A Bull Shift is when the Silver Cross Index or Golden Cross Index have positive crossovers their signal lines. It usually marks a turning point when we see these flags. We'll discuss the Bull Shift in our section on Bias.
Today, the Dow Industrials (DIA) triggered a Price Momentum Oscillator (PMO) Crossover BUY Signal. The SP500, SP100 and Nasdaq 100 have been on Crossover BUY Signals for some time. The Dow has been relegated to a mostly sideways trading range. The upper part of this range is arriving soon, but the new Silver Cross (20-day EMA above 50-day EMA) seems to suggest a breakout this time around. Participation has expanded past our 50% bullish threshold and the Silver Cross Index for DIA saw a Bull Shift (Silver Cross Index positive crossover its signal line) on the last rally. Participation will need to hold up if we are to see an upside breakout at a place it has failed multiple times before.
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 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: After yesterday's upside exhaustion climax we weren't surprised to see the market pause. It did form a higher high and higher low so the rising trend is still easily intact.
The VIX has punctured the upper Bollinger Band on the inverted scale and that typically leads to a day or two of decline. The RSI and PMO look healthy. Stochastics are above 80 suggesting internal strength.
Here is the latest recording:
S&P 500 New 52-Week Highs/Lows: We still see a negative divergence between New Highs and price tops that suggest a break in the rising trend ahead.
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.
STOs were mixed today with the STO-B rising and the STO-V declining slightly. It is very good to see that participation numbers were not slashed with today's decline. 63% remain above their 20-day EMA and we have over 75% of the index holding rising momentum. This can keep a rally afloat.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
Both the ITBM/ITVM are rising to at least confirm the STO-B's advance. %PMO Crossover BUY Signal just hit our 50% bullish threshold. Given 76% have rising momentum, this indicator will continue to rise.
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 market bias is BULLISH.
The intermediate-term market bias is NEUTRAL.
The long-term market bias is NEUTRAL.
The Bias chart moved bullish in a hurry as we see participation of stocks above their 20/50/200-day EMAs expanding quickly now. In particular, %Stocks > 20-day EMAs has moved above our 50% bullish threshold. The others have not which is why we leave the IT and LT as "Neutral" not BULLISH.
The Bull Shift of the Silver Cross Index is denoted by the SCI crossing above its signal line. You'll note that these shifts generally get you back in the market in time to catch the market rally. We've missed the mega-caps rally, but now we are seeing broader participation that should keep the market moving higher.
CONCLUSION: Friday's upside exhaustion climax fulfilled with a day of decline. Today's Bull Shift on the Silver Cross Index marks a change in character for the market. Now that we see broader participation in the short term, we've moved out market bias to BULLISH in the short term. The VIX is overbought so another day of consolidation/decline wouldn't be surprising, but as long as participation holds or reaches above our 50% bullish thresholds, we would expect the rally to resume. Erin is lightening up her shorts and adding a few "Diamonds in the Rough".
Erin is 18% long, 4% short.
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BITCOIN
The indicators turned south on Bitcoin and the rounded top was never overcome. Price is doing as expected with a breakdown. Support is being tested, but unfortunately the indicators are looking even more negative, suggesting that this decline will continue.
INTEREST RATES
Rates dropped slightly today. The yield curve remains highly inverted.
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 bouncing off the 50-day EMA. This bottom well above support within a bullish falling wedge suggests and upside breakout ahead. The PMO has surged above its signal line (bottom above the signal line) and the RSI is positive. Stochastics are attempting to reverse, but until then we might see $TNX test of the 50-day EMA again.
BONDS (TLT)
IT Trend Model: SELL as of 5/16/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: The 20-year yield was up today and that pressured TLT lower. We do have what looks like a short-term cup with handle and the PMO is working on an upside crossover. However, the RSI and Stochastics leave us wanting. We'd prepare for TLT to test the most recent low.
DOLLAR (UUP)
IT Trend Model: BUY as of 5/18/2023
LT Trend Model: SELL as of 4/12/2023
UUP Daily Chart: The Dollar fell on the day, but formed a higher high and a higher low, so the picture isn't completely negative. The indicators are flat and unresponsive right now so we expect more tapping on overhead resistance.
GOLD
IT Trend Model: BUY as of 3/7/2023
LT Trend Model: BUY as of 1/5/2023
GLD Daily Chart: We have a bearish rounded top dominating the GLD chart. This suggests a downside resolution which would mean a loss of this support level. Indicators are flat, but leaning bearish so we would look for this level to be broken.
GOLD Daily Chart: With price topping before testing the top of the bearish rising wedge. This suggests to us that the pattern is about to execute with a breakdown below the rising bottoms trendline.
GOLD MINERS Golden and Silver Cross Indexes: We believe that Gold is going to break down and that will not help Gold Miners. The 20/50-day EMAs are holding as overhead resistance and indicators really aren't firming up the way we would like. The PMO is flat, the RSI negative and participation is slim at best. Stochastics do suggest this rally will catch on, but we would wait for participation to improve before taking the risk.
CRUDE OIL (USO)
IT Trend Model: SELL as of 5/3/2023
LT Trend Model: SELL as of 12/6/2022
USO Daily Chart: The news is that OPEC+ will be cutting production and that seemed to help the rally. Ultimately, USO did close lower. Indicators are looking up. The PMO and Stochastics look particularly encouraging. Less production leads to higher prices so we do expect the rally in Crude to continue.
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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