Today the Energy Sector (XLE) 20-day EMA crossed up through the 50-day EMA (Silver Cross), generating an IT Trend Model BUY Signal. Energy is once again approaching the all-time highs set in November, but it is in a one-year trading range. Also, this the sixth 20/50-day EMA crossover in a year. A move to overhead resistance seems likely given the strength of participation and strongly rising Silver Cross Index.
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 3/30/2023
LT Trend Model: BUY as of 3/29/2023
SPY Daily Chart: The market soared today on inflation reports. Again, investors are willing to believe the Fed will pause rising rates. We think that is heavy wishful thinking, but so goes market participants. The short-term rising trend is holding up. This appears to be a rally after a period of consolidation.
Indicators are very positive. The RSI is above net neutral (50), is rising and is not overbought. The PMO is now accelerating its ascent on a BUY Signal. Stochastics have turned up above 80 and the VIX is comfortably above its moving average and below the upper Bollinger Band on the inverted scale suggesting internal strength is available.
Here is the latest recording:
S&P 500 New 52-Week Highs/Lows: New Highs expanded but we didn't have as many as yesterday. This is troublesome given the voracity of today's rally.
Climax* Analysis: There were no climax readings today.
*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.
Both STOs saw strong upside movement. This is excellent as the STO-V has been in decline. We do see negative divergences with %Stocks above their 20-day EMA and %PMOs Rising. Could be an indication of problems ahead.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT.
Intermediate-term indicators are confirming the rising short-term indicators. We have 84% with rising PMOs so we should see %PMO BUY Signals expand a bit more.
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 is BULLISH in all three timeframes:
The bias remains bullish. We have over 50% of stocks above their 20/50/200-day EMAs. Those percentages are all greater than the Silver Cross Index and Golden Cross Index percentages which implies they will likely continue moving higher.
CONCLUSION: We now have every indicator rising, all of them. The problems that exist are few. New Highs didn't expand on today's rally and we have a few negative divergences. Those should not be ignored, but overall the bullish bias is solid. Rotation has moved back into Energy (XLE), Materials (XLB) and Healthcare (XLV) with some interesting action in Communications Services (XLC). Portfolio positions should be safe with stops. Careful expansion of your portfolio with hard stops can be considered.
Erin is 30% long, 2% short.
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BITCOIN
Yesterday's comments still apply:
"Bitcoin paused after an important breakout above overhead resistance. The PMO is about to trigger a Crossover BUY Signal. The RSI has moved out of overbought territory on today's decline which is good. Stochastics are rising above 80. The indicators favor a resumption of the current rally."
INTEREST RATES
Yields were mixed. Most have reached support zones so we expect them to rise.
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 making its way back to the top of the bullish falling wedge. Indicators are begin to gel with the RSI rising and the PMO turning back up. Stochastics have been rising strongly. We are looking for an upside breakout, if not this time, the next time it tests that declining tops trendline that forms the top of the wedge.
DOLLAR (UUP)
IT Trend Model: NEUTRAL as of 3/28/2023
LT Trend Model: SELL as of 4/12/2023
UUP Daily Chart: UUP dropped below support as we expected given the PMO top beneath the signal line and negative RSI. Stochastics look terrible as they head to territory below 20. Next up is a test of support at 27.25. We expect it won't hold.
The breakdown of the rising trend in the intermediate-term happened as we expected. Strong support does lie at 27.25, but if we don't see any improvement in the indicators, that probably will not hold either.
GOLD
IT Trend Model: BUY as of 3/7/2023
LT Trend Model: BUY as of 1/5/2023
GLD Daily Chart: Gold is rising strongly, but is stuck in a bearish rising wedge. The Dollar looks very weak so we have a very good chance that we will get an upside breakout. We often say that a breakout from a bearish pattern is especially bullish. Indicators suggest this will happen given the positive RSI, PMO bottom above the signal line and Stochastics moving back above 80 today.
GOLD Daily Chart: On $GOLD the upside breakout is occurring. It isn't decisive (3%+ breakout), but it looks pretty good as we've noted how positive the indicators look. A weak Dollar is helpful, but Gold is also showing relative strength against the Dollar. Gold should continue to rise further even at all-time highs.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners are teflon right now. Nothing bearish in the market or Gold has kept them down and with Gold looking especially bullish, we expect they will continue even higher. Participation is incredibly strong with the Silver Cross Index now at 100%. Any pullback would be good right now as it would take the RSI out of overbought territory and provide a good entry. At this rate, we are beginning to wonder if we'll see that.
CRUDE OIL (USO)
IT Trend Model: BUY as of 4/10/2023
LT Trend Model: SELL as of 12/6/2022
USO Daily Chart: Crude Oil is forming another price island, making it vulnerable to a reverse island (gap down). However, we think this is a decline based on overhead resistance being met. Indicators are very positive. The RSI is not overbought and the PMO is rising strongly. Stochastics are rising above 80. Even $OVX suggests more upside as it is above its moving average and below the upper Bollinger Band on the inverted scale.
BONDS (TLT)
IT Trend Model: BUY as of 3/17/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: TLT is captive to the 20-year yield. Today that worked against it as the 20-year yield rallied. It is still holding a short-term rising trend, but the PMO has topped and looks ready to trigger a Crossover SELL Signal. Additionally, Stochastics and the RSI are falling. We think this rising trend will be broken and TLT will make its way back toward support at 99.00.
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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