If you've been wondering about the listless market, remember that the Fed meets next week, so we have another "Wait for the Fed" week to endure. Rather than a continued upward thrust in the market, we should be prepared for a 'trickle up' or even some consolidation.
___
Today the Russell 2000 20-day EMA crossed up through the 50-day EMA (Silver Cross), generating an IT Trend Model BUY Signal. This looks like a good signal given the rising PMO above the zero line. Things could get a bit listless as we begin to hit overhead resistance at the late 2022 tops.
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 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: You'll notice in the table above that it was the defensive sectors that were in the red today. This generally speaks well for market health in general, although the more aggressive sectors of Technology and Communication Services didn't see much upside. The PMO and RSI are cruising in positive territory.
The VIX punctured the upper Bollinger Band on our inverted scale again and as we always say that generally means a decline over the next day or two. One of the reasons we moved into the bullish camp would be the upside breakout from a bearish rising wedge. A bullish conclusion to a bearish chart pattern is especially bullish.
Here is the latest recording:
S&P 500 New 52-Week Highs/Lows: The negative divergence persists between New Highs and price highs.
Climax* Analysis: There was only one climax reading on the relevant indicators today, and SPX Total Volume was well under the one-year daily average, so it was not a climax day. It does speak to a broader market rally given Net A-D Volume on the NYSE was so positive.
*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 SOMEWHAT OVERBOUGHT.
Our STOs were in agreement today as both rose. Participation is healthy although it didn't see much expansion today. Over three quarters of the SPX have rising momentum which should keep the rally going or at least prevent a major decline.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
Both the ITBM/ITVM are confirming the rising short-term indicators. We now have over 50% with PMO Crossover BUY Signals.
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 breaking declining trends. In particular, %Stocks > 20/50-day EMAs have moved above our 50% bullish threshold. While we have a Bull Shift on the Silver Cross Index, it is still below our 50% bullish threshold so we are leaving the intermediate term as "Neutral". The Golden Cross Index is still declining so we are leaving the long-term bias as Neutral even though we have over 50% of stocks above their 50-day EMAs.
CONCLUSION: The market didn't lose much ground yesterday and it resumed the rally today. Participation is more robust with over three quarters of the SPX holding rising PMOs. The bias is also shifting bullish. Yesterday's Bull Shift on the Silver Cross Index suggests more upside will be available in the intermediate term. Broader participation reduces our risk when stock picking so exposure can be expanded. Shorts can be released.
Erin is 20% long, 0% short.
Have you subscribed the DecisionPoint Diamonds yet? DP does the work for you by providing handpicked stocks/ETFs from exclusive DP scans! Add it with a discount! Contact support@decisionpoint.com for more information!
BITCOIN
After breaking down, Bitcoin is bouncing off support. This hasn't changed the composition of the bearish rounded top. The PMO is on a SELL Signal and Stochastics/RSI are in negative territory. We don't expect this rally to amount to much.
INTEREST RATES
Rates were mixed today, but the majority did move higher. Exceptions would be long-term yields which were slightly lower on the day.
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
Yesterday's comments still apply:
"$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: We now have a bullish cup with handle pattern on TLT. Indicators are still flat and unresponsive, but the price pattern suggests a breakout above the 50-day EMA.
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 was up on the day, but ultimately it failed at overhead resistance; hence the bearish filled black candlestick. Indicators still look healthy so we are expecting an upside breakout.
GOLD
IT Trend Model: BUY as of 3/7/2023
LT Trend Model: BUY as of 1/5/2023
GLD Daily Chart: Yesterday's comments still apply:
"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: The 20-day EMA is incredibly close to a Dark Cross with the 50-day EMA. Price is still holding above the 50-day EMA. That will prevent the Dark Cross. However, with price topping before testing the top of the bearish rising wedge, it suggests that the pattern is about to execute with a breakdown below the rising bottoms trendline.
GOLD MINERS Golden and Silver Cross Indexes: Participation hasn't seen any real improvement and given the flat indicators, we are looking for a test of the 200-day EMA.
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 was down on the day but formed a bullish hollow red candlestick. This means that price closed lower on the day, but it closed above the open. Crude is stumbling, but ultimately the indicators are on its side. $OVX is rising and is now above the moving average on the inverted scale. That is bullish.
Good Luck & Good Trading!
Erin Swenlin and Carl Swenlin
Technical Analysis is a windsock, not a crystal ball. --Carl Swenlin
(c) Copyright 2023 DecisionPoint.com
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.
Helpful DecisionPoint Links:
DecisionPoint Alert Chart List
DecisionPoint Golden Cross/Silver Cross Index Chart List
DecisionPoint Sector Chart List
Price Momentum Oscillator (PMO)
Swenlin Trading Oscillators (STO-B and STO-V)
DecisionPoint is not a registered investment advisor. Investment and trading decisions are solely your responsibility. DecisionPoint newsletters, blogs or website materials should NOT be interpreted as a recommendation or solicitation to buy or sell any security or to take any specific action.