Today the Gold Miners ETF (GDX) 50-day EMA crossed down through the 200-day EMA (Death Cross), generating an LT Trend Model SELL Signal. As has been typical of most signals changes on other market and sector indexes we follow, price has been moving sideways for many months, and the moving averages are flat and close together. We do note that this is the first time in over a year that we've seen a "death cross" and it certainly solidifies this week's break below support.
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: Price broke down below the 50-day EMA today which shows follow-through on our bearish downside initiation climax that we got yesterday. Indicators continue to decline.
The next level of solid support doesn't arrive until about 425. The VIX is staying beneath its moving average on our inverted scale and Stochastics are below 20. Internal weakness is highly visible.
Here is the latest recording (8/14):
S&P 500 New 52-Week Highs/Lows: New Lows continue to expand as we would expect. The market was actually up to begin trading today so we expect that is why we did see some New Highs. The 10-DMA of the High-Low Differential is nearing the zero line. This has been an area near-term where reversals have occurred so we will want to keep an eye on that.
Climax* Analysis: There were three climax readings on the four eligible indicators giving a downside exhaustion climax. SPX Total Volume was light, which implies that today was no final exhaustion for this decline. Take this climax with a grain of salt.
*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 DOWN and the condition is NEUTRAL.
Swenlin Trading Oscillators (STOs) moved much lower on the day and could be considered somewhat oversold. However, these indicators have seen much lower readings and we expect that will occur again before we have a meaningful upside reversal. %PMOs Rising is definitely oversold, but it isn't out of the question that they could continue to see oversold readings as the decline continues.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
The ITBM has joined the ITVM in negative territory. These readings are neutral and nowhere near oversold. Given only 8% of stocks have rising momentum, %PMO BUY Signals is going to continue lower. That indicator is getting oversold.
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 market bias is BEARISH in all three timeframes.
We continue to see deterioration in participation of stocks above their 20/50/200-day EMAs. Short term, %Stocks > 20/50EMAs are both below the bullish 50% threshold and aren't nearly as oversold as they could be. The Silver Cross Index is declining quickly leaving the IT with a bearish bias. The Golden Cross Index moved lower today as we have been expecting. While %Stocks > 200EMA is not below the bullish 50% threshold, it is heading there more quickly now. We read the bias as bearish across the board.
CONCLUSION: The bearish downside initiation climax was followed immediately by a downside exhaustion climax today. We would not count on that bullish signal to result in higher prices. The indicators are far too bearish to expect a reversal. Some of our indicators are getting oversold, but all of them could move lower. Oversold conditions in the current market shouldn't be counted on to reverse this decline. Erin reviewed a slew of ETFs for ETF Day in DP Diamonds and none of them with the exception of inverses showed rising PMOs. This is out of hundreds. There is little place to hide, it's all about hedges right now.
Erin is 15% long, 4% short.
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BITCOIN
Bitcoin closed beneath support, confirming the bearish stance of the indicators. It isn't a decisive (3%) breakdown, but given the indicators we have to believe Bitcoin's decline will see followthrough.
INTEREST RATES
Yields are on the rise again and based on the strong push upward, we don't expect them to pull back yet.
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 about to test overhead resistance at the October top. The RSI is not overbought yet so a breakout isn't out of the question. The PMO and Stochastics are bullish so we would prepare for a breakout."
BONDS (TLT)
IT Trend Model: SELL as of 5/16/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: TLT is again in free fall. Indicators remain highly negative so we don't see relief in sight.
There really isn't any longer-term support at this price level so we do see lower prices ahead.
DOLLAR (UUP)
IT Trend Model: BUY as of 8/3/2023
LT Trend Model: BUY as of 5/25/2023
UUP Daily Chart: The Dollar had a solid breakout above overhead resistance today. The indicators remain very positive so more upside is likely. The rising trend is holding easily.
GOLD
IT Trend Model: NEUTRAL as of 8/2/2023
LT Trend Model: BUY as of 1/5/2023
GLD Daily Chart: GLD has hit support, but given the weak performance of Gold to the Dollar and negative indicators, this support level isn't likely to hold here.
GOLD Daily Chart: $GOLD hasn't reached support, but the PMO SELL Signal combined with a negative RSI suggest that it will be tested and likely will fail there. The inverse correlation with the Dollar is gaining again and with a bullish Dollar, Gold is likely to take more punishment. We are watching carefully for a reversal given the market's bearish outlook, but so far the supposed "safe haven" of Gold hasn't come to fruition.
GOLD MINERS Golden and Silver Cross Indexes: We discussed Gold Miners in the opening today. As follow on, Participation is near zero and the Golden Cross Index has much further to unwind. The Silver Cross Index is beginning to reach oversold territory, but with no heartbeat in participation, we don't see this as a reversal point. Support at February/March lows is arriving and that is where we will look for a possible reversal. Of course we will want to see some expansion in participation as it nears that level.
CRUDE OIL (USO)
IT Trend Model: BUY as of 7/12/2023
LT Trend Model: BUY as of 8/3/2023
USO Daily Chart: USO lost two lines of support today, the April high and the 20-day EMA. We don't think this decline is over and would look for Energy (XLE) to finally move bearish. The overbought PMO Crossover SELL Signal looks ominous, as do Stochastics which are accelerating lower. The next line of defense for USO is the mid-July high and 50-day EMA. It looks strong, but this big shift in momentum could take price lower.
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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