We'll be looking at the effects of the short-covering rally later in this report. For now, the Utilities Sector (XLU) 50-day EMA crossed up through the 200-day EMA (Golden Cross), generating an LT Trend Model BUY Signal. XLU price is still in a narrow, one-month trading range, so once again, we do not have great faith that the long-term trend has resolved to the upside. Certainly %Stocks above their 20/50/200-day EMAs are above our 50% threshold, but the Silver Cross Index tells us there is deterioration with fewer and fewer stocks keep their 20-day EMA above their 50-day EMA.
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 Market Index, Sector, and Industry Group 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: We believe that today's rally is a direct result of sentiment getting too bearish, and the strong open today turned into a giant short squeeze. Price did break from a short-term declining trend, but it remains in a trading range. We would say the double-top pattern was busted today on this breakout.
The PMO is still technically in decline. It held the same reading today, but was falling previously. The RSI did push above net neutral (50). Stochastics did turn up, but not in an impressive way. They could resume their decline should the market resume its decline.
SPY Weekly Chart: We are now seeing a symmetrical triangle on the weekly chart. These are continuation patterns and since the prior trend was down going into the pattern, we should expect a breakdown out of the pattern. The weekly PMO has stalled.
New 52-Week Highs/Lows: Considering the big rally, we should've seen more New Highs. Since we didn't, it tells us that there weren't enough stocks near new highs as a strong rally such as today's should've pushed New Highs above prior readings. The 10-DMA of the High-Low Differential is in decline which is not good for the market.
Climax Analysis: There were very strong, unanimous climax readings on the four relative indicators today, so we have an upside initiation climax. SPX Total Volume was solid, but not at blowoff levels. This tells us we could see some follow-through on Monday.
*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 NEUTRAL and the condition is NEUTRAL.
The STOs continued their decline in spite of the rally. Short-term weakness is still in play. While we do have over 50% of stocks above their 20-day EMA, Rising PMOs came up short of that bullish threshold.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
The ITBM and ITVM also continued to fall in spite of today's rally. This confirms declining short-term indicators. We have less than 50% with PMO BUY Signals which is below the bullish threshold.
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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 SECTORS ADDED! We have begun collecting SCI and GCI data for four new sectors: Biotechnology (IBB), Regional Banking (KRE), Retail (XRT), and Semiconductor (SMH).
This week the strongest IT Bias belongs to Real Estate (XLRE). This sector is showing intermediate-term strength given the addition to the SCI. The SCI gained more percentage points in XLRE than any other sector, index or industry groups we cover.
The weakest IT Bias goes to Semiconductors (SMH). It isn't that weak given the GCI gained this week. The problem for SMH is that price fell so much on the last decline that it pulled the SCI much lower. Since the IT Bias is determined by the SCI minus the GCI, the Bias came in very 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) still holds the top spot on the SCI table. No increases were noted this week, but the strong reading should keep it at the top of the table longer, particularly given this industry group is showing strength again.
Regional Banks (KRE) not surprisingly hold the lowest SCI value as that group has been decimated due to the banking crisis.
This table is sorted by GCI values. This gives a clear picture of strongest to weakest index/sector in terms of long-term participation.
Semiconductors (SMH) hold the highest GCI percentage and that percentage increased this week. This group isn't as weak as the IT Bias suggests. We would like to see the SCI gain strength before we get overly bullish on SMH.
Regional Banks (KRE) also hold the lowest GCI value. Given the continued decline this week it is surprising not see percentage points lost on this group. Of course you can't get much worse.
The following chart objectively shows the depth and trend of participation in three time frames.
The market bias is BEARISH.
The short-term bias is NEUTRAL.
The intermediate-term bias is BEARISH.
The long-term bias is BEARISH.
We consider the short-term bias to not be bearish only because the %Stocks above their 20/50-day EMAs are higher than the SCI percentage. However, the SCI is in decline after topping below its signal line so the intermediate term remains bearish. The GCI is falling and there are fewer %Stocks above their 50/200-day EMAs versus the GCI percentage so it is likely to continue its decline.
CONCLUSION: We believe today was a massive short squeeze. The upside initiation climax does suggest that this rally could see a bit of follow-through on Monday. A rally continuation will likely be abbreviated given STOs are now falling and the IT indicators are still declining. Despite the strong rally, the SPY did finish lower and we are looking for it to resume the decline that began in earnest this week. We see this is an opportunity to sell into strength. Defensive sectors primarily led the market this week, typically we see declines after these sectors lead.
Erin is 18% long, 7% short.
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BITCOIN
Bitcoin made headway this week, but is ultimately trading sideways. We have a symmetrical triangle which is a continuation pattern. That suggests an upside breakout ahead. Indicators are looking more healthy as well with the RSI now in positive territory and Stochastics rising. Even the PMO turned up.
This chart is to show where some of the support/resistance lines come from.
INTEREST RATES
The one-month yield is all over the place right now, most other yields are sitting on support or are in rising trends. If the market decline continues, we would expect Bonds to find more favor which will lead rates lower. That is good for Technology which did finish the highest on the 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
$TNX is forming a basing pattern likely in preparation for a move higher. However, a market decline is pushing investors into Bonds and that is preventing yields from rising strongly. The PMO topped beneath the zero line and the RSI is in negative territory. Stochastics ticked up, but not in a meaningful way. We see $TNX continuing a sideways trading range.
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 6.39 to 6.43.
BONDS (TLT)
IT Trend Model: SELL as of 2/21/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: Long Bonds didn't see much action, although the deep declines earlier in the week did propel them higher. Overall they remain in a trading range. We are beginning to think that long Bonds won't see as much love in a decline as short-term Bonds seem to be all the rage. Indicators are neutral at best so we would look for more sideways movement in the current trading range.
The longer-term picture does look encouraging given the large bullish ascending triangle (flat top, rising bottoms) visible on the chart. The pattern tells us to expect an upside breakout; however, conditions don't seem to be conducive for that breakout near-term.
TLT Weekly Chart: The weekly RSI moved negative, but just barely. The weekly PMO is still rising which bolsters the bullish ascending triangle and expected breakout.
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 formed a bearish engulfing candlestick today. Indicators are negative, including a PMO Crossover SELL Signal on tap. Support has held up, but it is especially vulnerable right now given indicators. We expect more trading range price movement with a likely breakdown in the cards next week.
UUP Weekly Chart: The weekly chart also favors a breakdown. The weekly PMO has just moved below the zero line and the weekly RSI is negative. We would look for the long-term rising trend to be broken to the downside.
GOLD
IT Trend Model: BUY as of 3/7/2023
LT Trend Model: BUY as of 1/5/2023
GOLD Daily Chart: Gold had another chance at a positive day given the Dollar was down, but instead it collapsed. Price does remain on the 20-day EMA, but this decline tipped the PMO over causing it to top beneath its signal line. While this is not good, a market decline will help Gold so we do expect it to breakout, not breakdown. It just looks like it needs another test of the bottom of the current trading range.
Discounts contracted to the lowest level we've seen. This implies traders are getting bullish on Gold. The problem will be if they get TOO bullish and we see premiums. Still a low discount can lead to decline so we must be careful.
GOLD Weekly Chart: Gold did very well this week, challenging new all-time highs. Sentiment doesn't look overly bullish in the grand scheme when we review the weekly chart. As noted above, we don't want to see premiums, that usually leads to declines. For now we will take these current sentiment readings.
GOLD MINERS Golden and Silver Cross Indexes: The market rally didn't affect Gold Miners much as they followed Gold down. We like this industry group and participation, but we need to be watchful as this could be the start of a bearish double-top formation. For now, the SCI is rising and the GCI is strong. Stochastics are still rising. We think this was an opportunity for price to move out of overbought territory. Stops can be set below April lows.
CRUDE OIL (USO)
IT Trend Model: SELL as of 5/3/2023
LT Trend Model: SELL as of 12/6/2022
USO Daily Chart: Crude Oil is clearly reversing. We were looking for a test of 58.00, but this reversal occurred before it reached that level. We find that bullish. Crude has been in a trading range for months and we don't think that will change. We won't trust this rally until the PMO turns up given price is still below 64.00 where there is resistance at January and February lows.
USO/$WTIC Weekly Chart: This makes sense as a reversal point given strong long-term support was reached. So far the rising bottoms trendline is holding up. The weekly PMO is not enlightening given the recent trading range. What we do know is that this level needs to be held as it could lead to some serious downside.
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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