In the last two weeks there have been three signal changes for the Industrial Sector (XLI). The moving averages are very close together, and price keeps whipping above and below them causing the 20-day EMA to whipsaw back and forth. Today the 20-day EMA crossed up through the 50-day EMA (Silver Cross), generating an IT Trend Model "Silver Cross" BUY Signal. We will have low confidence in this signal until we see signs that price will be departing the trading range to the upside.
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: Price spent a moment above overhead resistance but ultimately closed beneath forming a bearish shooting star candlestick. The PMO has made the turn and is currently on a BUY Signal.
The VIX is still hugging the upper Bollinger Band on our inverted scale, staying in overbought territory. Typically we see a price pause or decline when the VIX reaches the upper Band. Stochastics have shot vertically higher and now is above 80 where we like it. Internal strength is visible while Stochastics remain above 80 and the VIX remains over its moving average.
Here is the latest recording:
S&P 500 New 52-Week Highs/Lows: New Highs expanded on today's decline, but we remind you that these are intraday readings. The 10-DMA of the High-Low Differential is picking up speed to the upside which is bullish.
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.
Swenlin Trading Oscillators (STOs) are still rising which is good definitely a good sign for the short term. However, we did see a small contraction in participation.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT.
Both the ITBM/ITVM continued to rise today, confirming rising STOs. However, as we noted in this morning's DecisionPoint Trading Room, they can see some bouncing around as price pauses or attempts a rally. Still, we can't discount the rise completely.
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 short-term bias is BULLISH.
The intermediate-term bias is NEUTRAL.
The long-term bias is NEUTRAL.
The short-term bias can now be read as bullish in the short term given we have participation above the 50% threshold for %Stocks above their 20/50-day EMAs. The intermediate term is neutral as the Silver Cross Index (SCI) turned up today right on our 50% bullish threshold. If participation can remain at current levels, the SCI should continue rising. An upside crossover on the SCI would be more convincing. The long-term bias is Neutral as the Golden Cross Index (GCI) is rising, but participation of stocks above their 200-day EMA is lower than the GCI reading.
CONCLUSION: Ultimately, we believe the market is in pause mode as traders wait and wonder what the FOMC's rate hike will be or whether there won't be one at all. While indicators are beginning to firm up for a bullish phase, we believe there is risk that the market will resume the prior decline, particularly if the Fed stays true to hiking rates. Until the announcement is made, it would be wise to continue to play defense. Our sense is that if the market starts a decline, it will see strong follow-through and we should protect against that possibility. A continuation rally this week will confirm currently bullish indicators and would see us pivot.
Erin is 28% long, 4% short.
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BITCOIN
Bitcoin indicators did an about-face as price tumbled today. The rising trend is currently intact, but given the PMO top beneath the signal line, we don't expect that to last. The RSI has moved into negative territory below net neutral (50) and Stochastics are in decline. We expect more downside but acknowledge strong support is available at the late March lows.
INTEREST RATES
Rates resumed their rallies. A drop in the market will likely change this as Bonds will find favor which would bring rates lower.
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 rallied strongly today. The trading range between 3.2 and 3.7 is intact, but given the PMO bottom above the signal line, newly positive RSI and rising Stochastics, we think an upside breakout above 3.7 is likely (barring a large market decline).
BONDS (TLT)
IT Trend Model: BUY as of 3/17/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: Bonds are holding onto their trading range with support being tested today. Indicators are looking less impressive than last week. If the market doesn't reverse course to the downside, expect a move to 98.00.
There is still a large ascending triangle formation (flat top, rising bottoms) on the longer-term daily chart. These are bullish chart patterns and imply an upside breakout. A break below the rising trend line will bust the pattern.
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 is finally breaking out in a more meaningful way, stringing together three days of rally. The RSI has now moved back into positive territory and the PMO is rising on a Crossover BUY Signal. Stochastics look very strong. We expect more follow-through on this current rally.
The longer-term daily chart reveals a large symmetrical triangle. These are continuation patterns. The break from the triangle is determined by the prior trend. In the case of the Dollar, it is up. An upside breakout should be expected.
GOLD
IT Trend Model: BUY as of 3/7/2023
LT Trend Model: BUY as of 1/5/2023
GLD Daily Chart: Gold is in a short-term declining trend and we believe that will continue based on a stronger Dollar emerging. The indicators support this given the PMO SELL signal and now negative RSI.
GOLD Daily Chart: We don't have today's discount/premium reading, but we do note that discounts are expanding somewhat, suggesting that traders are more bearish on the metal. Unfortunately, they are far from bearish enough to look for a reversal based on sentiment. This price level looks strong, but we would prepare for another trip to the bottom of the rising trend channel.
GOLD MINERS Golden and Silver Cross Indexes: With Gold putting downward pressure on Gold Miners, GDX has seen consolidation above support. We continue to see participation of stocks above their 20-day EMA contract. The Silver Cross Index has had a negative crossover and is picking up speed to the downside. We expect a breakdown, particularly if the market shows weakness this week.
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 remains in a short-term declining trend and based on the indicators, we expect that to continue. The RSI topped in negative territory and the PMO continues lower on a Crossover SELL signal. Stochastics give us some hope as they are now rising, but they remain in extraordinarily weak territory below 20. We would prepare for a test of 62.00.
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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Price Momentum Oscillator (PMO)
Swenlin Trading Oscillators (STO-B and STO-V)
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