Today the Consumer Staples Sector (XLP) 20-day EMA crossed up through the 50-day EMA (Silver Cross), generating an IT Trend Model BUY Signal. This is the sixth 20/50EMA crossover in the last year, so I would say that the outlook is slightly bullish.
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: As happened yesterday, the market made another new 52-week high today, and it was confirmed by solid SPX Total Volume.
Here is the latest recording:
S&P 500 New 52-Week Highs/Lows: New Highs contracted again today, preserving the negative divergence versus SPY.
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 OVERBOUGHT. The STOs continued to fall, so we're still looking for a pullback.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT. Still looking for a pullback in this time frame.
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 SCI and GCI continue higher. Stocks Above Their 20/50/200 EMAs ticked up. Bottom line, the market is overbought.
CONCLUSION: Short-term and intermediate-term negative divergences persist, but SPX Total Volume was solid once again, so conviction of investors is not fading. Yesterday I speculated that we may not see any corrective action until the new, all-time highs are set, and I'm liking that idea more and more. They are not far away, and it could easily happen before next Wednesday, just in time for the Fed announcement.
Erin is 50% long, 0% short.
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BITCOIN
Bitcoin continues to drift away (downward) from the overhead resistance.
INTEREST RATES
Rates have been rising within the trading range since the May lows.
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
We have proposed a saucer formation, and now we wait for the handle to form, or for the saucer to break down.
BONDS (TLT)
IT Trend Model: SELL as of 5/16/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: There was a strong breakout today, establishing a rising trend from this month's lows.
Price remains within an seven-month trading range.
DOLLAR (UUP)
IT Trend Model: NEUTRAL as of 7/13/2023
LT Trend Model: BUY as of 5/25/2023
UUP Daily Chart: Today UUP moved up and out of the bearish reverse flag formation.
GOLD
IT Trend Model: NEUTRAL as of 6/8/2023
LT Trend Model: BUY as of 1/5/2023
GLD Daily Chart: There was no follow through from yesterday's breakout. Still looking bullish.
GOLD Daily Chart: The May top is the all-time high for $GOLD, and it is about 5.5% away from exceeding that high. We think that will happen soon. It is also interesting to note that sentiment has still not caught up with the rising trend, which is a good thing.
GOLD MINERS Golden and Silver Cross Indexes: Like gold, GDX saw no follow through from yesterday's breakout.
CRUDE OIL (USO)
IT Trend Model: BUY as of 7/12/2023
LT Trend Model: SELL as of 12/6/2022
USO Daily Chart: There was some follow through from yesterday's bounce off the rising trend line, but it couldn't hold.
We'll be looking for a break above the horizontal overhead resistance, as well as the top of the triangle.
Good Luck & Good Trading!
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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