The Renewable Energy industry got a boost today as the Biden Administration rolled out plans to lower duties and tariffs for solar panels. The industry group has already been riding an incredible rally since mid-May, the latest news could keep that rally going.
The TAN ETF generated a new IT Trend Model "Silver Cross" BUY signal today as the 20-day EMA crossed above the 50-day EMA. The RSI is positive and the PMO is now comfortably above the zero line. Stochastics are staying above 80 meaning there is internal strength. This ETF has been outperforming the SPY for about a month. The gap up puts price well above the 200-day EMA. One issue is today's bearish filled black candlestick. It could work to our advantage. After this more than 4.25% gain today, a natural pullback toward the 200-day EMA would offer a new entry.
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 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: Below we have the $ONE Daily RRG chart. All of the sectors are beginning to curl over. No real damage is happening as most of the sectors in the Improving quadrant will land in the Leading quadrant.
There are a few sectors that are maintaining bullish northeast headings. XLY, XLK and XLF are aggressive sectors of the market. If a short-term bear market rally is going to restart, these are the sectors that need to maintain strength. XLP is recovering from the Target debacle but has more ground to cover before reaching the Leading quadrant. XLI is nearly in the Leading quadrant and has a bullish northeast heading.
Leading quadrant sectors other than XLF are XLB, XLU, XLV and XLE. All have neutral headings moving southeast. XLC will likely hit the Leading quadrant this week. It is also an aggressive sector that should do well in a bear market rally, but its southeast heading makes it a little suspect.
The weekly $ONE RRG shows us that the bear market is still in force with nearly every sector holding a bearish southwest heading.
XLF is turning back up, but it has a large amount of ground to cover before it even reaches the Improving quadrant. Think of it as a little less bearish than its peers in the Lagging quadrant. XLE has moved is staying in Weakening with a heading that is indecisive.
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: SELL as of 5/5/2022
SPY Daily Chart: It was a positive close, but still within the thin trading range that was established last week along the confirmation line of the bullish double-bottom and between the 20/50-day EMAs. Indicators remain positive suggesting an upside breakout could still happen.
Volume remains thin and relatively speaking, the VIX is overbought for this month on our inverted scale and despite a positive close, its reading moved higher. A higher VIX and dwindling Total Volume could suggest that buyers are too cautious of the bear market to invest.
Here is the latest recording:
Topic: DecisionPoint Trading Room
Start Time: Jun 6, 2022 09:00 AM
Meeting Recording Link HERE.
Access Passcode: June@6th
S&P 500 New 52-Week Highs/Lows: New Highs are expanding and the 10-DMA of the High-Low Differential has moved above zero.
Climax* Analysis: There was no climax today. It appears Friday's downside initiation climax didn't resolve downward which could mean higher prices. Bearish climaxes have had a tendency to follow through while bullish ones have not.
*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.
Market consolidation has offered these indicators the opportunity to decompress without the need for a decline. We still aren't happy they are declining, but it hasn't resulted in price damage. We still have 76% of stocks with rising momentum which is above our 70% bullish threshold.
Intermediate-Term Market Indicators: The intermediate-term market trend is DOWN and the condition is SOMEWHAT OVERBOUGHT.
We say that indicators are somewhat overbought. The ITBM/ITVM are more neutral than overbought. However, combined with overbought %PMO BUY signals, we get a somewhat overbought condition. That indicator has topped which is generally bearish for the market in the intermediate term.
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 short-term bias is bullish. There are far more stocks with price above their 20-day EMAs than there are stocks above their 50-day EMA. This suggests that the SCI will continue to rise.
The intermediate-term bias is neutral. The SCI is rising after an oversold crossover its signal line, but it remains at a very low 30.4%.
The long-term bias is still bearish. The GCI is stagnant at a bearish 38.4% and we do not see any more stocks with price above their 200-day EMA. In order to have a Golden Cross, you need price above both the 50/200-day EMAs.
CONCLUSION: The SPY's continued consolidation does concern us. We should've seen a breakout by now. However, the PMO, RSI and Stochastics are still positive and short-term indicators have been able to unwind without much price damage. Friday's downside initiation climax didn't result in lower prices which is not the current norm. As we often say in a bear market, oversold conditions are "thin ice" for an extended rally; however, we do believe the short-term foundation is still intact and are cautiously bullish moving into this week.
Erin is 35% exposed to the market.
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BITCOIN
Bitcoin rallied strongly but remains in a trading range between $27,500 and $32,500. We expect this trading range to become the new normal. Indicators have improved based on today's action, but we don't see an extended breakout rally ahead.
INTEREST RATES
Yields are climbing again after pulling back in May.
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 is poised to breakout to new 52-week highs. After the bearish head and shoulders pattern failed to produce an extended decline, price is rallying strongly suggesting internal strength is high. Stochastics are verifying increasing internal strength.
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 in consolidation mode and has formed a reverse flag in the short term. Price is bounded by the 20/50-day EMAs, but is trending slightly higher. Indicators are neutral and unhelpful. Expect more sideways movement.
GOLD
IT Trend Model: NEUTRAL as of 5/3/2022
LT Trend Model: BUY as of 1/12/2022
GLD Daily Chart: As expected Gold is also in consolidation mode given its ties to the Dollar. The chart is neutral for Gold as well, but it has the advantage of a possible bull flag.
GOLD Daily Chart: Indicators are slightly less favorable on Gold v. the Dollar. While the Dollar's indicators are mostly neutral, Gold's are mixed. The RSI and Stochastics are configured negatively, but the PMO is still rising which suggests that if the Dollar remains neutral, Gold is likely to break down.
GOLD MINERS Golden and Silver Cross Indexes: With Gold under pressure, this industry group is struggling again. Participation had begun to improve, but the recent decline has seen that evaporate. The short-term rising trend is still intact, but the RSI is negative and Stochastics are topping. We also note there is a "death cross" waiting in the wings (50/200-day EMA negative crossover). That suggests that the GCI on this group will continue its decline after topping below its signal line. Be careful with Miners.
CRUDE OIL (USO)
IT Trend Model: BUY as of 1/3/2022
LT Trend Model: BUY as of 3/9/2021
USO Daily Chart: Crude Oil was down today, but price remains above the March intraday high. Indicators are very positive. With today's decline, the RSI was able to move out of overbought territory. Stochastics are oscillating above 80 and the PMO is rising/not overbought.
We also note that volume was very low on today's decline.
BONDS (TLT)
IT Trend Model: NEUTRALas of 1/5/2022
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: With yields back on the rise, Bonds are struggling again. Support is arriving, but we doubt it will hold. The RSI is negative. The PMO is topping well below the zero line and Stochastics are falling in negative territory. Volume was higher on today's decline.
The 20-year yield is about to breakout to new highs which will obviously push TLT down further.
Good Luck & Good Trading!
Erin & 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.
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)
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