop next week as overbought conditions work themselves out.
Still, the RSI does remain positive and not overbought. The PMO is rising and is in positive territory. We don't expect any "flash crashes".
SPY Weekly Chart: The weekly PMO is decelerating as price attempts to recapture the intermediate-term rising trend. It appeared that if we were to redraw the rising bottoms line that it would form a rising trend channel. No such luck. We still have a bearish rising wedge.
PARTICIPATION: The following chart uses different methodologies for objectively showing the depth and trend of participation for intermediate- and long-term time frames.
- The Silver Cross Index (SCI) shows the percentage of SPX stocks on IT Trend Model BUY signals (20-EMA > 50-EMA).
- The Golden Cross Index (GCI) shows the percentage of SPX stocks on LT Trend Model BUY signals (50-EMA > 200-EMA).
The SCI had a positive crossover and is rising strongly out of oversold territory. The GCI held steady most of the week, but today it dropped slightly. There are some stocks out there that just had "death crosses" of the 50/200-EMAs.
Participation improved greatly this week, so much so that %Stocks > 20/50-EMAs readings have pushed into overbought territory.
Climax Analysis: No climax days this week. Volume ratios came close to a climax on Wednesday, but we didn't see accompanying climactic readings on Net A-D, Net A-D Volume and Total Volume.
*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 either initiation or exhaustion.
Short-Term Market Indicators: The short-term market trend is UP and the condition is OVERBOUGHT.
The STOs began to decline yesterday out of very overbought territory. This usually precedes a decline or choppy trading. Percent of stocks with rising momentum is excellent at 83% but this is an overbought reading and it looks a bit toppy.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT.
The ITBM and ITVM are near-term overbought territory. We've seen readings much higher so there is room to accommodate a continuation of the intermediate-term rising trend. 85% of the SPX have PMO BUY signals which provides a strong foundation for a continuation of the rising trend. The main problem is that reading is overbought.
Bias Assessment: The SCI is above 50% now and is rising giving us a bullish bias in the intermediate term. Short term we see strong participation of stocks > 20/50-EMAs with readings that are higher than the SCI. This confirms the bullish bias in the short and intermediate terms.
CONCLUSION: The rally continued this week and new all-time highs were set. Indicators are positive and participation has broadened enough to support a continuation of the intermediate-term rising trend. Short term, the falling STOs from overbought territory do suggest bumps in the road ahead. However with a strong bullish bias in all timeframes, we wouldn't expect a deep decline. Even if the SPY drops to support at $441 (last October top), that's a decline of only 2.5%. Looking ahead to next week, buckle in as we will likely be experiencing some chop.
Erin is 85% exposed to the market.
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 support@decisionpoint.com for more information!
BITCOIN
Bitcoin hit new all-time highs this week, but is now taking back most of the gains. $GBTC was still up 2.83% on the week. This area should provide strong support, but seeing the rising bottoms trendline compromised and a PMO top does make us cautious. Should this support level be broken, the next strongest level of support would be at the September top at $52,500.
INTEREST RATES
The 20/30-year yields are moving sideways, but did trend higher this week. All other yields continue to rise.
10-YEAR T-BOND YIELD
After poking above the rising trend channel, $TNX moved back within. This brought the RSI out of overbought territory. The PMO saw no damage. Resistance is being met at 1.7% and this could be part of the problem. This rising trend could be maintained even with a drop back to 1.55%. It wouldn't surprise us to see yields pullback.
DOLLAR (UUP)
IT Trend Model: BUY as of 6/22/2021
LT Trend Model: BUY as of 8/19/2021
UUP Daily Chart: The Dollar is finding support along the July top and 50-EMA. The indicators are still bearish and price is traveling in a bearish rising wedge. The expectation is more decline.
If UUP does bounce that would be bullish. Price wouldn't have had to test the bottom of the pattern before reversing.
UUP Weekly Chart: The weekly chart is showing some deterioration as the PMO is decelerating and the weekly RSI is falling. Price didn't stay above support this week which is also concerning. The bullish double-bottom pattern is still mostly intact.
GOLD
IT Trend Model: NEUTRAL as of 6/24/2021
LT Trend Model: SELL as of 8/9/2021
GOLD Daily Chart: A bearish Dollar would be fuel for Gold to breakout above the confirmation line of the double-bottom pattern. The confirmation line is drawn along the September high. The chart continues to get more bullish with today's rally that took price above the 200-EMA and didn't compromise the rising bottoms trendline. It's another big black candle and those tend to be bearish. Price closed beneath the 200-EMA.
Stochastics are very bullish having turned up above net neutral (50). The PMO is rising and is nearing positive territory. The RSI is positive and rising. Price on $GOLD is in a clear rising trend channel. All of this points to Gold moving much higher.
GOLD Weekly Chart: The weekly chart is firming up with the weekly RSI back in positive territory and the weekly PMO turning up. Note that investors are getting more bullish about Gold given the shrinking discounts on PHYS.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners ventured above the 200-EMA today, but closed beneath it and resistance at the November 2020 low and September 2021 top. The RSI and PMO are positive and trending higher. The most bullish feature is the strongly rising SCI and accompanying participation percentages. 100% have price above the 20-EMA and 96%+ have price above their 50-EMAs. The SCI will continue to rise strongly. Miners should continue to march higher.
CRUDE OIL (USO)
IT Trend Model: BUY as of 9/3/2021
LT Trend Model: BUY as of 3/9/2021
USO Daily Chart: USO is rising and holding the steeper of the two rising trendlines. Even if this trendline is broken, the 20-EMA and the bottom of the rising trend channel are there to catch any falls.
The RSI is overbought, but rising. The PMO is little less bullish. It is beginning to decelerate in near-term overbought territory. It may be time for overbought conditions to be relieved. That would result in a test of the 20-EMA, but if we see a pullback get steam, it could move all the way back down to July highs. Supply and demand continues to imply higher Crude Oil prices will continue, we would just look for a cooling off period to work out overbought conditions.
USO/$WTIC Weekly Chart: The weekly chart also points out that overhead resistance is arriving at the 2020 gap down. The weekly RSI is overbought. The weekly PMO is rising, but is very overbought.
BONDS (TLT)
IT Trend Model: NEUTRAL as of 10/1/2021
LT Trend Model: SELL as of 10/21/2021
TLT Daily Chart: There appears to be a reverse head and shoulders pattern firming up on TLT. With the 20-year yield gyrating sideways, we could see TLT execute this bullish pattern. The PMO has turned up and could trigger a crossover BUY signal next week.
This is set with a backdrop of an LT Trend Model "Death Cross" SELL signal that occurred last week. A bounce here is happening along the longer-term rising bottoms trendline which also gives the chart a more bullish bias despite the death cross.
TLT Weekly Chart: The weekly chart is mixed. The weekly PMO looked far more ominous last week, but this week it is trying to bottom above both the signal line and zero line. At the same time price action and the weekly RSI are bearish. Price was unable to get back above the 17/43-EMAs and now they have had a negative crossover.
Technical Analysis is a windsock, not a crystal ball.
-- Carl & Erin Swenlin
(c) Copyright 2021 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.
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:
DecisionPoint Alert Chart List
DecisionPoint Golden Cross/Silver Cross Index Chart List
DecisionPoint Sector Chart List
Price Momentum Oscillator (PMO)
Swenlin Trading Oscillators (STO-B and STO-V)
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. 22