Today the NYSE Composite Index ($NYA) 50-day EMA crossed up through the 200-day EMA (Golden Cross), generating an LT Trend Model BUY Signal. This is the fourth 50/200-day EMA crossover within a year, the previous two occurring since the new year, and one of which occurred in March. Again we're looking at a new signal that has questionable veracity. There could be more upside ahead based on the PMO reaching above the zero line, but overhead resistance isn't that far away.
Also, the Health Care Sector (XLV) 50-day EMA crossed up through the 200-day EMA (Golden Cross), generating an LT Trend Model BUY Signal. This follows a new Silver Cross BUY Signal a few days ago. This is the sixth 50/200-day EMA crossover within a year, resulting from sideways price movement. Participation is improving and primary indicators are positive. Maybe this will be the time XLV breaks out of its trading range, but we'll have to wait and see.
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: The market was down slightly today. It gave us a higher low and a higher high so no damage was done to the short-term rising trend. Overhead resistance is nearing so this could be the time for a pullback or pause.
The RSI remains in positive territory above net neutral (50) and the PMO is still rising. The OBV is currently confirming the rally. Stochastics are above 80 and the VIX is below the upper Bollinger Band, but above its moving average. Those two indicators suggest there is internal strength.
SPY Weekly Chart: This week the SPY held its prior rising trend. The weekly RSI is positive and the weekly PMO is rising after a bullish bottom above the signal line. As noted above, overhead resistance is on its way at the 2023 top and the August 2022 top.
New 52-Week Highs/Lows: This is the first of many new negative divergences today. New Highs are contracting, but price highs are moving higher. The 10-DMA of the High-Low Differential is flat giving us the same reading for a third day in a row. It's acting toppy.
Climax Analysis: There were no climax readings today or at anytime this week.
*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.
These are the next negative divergences. We had already detected them on %Stocks > 20-day EMA and %PMOs Rising. Both the STOs topped today which is what sealed their negative divergences.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT.
The ITBM/ITVM are bullish as they are rising. We see negative divergences forming, but they won't be 'sealed' until the ITBM and ITVM turn lower. They could resolve this divergence should they move above prior highs. Still, it isn't a good look. We have the same amount of PMO BUY Signals as yesterday. What is unfortunate is that there are few PMOs Rising, so some of those BUY Signals are in jeopardy.
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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 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 belongs to Utilities (XLU) which saw vast improvement to both its SCI and GCI. Industrials hold the weakest IT Bias at -24. It has lost some long-term strength based on the GCI moving lower. It still saw an expansion in its SCI so the picture is more neutral than bearish.
This table is sorted by SCI values. This gives a clear picture of strongest to weakest index/sector in terms of intermediate-term participation.
Gold Miners (GDX) for obvious reasons holds the highest SCI percentage. Regional Banks (KRE) also for obvious reasons are the weakest.
This table is sorted by GCI values. This gives a clear picture of strongest to weakest index/sector in terms of long-term participation.
Long-term strength belongs to Semiconductors (SMH). Unfortunately, their SCI is contracting and no improvement was made to the GCI this week. This looks like a group that is fading, not gaining. Again, the weakest is Regional Banks (KRE).
The following chart objectively shows the depth and trend of participation in three time frames.
The market bias is BULLISH on all timeframes.
We have both the SCI and GCI rising and %Stocks above their 20/50/200-day EMAs is above 50%. However, the bias is beginning to deteriorate given the negative divergences that have appeared. We still see it as bullish given both the SCI and GCI are rising.
CONCLUSION: Negative divergences have appeared on the indicator charts for New Highs, participation and STOs. The negative divergences on the ITBM/ITVM aren't official until they top, but it seems likely. STOs dropped today, but IT indicators continue to confirm the bullish bias. With the appearance of more negative divergences, we think the market will begin consolidating or pulling back. This rally stayed in spite of falling STOs, but divergences are hard to overcome. We see the bullish bias deteriorating in the short term. It is once again time to be cautious. Protect your portfolios accordingly with hard stops.
Erin is 30% long, 2% short.
Calendar: Options expiration is next week. Expect low volatility Thursday and Friday.
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BITCOIN
Bitcoin saw an important breakout this week. 28,500 has posed a problem for Bitcoin given its strength (you can see on the longer-term daily chart below this one showing how many "touches" have occurred at that level. The indicators are positive with the exception of the RSI moving into overbought territory. However, we can see that when Bitcoin breaks out it can maintain overbought conditions for many trading days. That is likely to occur this time too.
This chart is to show where some of the support/resistance lines come from.
INTEREST RATES
Rates are on the rise again as we suspected after they reached strong support levels. Look for them to test earlier 2023 highs.
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 has formed an intermediate-term bullish falling wedge. Today it jumped higher, pushing the RSI above net neutral (50) and causing a PMO Crossover BUY Signal. Stochastics are rising in positive territory. As we stated in the yields section above, we believe rates are on the rise and should test overhead resistance at 2023 highs.
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.
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This week the 30-Year Fixed Rate fell from 6.28 to 6.27.
BONDS (TLT)
IT Trend Model: SELLas of 2/21/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: (Note: Carl has changed the DP Alert format slightly by bringing the BONDS section up to more appropriately follow the INTEREST RATE section.)
TLT broke its rising trend as we expected given the bullish rise in yields. Support lies at 104.00, but should it reach that level it will have formed a bearish double-top. This seems likely as the RSI has moved into negative territory, the PMO is nearing a Crossover SELL Signal and Stochastics are falling fast.
TLT Weekly Chart: A decline makes sense given the strong overhead resistance that TLT just hit. The weekly RSI has now dropped below net neutral (50). The weekly PMO is rising, but it is beginning to hesitate. TLT is vulnerable to a decline to 90, but for now we are only expecting it to pull back to 98.00.
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 rallied nicely today but still looks weak in our opinion. The RSI is negative and the PMO is still falling, as are Stochastics. The declining trend doesn't appear in jeopardy.
UUP Weekly Chart: UUP is holding its rising trend on the weekly chart, but given the bearish configuration of the weekly RSI and weekly PMO, we expect it to break down and moved to 27.00.
GOLD
IT Trend Model: BUY as of 3/7/2023
LT Trend Model: BUY as of 1/5/2023
GOLD Daily Chart: Gold dropped below its bearish rising wedge. The hope had been an upside breakout from a bearish pattern--no such luck. However, we don't see the chart as bearish. The RSI is positive and the PMO although topping is on a Crossover BUY Signal. $GVZ is above its moving average on the inverted scale suggesting internal strength is still available.
Stochastics are looking iffy and really, so is the PMO. We see a possible pullback to the February high, followed by a likely rally higher. It makes sense that Gold is stumbling a bit here given it is flirting with all-time highs. Discounts are moving higher, meaning traders are getting more bearish on Gold. They're not bearish enough to call for a reversal based on bearish sentiment, but it does suggest this pullback is likely.
GOLD Weekly Chart: The weekly RSI is getting overbought and generally this occurs at major tops. However, the weekly PMO is rising strongly. Of course it is also near-term overbought. What is likely to give Gold a softer landing is the weakness we see in the Dollar. We will look for a reversal to test the intermediate-term rising trend. We currently don't have reason to believe it will be more painful.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners (GDX) saw a small decline late last week, but it revved higher. This may not be the case this time around for GDX. Gold is ready to decline in the short term and that will add gravity to GDX. If the market also turns lower, it could retrace back to the 50-day EMA or at least below support 33.00. The good news is it will offer latecomers a possible entry. Of course if participation deteriorates too quickly, it will be best to leave this group alone. If you have Gold Mining positions, it is probably time to tighten stops.
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 was up today, but it stayed in what could be a reverse island formation. Overhead resistance is here. It managed to get above the February and March highs after some consolidation and we believe that is what is going to happen here. Overhead resistance is at 78.00 which would offer a nice profit.
Indicators remain positive so we see a breakout as highly likely.
USO/$WTIC Weekly Chart: The longer-term declining tops trendline was broken last week. This week saw follow-through. The weekly PMO has triggered a Crossover BUY Signal and the weekly RSI just moved into positive territory. This chart is more evidence that Crude isn't done rallying.
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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