Today the U.S. Dollar Index (UUP) 20-day EMA crossed up through the 50-day EMA (Silver Cross), generating an IT Trend Model "Silver Cross" BUY Signal. Remember, there was a Golden Cross (50-day EMA crossed above the 200-day EMA) on Friday. A frequent occurrence following EMA crossovers is a reaction in the opposite direction, which appears to be starting as of today. It doesn't necessarily mean that the rally is over, just that a 'pause to refresh' is due.
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.
CLICK HERE for Carl's annotated Sector charts.
THE MARKET (S&P 500)
IT Trend Model: BUY as of 1/12/2023
LT Trend Model: BUY as of 2/9/2023
SPY Daily Chart: In this morning's DecisionPoint Trading Room, we discussed the plethora of bearish filled black candlesticks that marked most of the charts today. It is formed when bulls push price higher and bears manage to pull it back below the open with a price that is higher than the prior day. It basically tells us that bears were ultimately in charge today.
The short-term rising trendline has been recaptured, as well as support at the 200-day EMA. The indicators are bearish. The RSI is negative and the PMO is in decline. Stochastics are attempting to rise, just like the VIX; but Stochastics are well below 20 and the VIX is below its moving average on the inverted scale, suggesting internal weakness.
Here is the latest recording:
S&P 500 New 52-Week Highs/Lows: New Highs/New Lows are negligible. The big problem is the 10-DMA of the High-Low Differential is in decline.
Climax* Analysis: There were no climax readings today. Friday's downside exhaustion climax played out as expected with the slight bearish bias of a filled black candlestick.
*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 DOWN and the condition is OVERSOLD.
The STO-V started to contract today and the STO-B was virtually unchanged. These indicators are very oversold and still have room to fall further, but we are getting close to reversal territory.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
The two primary indicators on this chart, the ITBM and ITVM are only in neutral territory. It would certainly bolster the bull market case if they were to reverse here as they did last time. %PMO BUY signals while low could get more oversold. However, with 14% holding rising momentum, the lowest it can go is 14%.
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 overall market bias is BEARISH.
We don't need to separate out the timeframes because all three timeframes show bearish biases. We have a very low number of stocks above their 20/50-day EMAs and no improvements are being made. The Silver Cross Index is falling and will continue to fall as long as we keep seeing fewer stocks above their 20/50-day EMAs. The Golden Cross Index rose slightly, but with far fewer stocks holding above their 50/200-day EMAs, it is going to be very difficult for it to rise much further.
CONCLUSION: The short-term rising trend and support at the 200-day EMA have been recaptured. Unfortunately, today we have a bearish filled black candlestick. These one-day patterns imply a decline the next day. Truth be told, all of our indicators suggest decline. However, many short-term indicators are reaching oversold territory; we will be on the lookout for a short-term reversal. For now the bearish bias has us playing defense.
Erin is 22% exposed.
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BITCOIN
Bitcoin is traveling within a large bearish rising wedge. The indicators are basically neutral with a flat PMO, RSI just above 50 and Stochastics turning up slightly. We would err toward the bearish chart pattern, but there is no reason price won't touch the top of the wedge one more time before breaking down so we would avoid inverse Bitcoin plays.
INTEREST RATES
Rates continue to trend higher after forming and in some cases executing bullish double-bottom chart patterns. The rising rate environment should continue this week.
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
After breaking out above the confirmation line of the bullish double-bottom, price is consolidating. Indicators are still bullish so we would expect the rally to get going again soon.
DOLLAR (UUP)
IT Trend Model: BUY as of 2/27/2023
LT Trend Model: BUY as of 2/24/2023
UUP Daily Chart: We discussed the new IT Silver Cross BUY signal in the opening. The current rising wedge is disappearing as a chart pattern as price is about to break out of the apex of the pattern. Indicators are positive so while we saw a decline today, we expect price to ultimately continue higher after brief consolidation.
GOLD
IT Trend Model: BUY as of 11/14/2022
LT Trend Model: BUY as of 1/5/2023
GLD Daily Chart: Gold is trickling lower. It is holding the 200-day EMA as support, but it won't likely to remain above it. The RSI is negative and the PMO is falling in negative territory. Stochastics are flatlining in negative territory.
GOLD Daily Chart: The inverse correlation of Gold and the Dollar is nearly a perfect -1.0. If we are bullish on the Dollar, we have to be bearish on Gold. It isn't hard to be bearish. Note the continued weakness of Gold to the Dollar. Investors are bearish on Gold as well given the high discounts on PHYS. Sentiment is being backed up by internal weakness on the chart. Gold will likely lose this support level.
GOLD MINERS Golden and Silver Cross Indexes: With Gold struggling, Gold Miners have been hit hard. Participation is abysmal, but we do note the Silver Cross Index has paused the decline. Price is now getting to strong support at 26.00, but knowing that Gold is likely to slide even further, we would avoid this group for now.
CRUDE OIL (USO)
IT Trend Model: SELL as of 2/2/2023
LT Trend Model: SELL as of 12/6/2022
USO Daily Chart: Crude Oil is in a trading range. Friday's giant bullish engulfing candlestick didn't resolve with a rally today as one would expect. The RSI and PMO don't inspire confidence, but Stochastics are rising. We would look for another test of the 200-day EMA. Support looks very sturdy between 62 and 64.
BONDS (TLT)
IT Trend Model: SELLas of 2/21/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: TLT isn't giving up. It is holding the longer-term rising bottoms trendline and has support near 99 (or the confirmation line of a large bearish double-top). We don't believe it will hold here. Yields look too bullish and TLT's indicators are bearish. The RSI is negative and the PMO is falling below the zero line. Stochastics have even topped below 20. Look for a breakdown.
Good Luck & Good Trading!
Erin Swenlin and 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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Price Momentum Oscillator (PMO)
Swenlin Trading Oscillators (STO-B and STO-V)
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