Erin left for Amsterdam this afternoon on a plane with no Internet connection. Uncivilized! Erin planned to publish some time after landing, but that would be awfully late, so I decided that you all would rather see the charts on time, albeit with minimum comments.
-- Carl
** IMPORTANT REMINDER **
I leave on vacation tomorrow with a flight from LAX to Amsterdam in the afternoon so the report will likely go out late. I will still be publishing the DP Alert while on vacation, but comments will be abbreviated and "lead" articles will likely be scant. You will get your DP Alert before market open the next day, but it may go out at irregular times.
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
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: The sectors that had taken up residence in the Leading quadrant have now tumbled into the Weakening quadrant. Weakening doesn't mean disaster. In fact, Julius de Kempenaer the creator of RRG charts, often says that he likes stocks to hook back up to Leading from Weakening.
All sectors that have fallen into the Weakening quadrant have bearish southwest headings. We will want to see if they hook back around while in this quadrant as that would be very bullish.
XLP continues to be the weakest of all the sectors. It is situated in Lagging and moving westward. Although it has shaken its southerly heading and is moving northwest instead of southwest. Still we consider this the weakest sector.
XLC, XLK, XLY and XLF actually have the most bullish configuration as they move in the bullish northeast direction and head toward the Leading quadrant.
This leaves XLB. It is still in the Leading quadrant, but is moving toward the Weakening quadrant. It isn't moving as quickly, so it could reverse itself to remain in the strongest quadrant of Leading.
RRG® charts show you the relative strength and momentum for a group of stocks. Stocks with strong relative strength and momentum appear in the green Leading quadrant. As relative momentum fades, they typically move into the yellow Weakening quadrant. If relative strength then fades, they move into the red Lagging quadrant. Finally, when momentum starts to pick up again, they shift into the blue Improving quadrant.
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: NEUTRAL as of 1/21/2022
LT Trend Model: BUY as of 6/8/2020
SPY Daily Chart: The market topped today, and SPX Total Volume continued top contract.
Here is the latest recording:
Topic: DecisionPoint Trading Room
Start Time: Mar 21, 2022 09:00 AM
Meeting Recording Link.
Access Passcode: March@21
S&P 500 New 52-Week Highs/Lows: New Highs continued to contract.
Climax* Analysis: We got climax readings on most of the indicators today. Although they were not confirmed by SPX Total Volume, I still consider that we got a downside initiation climax.
*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 indicate either initiation or exhaustion.
Short-Term Market Indicators: The short-term market trend is DOWN and the condition is OVERBOUGHT.
Note that the STOs topped along with the market today. Since they typically top ahead of the market, that is bearish for this time frame.
Intermediate-Term Market Indicators: The intermediate-term market trend is DOWN and the condition is NEUTRAL.
None of these indicators topped today, but I anticipate that they will soon, because the % PMO Xover BUY Signals is very overbought. This would mean that the overbought level for the ITBM/ITVM has shifted way down in the normal range. Stay tuned.
PARTICIPATION and BIAS Assessment: 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 in the short term is bullish given %Stocks > 20/50-day EMAs are much higher than the SCI.
The intermediate term shows a bearish bias as the SCI is reading well below 70%. However, it is rising, so that tells us that the bearish bias is at least improving and moving toward Neutral.
The long-term bias is neutral to bearish. We have slightly higher percentage of stocks > 50/200-day EMAs compared to the GCI so we can't expect to see too much improvement on the GCI. The GCI is at a bearish reading of 56% but has bottomed.
CONCLUSION: I published an article on bear market breakouts today with a question mark in the title. While I can't be certain, I believe the recent breakout will prove to be a "fake-out breakout." We shall see. Today's price top has been expected due to short-term indicators being very overbought. If the decline continues, the intermediate-term indicators will top in the neutral zone, shifting the recent range severely lower in the normal range. That will be very bearish.
Erin will remain 15% exposed to the market while she is in Holland/Belgium. It is important to be able to manage positions more closely right now and that is the most risk she is willing to take while unable to stay plugged into the market.
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BITCOIN
Bitcoin appears to have found purchase on top of the 20/50-day EMAs. The indicators have firmed up with the RSI staying above net neutral (50) and the PMO angling higher. Stochastics are a little soft sitting below 80, but we are seeing them attempting to reverse toward 80. Look for Bitcoin to test the 200-day EMA soon.
INTEREST RATES
Yields continue to fly higher, but pulled back a few basis points today.
10-YEAR T-BOND YIELD
$TNX seems to be contained by the top of the rising trend channel. Indicators are unanimously positive suggesting a continuation of the rising trend.
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 still in a three-week consolidation.
GOLD
IT Trend Model: BUY as of 12/29/2021
LT Trend Model: BUY as of 1/12/2022
GLD Daily Chart: GLD has set a less accelerated rising trend line, which should be easier to maintain.
GOLD Daily Chart: $GOLD is essentially holding above the May top, and sentiment is almost neutral.
GOLD MINERS Golden and Silver Cross Indexes: GDX is near overhead resistance. Stochastics look positive having bottomed in positive territory. Participation is still very strong.
CRUDE OIL (USO)
IT Trend Model: BUY as of 1/3/2022
LT Trend Model: BUY as of 3/9/2021
USO Daily Chart: USO has advanced at about the same angle as it did at the beginning of the month. Currently price is accelerating higher, but indicators are not overbought yet suggesting higher prices will continue.
BONDS (TLT)
IT Trend Model: NEUTRALas of 1/5/2022
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart:
Today brought a nice bounce within the down trend. Still, it is unlikely that the trend will be broken.
Good Luck & Good Trading!
Carl Swenlin
Technical Analysis is a windsock, not a crystal ball. --Carl 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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