The Silver Cross Index (SCI) measures how many stocks have their 20-EMA above their 50-EMA within an index or sector. The SCI is continuing to rise on the SPX, but the SCI on the Nasdaq and NYSE have both turned down. The Nasdaq SCI is just above 54% and now it is trending lower which gives the Nasdaq a neutral to somewhat bearish bias. The NYSE SCI turned down today, but is at a somewhat healthy reading of 68% keeping the intermediate-term bias somewhat bullish for the NYSE. While a topping SCI doesn't guarantee a price decline ahead, it does tell us the Nasdaq and NYSE are internally weak and hence 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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MAJOR MARKET INDEXES
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.
RRG® Chart: XLB and XLK remain firmly in the Leading quadrant with XLB moving in the bullish northeast direction. XLC, XLP and XLI are looking very bullish as they move with a northeast heading within Improving. XLY has begun to fade and is currently moving with a bearish southwest heading. The remainder are in Lagging with XLV looking the most bearish.
CLICK HEREfor 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 SPY was up very slightly, but it did log a higher low and a higher high.
The RSI is positive and not overbought. The PMO is moving mostly sideways. Total Volume contracted and remains much lower than the annual average. I note that Stochastics have turned up in positive territory.
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).
As noted in the introduction, the SPX SCI is still on the rise, but the GCI which turned down last week is still falling.
S&P 500 New 52-Week Highs/Lows: New Highs expanded quite a bit on a day where the market didn't do much. It has helped the 10-DMA of the High-Low Differential halt its decline.
Climax* Analysis: Today was not a climax day. The VIX remains below its EMA on the inverted scale indicating internal weakness.
*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 NEUTRAL.
The STO-B is flat, but the STO-V continues lower which suggests price could turn lower. We lost some stocks with rising momentum. The reading is a somewhat weak 58%.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT.
The ITBM/ITVM were mixed today with the ITBM rising and the ITVM moving lower again. Interestingly we saw a rise on %PMO BUY signals.
Bias Assessment: We now have a short-term neutral to bearish bias given there are fewer stocks above their 20-EMA than the SCI (bearish) and about the same amount above the 50-EMA (neutral). The SCI reading is at a 72% reading giving us a bullish bias in the intermediate term and the GCI is sitting at a bullish 82% giving us a bullish bias in the long term as well.
CONCLUSION: The SPX was unchanged today. ST indicators and participation are still healthy enough to hold the market up, but we are seeing the SCI topping on the Nasdaq which is a bellwether for the overall market. Last week Carl and I determined that this week we should expect mostly sideways movement with a slight trend higher. I don't see anything today that would change that conclusion.
I am 75% exposed to the market with 25% being in cash and readily available to trade.
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BITCOIN
Bitcoin formed a bullish flag and then after breakout, pulled back. We could still see higher prices off this flag, but price isn't reacting as it should coming out of a flag. The short-term rising bottoms trendline and 20-EMA are holding. The RSI is still positive. However, Stochastics and the PMO are falling. I expect to see the 20-EMA broken and $60,000 tested again.
INTEREST RATES
Yields are beginning to rise again giving Bonds a bearish bias.
10-YEAR T-BOND YIELD
$TNX broke the short-term declining trend. The RSI is rising and positive. The PMO is also rising and is now headed for a crossover BUY signal. Look for the 10-year yield to continue rising toward the October high.
DOLLAR (UUP)
IT Trend Model: BUY as of 6/22/2021
LT Trend Model: BUY as of 8/19/2021
UUP Daily Chart: UUP had an upside break out from a bearish rising wedge which can be considered especially bullish. The RSI is positive and the PMO continues to rise strongly. Stochastics flattened, but remain above 80.
GOLD
IT Trend Model: BUY as of 10/28/2021
LT Trend Model: SELL as of 8/9/2021
GLD Daily Chart: Normally when the Dollar is rising, Gold (because it is denominated in Dollars) will fall. However, you'll note that the correlation between Gold and the Dollar is very positive now. This means they have decoupled. While the Dollar can still affect the price of Gold, right now it shouldn't weigh as heavy. GLD is forming a flag. The RSI is slightly overbought, but the PMO is rising strongly and is not overbought. We should see a LT Trend Model "Golden Cross" BUY signal soon.
(Full Disclosure: I own GLD as a "buy and hold" position.)
GOLD Daily Chart: $GOLD is headed to test overhead resistance at $1920. Stochastics have turned up and are above 80.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners are consolidating like the metal itself. The chart is still very bullish. The GCI is finally rising and participation continues to impress or improve. The reverse head and shoulders pattern suggests a minimum upside target of around $39.
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 was higher today, but saw a lower intraday high and low. It appears we have a possible double-top. However, I can't get too bearish on Crude Oil as I expect support at the 50-EMA and confirmation line of the double-top to hold, at least for the moment. Stochastics are turning back up and the RSI is rising and positive.
BONDS (TLT)
IT Trend Model: BUY as of 11/8/2021
LT Trend Model: BUY as of 11/4/2021
TLT Daily Chart: It's no surprise to see TLT dropping like a rock given the rally in yields. That rally doesn't look like it is over so TLT will likely continue its decline. It is on short-term support, but after closing below all three key moving averages, I expect it to continue lower. The RSI, PMO and Stochastics are confirming the decline.
Technical Analysis is a windsock, not a crystal ball.
--Erin Swenlin
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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.
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