Today the Financial Sector (XLF) 50-day EMA crossed up through the 200-day EMA (Golden Cross), generating an LT Trend Model BUY Signal. It is called a "Golden Cross" because it implies bullishness in the long term, but this is the third 50/200EMA crossover in a year, so we can't say that the lack of direction has truly been resolved.
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: SPY put in a top today. Because of options expiration this week, we were looking for relatively low volatility, but it was a mixed bag, with the Dow Industrials up +0.50% and the Nasdaq 100 down -2.31%. Basically, the big tech stocks finally turned down.
Here is the latest recording:
S&P 500 New 52-Week Highs/Lows: New Highs contracted again today in sympathy with prices.
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. With the STOs continuing downward, we continue to look for a market decline in this time frame.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT. The ITBM and ITVM haven't topped yet, but they are due.
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 indicators have been dropping for days, and we finally saw a price decline. Intermediate-term indicators are overbought and should top soon. The capitulation of the big tech stocks may be the final straw for this rally.
Erin is 50% long, 0% short.
Calendar: Tomorrow is the last trading day before options expiration, so we expect low volatility today and tomorrow. In that regard, it was a mixed bag today with the Dow up and the NDX down. If big tech continues to suffer tomorrow, high volatility may be what we see. It is not an end-of-quarter expiration, so volume should be normal.
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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
Still watching the saucer to see if we get a handle. I'm not sure if there is a rule, but I'll be looking for the "handle" to form somewhere above the overhead resistance line at 41.00.
BONDS (TLT)
IT Trend Model: SELL as of 5/16/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: A rising trend was established yesterday, and it broke down today.
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: Yesterday's rally extended today. Note that there is the potential for an island reversal to the upside.
GOLD
IT Trend Model: NEUTRAL as of 6/8/2023
LT Trend Model: BUY as of 1/5/2023
GLD Daily Chart: GLD is consolidating the recent breakout.
GOLD Daily Chart: My earlier comments are still valid: 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: GDX broke down today. All is not lost, but this undermines the bullish outlook for gold.
CRUDE OIL (USO)
IT Trend Model: BUY as of 7/12/2023
LT Trend Model: SELL as of 12/6/2022
USO Daily Chart: The short-term rising trend was tested today.
We're still 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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