Gold has been consolidating (until today), but Silver (SLV) has been rallying mostly non-stop. Today it broke out strongly on very high volume. The chart looks good, but it does suggest that Silver needs to cool given the RSI is so overbought right now. The PMO is still rising strongly, but it too is getting overbought. Stochastics look great as they tell us SLV has internal strength. A pullback toward prior resistance makes sense right now and it would give you a possible entry. In DecisionPoint Diamonds Erin always lists a stop level on her charts and she has added one here too. It is set a little over halfway down into the prior congestion area from December/January.
The weekly chart certainly suggests price will continue higher given the positive weekly RSI and relatively new weekly PMO Crossover BUY Signal. The StockCharts Technical Rank (SCTR) is top tier at 98.8%. It tells us that based on the trend and condition of SLV in the intermediate to long terms is better than 98.8% of all ETFs. Keep an eye on this "other metal".
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 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 steep rising trend of the current rally was compromised today. Support is nearby at about 405.
Indicators didn't lose their bullish characteristics. The RSI is still situated in positive territory above net neutral (50). The PMO is rising. Internal strength is clearly visible as Stochastics are well above 80 and the VIX is well above its moving average on the inverted scale.
Here is the latest recording 4/3:
S&P 500 New 52-Week Highs/Lows: New Highs still show a negative divergence with price and given we topped today, it is particularly worrisome. On the positive side, the 10-DMA of the High-Low Differential is still rising in positive territory.
Climax* Analysis: Today, of the four relevant indicators, there were two climax readings and two near to climax, so we're going to call a downside initiation climax. Expect the decline to continue.
*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 OVERBOUGHT.
STOs topped in overbought territory. When they top, it usually precedes a decline. Participation thinned out considerably as far as %Stocks > 20-day EMA. We also saw a contraction on rising momentum. Both indicators are above our 50% bullish threshold.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL to OVERBOUGHT.
IT indicators are still rising which does soften the blow of the STOs topping. We do see a high likelihood that %PMO BUY Signals will begin contracting since %PMOs Rising is less than %PMO BUY Signals. That indicator is overbought so a small pullback would be welcome.
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.
Yesterday's comments still apply:
The market bias is BULLISH in all three timeframes.
"We have more than 50% of stocks above all three key moving averages which gives us a bullish short-term bias. The SCI had a positive crossover and is rising, so although it isn't above 50% yet, it is moving in the right direction on a positive crossover its signal line. The GCI isn't over the 50% bullish threshold yet either, but it has turned back up and given there are far more stocks above both their 50/200-day EMAs than those with Golden Crosses, we would expect the GCI to continue rising bullishly."
CONCLUSION: We will learn even more about this rally when we see how price reacts to topping STOs and a downside initiation climax. If this is a solid bull market, we shouldn't see that much price damage on the heels of these bearish signals. The PMO and the ITBM/ITVM are still rising which suggests any decline would be short-term in nature. Keep your stops in play. When/if those indicators top, we will have to assume that the decline will be more than just a mechanical pullback off a strong rally.
Erin is 28% long, 2% short.
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BITCOIN
Yesterday's comments still apply:
"Bitcoin is forming a double-top now. It won't be confirmed until price drops below the last March low. The chart looks very negative with the exception of the RSI which is still comfortably within positive territory. However, the very ugly PMO and diving Stochastics suggest the double-top will execute. A decline to 24,000 would likely follow which is about where the minimum downside target of the double-top would be."
INTEREST RATES
After promising bounces of support, long-term rates are falling again. Horizontal support at 3.4 is nearing for long-term rates. Given the bearish 10-year yield chart in the following section, that level is highly vulnerable.
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 closed beneath support at 3.4%. We've seen it flirt with this level before and survive, but the indicators are highly negative so we don't think it will recover. The RSI is negative and moving lower. The PMO topped beneath its signal line which is especially bearish and Stochastics look terrible as they drop vertically.
DOLLAR (UUP)
IT Trend Model: NEUTRAL as of 3/28/2023
LT Trend Model: BUY as of 2/24/2023
UUP Daily Chart: The Dollar broke below support today and based on the negative indicators, we believe it will move even lower and test the February low.
GOLD
IT Trend Model: BUY as of 3/7/2023
LT Trend Model: BUY as of 1/5/2023
GLD Daily Chart: We've identified a new rising trend in the short term. Gold rallied strongly. The Dollar certainly contributed, but it was only down -0.40% while Gold was up over +1.8%. This tells us Gold is internally strong. The indicators suggest follow-through on today's rally. The RSI is positive and the PMO is accelerating its ascent.
GOLD Daily Chart: We note that discounts popped higher today. Although Gold rallied strongly, PHYS sold at a discount that was much higher than we've seen in recent days. This actually suggests that Gold sentiment just got a bit more bearish. Sentiment is contrarian so big discounts are generally Gold's friend.
GOLD Weekly Chart: We're going to sneak a weekly chart in here to emphasize the gold is approaching all-time highs.
GOLD MINERS Golden and Silver Cross Indexes: Instead of pausing at overhead resistance, GDX obliterated it, trading above it all day and closing near intraday highs. With Gold looking strong and the Dollar weak, Gold Miners should continue to benefit. They already have incredible participation suggesting this rally isn't over. We would look for a pause or pullback to this breakout point as the RSI is now overbought.
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 finished unchanged, basically digesting yesterday's gap up rally. Indicators remain strong and the RSI is not overbought yet. We expect a rally when this pause is over.
72.50 is the strongest level of resistance ahead, but given yesterday's strong breakaway gap and technicals we pointed out above, we would expect it to be broken and a test of 77.50 to follow.
BONDS (TLT)
IT Trend Model: BUY as of 3/17/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: Yesterday's comments still apply:
"The short-term declining trend on TLT has been broken to the upside. We've been fairly negative on Bonds, but a review of the yield charts suggest they could break out here. Indicators are beginning to firm up with a very bullish PMO bottom above the signal line and Stochastics rising into positive territory."
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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DecisionPoint Sector Chart List
Price Momentum Oscillator (PMO)
Swenlin Trading Oscillators (STO-B and STO-V)
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