We wrote about the negative indicator charts and in particular, the topping Intermediate-Term Breadth Momentum oscillator (ITBM) and Intermediate-Term Volume Momentum oscillator (ITVM) which were particularly ominous yesterday. Today we noticed that the Nasdaq Composite and NYSE Silver Cross Indexes had topped. We aren't seeing the same on the SPX, yet. This indicator can 'twitch', but we think the Silver Cross Index on the Nasdaq isn't a 'twitch'. It could be for the NYSE. In any case, it just further evidence that the market is breaking down internally.
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
For Today:
For the Week:
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.
For Today: 
For the Week:
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: Options expiration week resulted in a very narrow trading range at the end of the week. It is a tendency that we anticipate, and it did not disappoint. Price is breaking down from the bearish rising wedge. Price was unable to close within as it did yesterday. It was an up day, but we had a lower low and a lower high. We checked and the PMO is still declining.
The RSI is comfortably positive above net neutral (50), but Stochastics have dipped below 80 and are traveling almost vertically lower. The VIX hasn't moved much so we still read it as overbought on our inverted scale.
SPY Weekly Chart: The market was nearly unchanged this week. Price managed to hold onto the rising bottoms trendline, but we note that the weekly PMO is looking 'toppy'.
New 52-Week Highs/Lows: New Highs contracted slightly and New Lows were the same as yesterday. One of the few positive indicators would be the 10-DMA of the High-Low Differential. It is rising again, but it is extremely overbought in the near term.
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 moved lower on the day and participation continued to thin. We still have bullish 50%+ readings, but %Stocks > 20-day EMA and %PMOs Rising are declining. Negative divergences are visible on all four indicators.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT.
Both the ITBM and ITVM continued lower after topping yesterday. A quick review of history on this chart and you know that longer-term declines generally arrive when these indicators top in overbought territory. We will continue to see %PMO BUY Signals decline because currently there are only 62% with rising PMOs.
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PARTICIPATION and BIAS Assessment: The following table 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 following table summarizes participation for the major market indexes and sectors. The 1-Week Change columns inject a dynamic aspect to the presentation. There are three groups: Major Market Indexes, Miscellaneous Sectors, and the eleven S&P 500 Sectors.
NEW INDUSTRY GROUPS ADDED! We have begun collecting SCI and GCI data for four new sectors: Biotechnology (IBB), Regional Banking (KRE), Retail (XRT), and Semiconductor (SMH).
The strongest IT Bias goes to Utilities (XLU). This sector is on the move along with Consumer Staples (XLP). Both are defensive groups. The last to perform before a market decline are defensive sectors. While we see these defensive areas as pockets of strength, we also know that a serious decline will likely take all sectors lower. The weakest IT bias is Industrials (XLI). Don't get too wrapped up with the negative bias, this group's Silver Cross Index gained six percentage points this week.
This table is sorted by SCI values. This gives a clear picture of strongest to weakest index/sector in terms of intermediate-term participation.
The highest SCI value belongs to Gold Miners (GDX). While its GCI gained four percentage points, we have seen some serious price deterioration on GDX. So far, however, it hasn't taken a toll on the SCI.
The lowest SCI value belongs to Regional Banks (KRE). No surprises here as that industry continues to struggle with bankruptcies etc.
This table is sorted by GCI values. This gives a clear picture of strongest to weakest index/sector in terms of long-term participation.
The strongest GCI percentage goes to Semiconductors (SMH). This is leftover strength from their meteoric rise out of the October lows. However, notice now that they have weakened, the SCI value lost 12 points! That trend will likely continue.
The weakest GCI percentage is Regional Banks (KRE) again. Not only is it the weakest, it lost one more percentage point this week.
The following chart objectively shows the depth and trend of participation in three time frames.
The market bias is NEUTRAL.
The short-term bias is NEUTRAL.
The intermediate-term bias is NEUTRAL but deteriorating.
The long-term bias is BULLISH but deteriorating.
The technicals put the market in neutral. We have nearly the same percentages of stocks above their 50/200-day EMAs as we have both silver crosses and golden crosses. There are negative divergences on all participation indicators. The SCI and GCI are technically rising, but given the deterioration of participation, we would look at the bias as more neutral than bullish.
CONCLUSION: The market has topped this week amidst negative divergences from last Friday, declining short- and intermediate-term indicators. Defensive sectors are leading the market (this usually precedes a decline). With intermediate-term indicators confirming declining short-term indicators, we are looking for a correction, not an easy pullback. As Erin discussed in today's Diamond Mine trading room, expanding your portfolio is risky business right now. Consider paring exposure, hedging or shorting. If you see topping PMOs and Stochastics on your position's charts, it is probably a good time to book profits. Shedding losers is wise. If they aren't performing after the market's rally out of October lows, it is highly doubtful they'll perform when the market declines.
Erin is 30% long, 4% short.
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BITCOIN
Bitcoin lost support this week and is diving lower. The indicators started to deteriorate while price was on support. The indicators are now going from bad to worse. The RSI is negative and the PMO is declining quickly on an overbought SELL signal. Stochastics have dipped below 20. We can see support is near at the late March low, but we would look for price to test the February top which is a bit deeper than that level.
This chart is to show where some of the support/resistance lines come from.
INTEREST RATES
Yields rose on the week with the exception of the one-month yield which nosedived. We expect the current rising trends to stay intact next 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 hitting overhead resistance, $TNX pulled back. It resumed the rally today. This looks very much like a bull flag. Indicators are positive with the RSI above net neutral (50) and the PMO rising on an oversold BUY Signal. Stochastics are also oscillating above 80. We expect a breakout next week.
MORTGAGE INTEREST RATES (30-Yr)**
**We watch the 30-Year Fixed Mortgage Interest Rate, because, for the most part, people buy homes based upon the maximum monthly payment they can afford. As rates rise, a fixed monthly payment will carry a smaller mortgage amount. As buying power has been shrinking, home prices have come under pressure.
--
This week the 30-Year Fixed Rate changed from 6.27 to 6.39.
BONDS (TLT)
IT Trend Model: SELL as of 2/21/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: We are looking for yields to continue rising which will pressure Bonds even lower. Stochastics and the RSI tell me to look for a breakdown of the rising bottoms trendline. The PMO is declining. Indicators certainly favor a breakdown not a breakout.
There is a very large ascending triangle on the one-year daily chart (rising bottoms, flat top). These are bullish formations and do suggest an upside breakout. We think that pattern will bust. A bearish resolution of a bullish chart pattern would be considered especially bearish. That breakdown may not occur next week simply because support at the late March low is holding.
TLT Weekly Chart: Price broke out from the steep declining tops trendline, but that breakout hasn't amounted to more than a sideways trading range. The weekly RSI is negative, but the weekly PMO is still rising. Overhead resistance looks very sturdy--another reason we are bearish on Bonds. Of course, we must say that if the market takes a turn for the worse, Bonds may become a safe haven. We'll watch indicators closely.
DOLLAR (UUP)
IT Trend Model: NEUTRAL as of 3/28/2023
LT Trend Model: SELL as of 4/12/2023
UUP Daily Chart: The Dollar was stagnant this week, but ultimately it did close slightly higher. The declining trend channel is still intact, but indicators are looking up just a bit. The PMO is about to trigger a Crossover BUY Signal and Stochastics have turned up in positive territory. The RSI may be negative, but having the PMO and Stochastics configured bullishly suggests the Dollar will rise.
There is a giant symmetrical triangle that has formed on the one-year daily chart. These patterns can break in either direction, but typically they break in the direction of the prior trend. In the Dollar's case, the prior trend was UP so we should expect and upside breakout.
UUP Weekly Chart: This is an excellent place for a rebound as it comes right off the long-term rising trend. If we didn't just look at the daily chart, we might look for a breakdown here given the negative weekly RSI and weekly PMO. But we did just see the charts above and they look bullish enough to expect higher prices.
GOLD
IT Trend Model: BUY as of 3/7/2023
LT Trend Model: BUY as of 1/5/2023
GOLD Daily Chart: Gold looks especially toppy right now. Price is beginning to form a rounded top. We've watched Gold compromise rising trendline after rising trendline. Today it continued with that theme, breaking below another rising trendline. The indicators look terrible. The RSI is technically in positive territory, but its falling. The PMO and Stochastics are very negatively configured. We ultimately expect Gold to test the intermediate-term rising bottoms trendline drawn from the November low.
We note that $GVZ penetrated the upper Bollinger Band on the inverted scale. Like the VIX, upside punctures typically lead to lower prices. We would say that a declining market could change the character of Gold as it is a common safe haven in down markets. As always we will keep you posted.
GOLD Weekly Chart: The weekly chart for Gold shows a declining weekly RSI. The weekly PMO is still rising, but has decelerated somewhat. This chart suggests to us that we will see another test of the rising bottoms trendline. Notice that discounts expanded this week. That means investors are bearish on Gold, but not bearish enough to look for a reversal based on sentiment.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners pulled back this week and landed on support. Given the deterioration of the RSI, PMO SELL Signal on tap as shrinking participation, we believe GDX will breakdown here. Gold looks bearish and so does the market. That will not help Gold Miners.
CRUDE OIL (USO)
IT Trend Model: BUY as of 4/10/2023
LT Trend Model: SELL as of 12/6/2022
USO Daily Chart: USO dove lower this week after unsuccessfully testing overhead resistance. We had favored a breakout last week, but the indicators turned south quickly, so we had to change our position. The RSI is positive, but the PMO and Stochastics look terrible. Today price formed a bearish filled black candlestick. Look for price to test the bottom of the current trading range around 62.00.
USO/$WTIC Weekly Chart: The weekly chart is that helpful. Price has been trickling lower since mid-2022. This has put the RSI right on net neutral (50) and flattened the PMO. It did trigger a Crossover BUY Signal, but given it is traveling sideways with price, we don't see it as significant.
Good Luck & Good Trading!
Erin Swenlin And Carl Swenlin
Technical Analysis is a windsock, not a crystal ball. --Carl Swenlin
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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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