Today the Industrials Sector (XLI) 20-day EMA crossed down through the 50-day EMA (Dark Cross), generating an IT Trend Model NEUTRAL Signal. XLI has been rising most of the year shown, so this signal change could be a warning that XLI will be giving back some of the gains. We have also identified a large rounded top to go with the weak participation readings.
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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MARKET/INDUSTRY GROUPS/SECTOR INDEXES
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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: The big news would be the PMO whipsaw BUY Signal today. Price has established a tight trading range so we should not be surprised if this rally fades when that level is reached.
The VIX its lows for the year so investors are awfully complacent right now as price pushes toward the end of a symmetrical triangle. We do recognize that with the VIX above its moving average on the inverted scale and Stochastics shifting higher in positive territory that internal strength is there.
Here is the latest recording from 9/11:
S&P 500 New 52-Week Highs/Lows: The 10-DMA of the High-Low Differential continued its decline, but New Highs did expand as we would expect on a strong rally.
Climax* Analysis: Today there were unanimous climax readings on the four relevant indicators, which gives us an upside initiation climax.
*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 NEUTRAL.
It appears that the Swenlin Trading Oscillators were onto something when they reversed higher a few days ago. What concerns us is the continued bleed on %Stocks > 20EMA and %PMOs Rising which really shouldn't have happened on a rally of this magnitude.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
The ITBM and ITVM are now confirming rising STOs, but we saw no movement in %PMO Crossover BUY Signals.
PARTICIPATION: 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 bias is BEARISH in all three time frames.
Another rally and we see that %Stocks > 20/50EMAs were lower again today. %Stocks > 20/50EMAs are below our bullish 50% threshold. Intermediate term, the Silver Cross Index did move higher today. It doesn't erase the bearish bias in the intermediate term as it hasn't had a crossover, but this is positive news. The GCI continues lower so we see the long-term bias as bearish.
BIAS Assessment: The following table expresses the current BIAS of various price indexes based upon the relationship of the Silver Cross Index to its 10-day EMA (intermediate-term), and of the Golden Cross Index to its 20-day EMA (long-term). When the Index is above the EMA it is bullish, and it is bearish when the Index is below the EMA. The BIAS does not imply that any particular action should be taken. It is information to be used in the decision process.
The S&P 100 (OEF) ETF, Real Estate Sector (XLRE), and Utilities Sector (XLU) Silver Cross Indexes crossed up through their 10-day EMAs shifting their intermediate-term BIAS to bullish.
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CONCLUSION: More 'good news/bad news' today. Our primary short-term and intermediate-term indicators are rising now, but participation shrunk on today's rally. We should've seen an expansion. Yet, we have a bullish upside initiation climax and a new PMO Crossover BUY Signal. We would look for another rally tomorrow, but until we see the requisite participation expansion, there is a good chance we will see price stymied at overhead resistance. Expanding your portfolio carries extra risk given this rally could be short-lived.
Erin is 40% long, 0% short.
Calendar: Tomorrow is options expiration. It an end-of-quarter expiration, so we'll see very high SPX Total Volume--not to be attributed to other factors. Volatility this week has been low, and it should continue that way through tomorrow.
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BITCOIN
Bitcoin is attempting an upside breakout from its trading range. The indicators have improved greatly today with the RSI and Stochastics moving into positive territory, and the PMO seeing more margin between it and its signal line. The Death Cross of the 50/200-day EMAs could be avoided should price get above the 200-day EMA.
INTEREST RATES
Yields inched higher on the day, but most remain below their prior tops.
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're starting to eye what could turn into a bearish double top on $TNX. The reverse island formation is still a bearish prospect as well. The PMO is on a Crossover SELL Signal and not making an attempt to move higher. Stochastics appear ready to top below 80. We see a bearish bias on $TNX.
BONDS (TLT)
IT Trend Model: SELL as of 5/16/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: We've been patiently waiting for a second shoulder on what looked like a bullish reverse head and shoulders pattern, but it isn't happening so we are about ready to scrap the pattern. The RSI and Stochastics are negative, but the PMO is still clinging to a Crossover BUY Signal. More than likely we will see more sideways movement.
DOLLAR (UUP)
IT Trend Model: BUY as of 8/3/2023
LT Trend Model: BUY as of 5/25/2023
UUP Daily Chart: So much for the short-term declining trend. The Dollar is incredibly strong right now. This has put the RSI into overbought territory, but given the strength of the Dollar, we don't think it is going to pose a problem. The PMO has surged (bottomed) above its signal line and Stochastics are oscillating above 80 indicating internal strength. The Dollar will likely continue its rise.
GOLD
IT Trend Model: NEUTRAL as of 8/2/2023
LT Trend Model: BUY as of 1/5/2023
GLD Daily Chart: Gold rallied today, but also broke below support at the 200-day EMA. The declining trend is firmly intact. We will likely see a PMO Crossover SELL Signal on GLD tomorrow barring an incredible rally.
GOLD Daily Chart: $GOLD lost its PMO Crossover BUY Signal today. The RSI is negative and relative strength against an already soaring Dollar is declining. Look for support to be tested at 1900 soon.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners rallied strongly today. Unfortunately we did not see expansion in %Stocks > 20/50EMAs. Still, given the bullish PMO and newly positive RSI, the outlook is good. Stochastics aren't reflecting internal strength so we'd like to see them react when we get a rally like we had today. We are cautiously optimistic about GDX.
CRUDE OIL (USO)
IT Trend Model: BUY as of 7/12/2023
LT Trend Model: BUY as of 8/3/2023
USO Daily Chart: The technicals are very bullish for USO with the exception of the very overbought RSI. We expect overbought conditions to persist given the strong bullish bias on the chart and production cuts. We expect higher prices to continue.
Good Luck & Good Trading!
Erin Swenlin and Carl Swenlin
Technical Analysis is a windsock, not a crystal ball. --Carl Swenlin
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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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