We noticed that the SPY saw a strange intraday high today. The quote system is carrying the wrong high for SPY today. We found the error on all websites, but it does seem to be getting fixed across data providers.
Here is the 10-minute chart with the correct high on today's price movement.
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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: In spite of a second day of rally, the Price Momentum Oscillator (PMO) continues lower. It managed to avoid a Crossover SELL Signal, but we don't think it will be so lucky tomorrow. Should we see a strong rally, that signal could be avoided.
The VIX remains above its moving average on the inverted scale, but Stochastics have hit territory below net neutral (50). What strikes us is the lack of concern as reflected in the VIX staying above its moving average and holding a very low reading considering the pullback in the market. Sentiment is contrarian so a complacent VIX reading may be a problem.
Here is the latest recording (6/26):
S&P 500 New 52-Week Highs/Lows: New Highs contracted but are still quite high in comparison to prior readings even at the August top. Many times when this indicator gets on the overbought side, we do see downside movement. The 10-DMA of the High-Low Differential topped today.
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 OVERSOLD.
Swenlin Trading Oscillators (STOs) are still rising, but we noticed that unlike the prior two days, participation thinned somewhat. %Stocks > 20-day EMA and %PMOs Rising are still above our 50% bullish threshold, but we don't like to see those indicators fall on a rally day.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT.
The ITBM and ITVM are now both in decline and not confirming rising STOs. We would say that both the ITBM and ITVM are overbought. %PMO Crossover BUY Signals contracted and now has topped beneath the signal line which generally poses problems.
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.
Yesterday's comments still apply:
"The market bias is BULLISH in all three timeframes.
The bias in the short and intermediate terms moved back to bullish. We see expanding participation of stocks above their 20/50-day EMAs and percentages are above our 50% bullish threshold. The Silver Cross Index turned back up today and we have a higher percentage of stocks above their 20/50-day EMAs in comparison to the Silver Cross Index so we should see it continue higher. It is also reading above 50%. The long-term components are above the 50% bullish threshold as is the Golden Cross Index."
CONCLUSION: Indicators were not in full agreement today, but we did get the rally we expected off yesterday's upside initiation climax. Participation thinned on today's rally and we saw a contraction in IT indicators. While we could see more follow-through on this rally, the nearing PMO Crossover SELL Signal has us playing defense. The bias is bullish, but if participation thins much more, that will change. For now, the Silver Cross Index is rising, as are STOs so we should see a bit more follow-through on the rally of the past two days. Past that, we are expecting the market to start churning back toward support at 425.00 for the SPY.
Erin is 55% long, 0% short.
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BITCOIN
Bitcoin is struggling against overhead resistance at 31,000. If you look at the one-year chart below the five-month chart, you'll see that this is a very strong resistance line. It isn't surprising to see price staying below resistance. The RSI and Stochastics are still bullish, but we note the PMO is beginning to decelerate. We expect more sideways movement. This could be a bull flag, but we need to make sure the PMO doesn't begin dropping.
INTEREST RATES
Long-term rates are seeing declining trends while shorter-term rates continue higher in rising trends.
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 in the process of forming a bearish Adam & Eve double-top which suggests to us that rates will continue lower and Bonds will find favor. The RSI is positive, but likely to drop into negative territory very soon. The PMO is falling on a Crossover SELL Signal and Stochastics are very bearish.
BONDS (TLT)
IT Trend Model: SELL as of 5/16/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: We don't have the breakout on TLT yet, but given the bullish indicators, we do expect that upside breakout. After a glance at the bearish $TNX chart, we do expect rates as a whole to begin inching lower, that will get us the breakout. The RSI is positive, rising and not overbought. The PMO just hit positive territory on an oversold Crossover BUY Signal. Stochastics have moved above 80. We are watching the 20/50-day EMAs closely as they are nearing an IT Trend Model "Silver Cross" BUY Signal.
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 is churning but is angling higher. The RSI is positive and the PMO turned back up today along with Stochastics. The chart is looking more bullish, but we do expect more churn with a likely 'melt up'.
Erin is hoping the intermediate-term bearish rising wedge doesn't fulfill given her upcoming trip to Europe in a few weeks. Given price did turn back up before testing the rising bottoms trendline, an upside breakout isn't out of the question. However, based on Erin's prior experience, the Dollar usually takes a beating before she leaves.
GOLD
IT Trend Model: NEUTRAL as of 6/8/2023
LT Trend Model: BUY as of 1/5/2023
GLD Daily Chart: Gold fell back into its inverse correlation with the Dollar today, although it was down less than the Dollar was up. Looking at the current correlation, the Dollar and Gold have decoupled. This means what happens to Gold isn't as tied to what happens with the Dollar.
GOLD Daily Chart: Support is nearing at the 200-day EMA. Indicators need to improve if we want to see Gold hold that level. Currently they are all very bearish. We note that the correlation of $GOLD to the Dollar is very positive currently. We noticed that the last time Gold became positively correlated to the Dollar, it came before a rally so this could work to Gold's benefit. For now, look for lower prices.
GOLD MINERS Golden and Silver Cross Indexes: Yesterday's comments still apply:
"Gold Miners are holding support, but languishing given the deterioration of the internals. We now have zero Gold Miners with price above the 20/50-day EMAs. The Golden Cross Index does hold a greater than 50% reading but given the minuscule amount of stocks their 200-day EMA and no stocks above their 50-day EMA, it is going to accelerate lower."
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 performed the best today on our Market Summary. It has caused the PMO to "surge" above its signal line (bottom above the signal line). Stochastics also turned up with a higher low. Price is nearing the bottom of the trading range so a reversal may be on the way.
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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