Gold (GLD) has been strong this month and today its 50-day EMA crossed up through its 200-day EMA (Golden Cross), generating an LT Trend Model BUY Signal. You will note that a Silver Cross BUY is not far behind. We'll discuss Gold in its section.
Also today, the NYSE Composite ($NYA) and Materials Sector (XLB) 50-day EMAs crossed down through their 200-day EMAs (Death Cross), generating LT Trend Model SELL Signals.
Near-term support is arriving at the October low, but given the poor participation numbers and this new Death Cross, we would look for that level to be broken.
XLB has lost near-term support but is arriving near very strong support at 74. Be leery of participation numbers. Miners are doing extremely well and that is likely where all of the positive participation lies. Support should be tested and likely not successfully.
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/SPX SECTOR/INDUSTRY GROUP INDEXES
Change Today: 
Change for the Week:
CLICK HERE for Carl's annotated Market Index, Sector, and Industry Group charts.
THE MARKET (S&P 500)
IT Trend Model: NEUTRAL as of 9/22/2023
LT Trend Model: BUY as of 3/29/2023
SPY Daily Chart: Near-term support has been reached but the depth and voracity of this decline certainly suggests it will not hold. We have a new PMO Crossover SELL Signal. It topped well below the zero line which is very bearish. Volume has been strong during this decline.
The VIX closed once again beneath its lower Bollinger Band on the inverted scale. It hasn't resulted in higher prices so we won't look for them right now. Stochastics are very negative suggesting internal weakness.
SPY Weekly Chart: We have a bullish cup with handle pattern on the weekly chart, but the handle is forming a bearish descending triangle (flat bottoms, declining tops). It suggests a breakdown and the likelihood that this handle will continue forming.
New 52-Week Highs/Lows: New Lows didn't expand as we would expect and we still see a rising trend on New Lows. If this trend continues and we set a new low, that would set up a positive divergence. Since we don't have a price low established we will not read too much into this possible bullish setup.
Climax Analysis: There were strong, unanimous climax readings on the four relevant indicators today, giving us another downside exhaustion climax. This was confirmed by heavy SPX Total Volume, which was heavy, but we still don't think it qualifies as blowout volume. This means that we can probably expect more downside next week.
*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) gave us a good read on this last price top. We did expect a reversal because IT indicators were still rising. They no longer are. Participation continues to shrink and based on %Stocks > 20EMA and %PMOs Rising not sitting on oversold readings, we have to assume we have more downside to absorb.
Intermediate-Term Market Indicators: The intermediate-term market trend is DOWN and the condition is NEUTRAL.
IT indicators began to descend yesterday. The last time we saw these indicators turn down in negative territory, it preceded the last leg down. %PMO Crossover BUY Signals has topped and based on only 35% of stocks showing rising PMOs, that indicator will continue lower.
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PARTICIPATION: The following tables summarize participation for the major market indexes and sectors. The 1-Week Change columns inject a dynamic aspect to the presentation. There are three groups: Major Market Indexes, Miscellaneous Industry Groups, and the 11 S&P 500 Sectors.
Gold Miners (GDX) holds the highest IT Bias which makes sense as it is one of the few areas of the market enjoying a solid rally. You'll note that both the Silver Cross Index and Golden Cross Index gained significant percentage points this week.
The lowest IT Bias is -36 and it is owned by Semiconductors (SMH). This group led the charge out of the October low and they are now seeing significant internal weakness. It didn't lose any SCI points, but it did lose 4 percentage points on the GCI which is part of why it holds the lowest IT Bias.
This table is sorted by SCI values. This gives a clear picture of strongest to weakest index/sector in terms of intermediate-term participation.
Energy (XLE) holds the highest SCI value and it is holding onto it as it didn't see any losses. The group is benefiting from higher Crude Oil prices, but it is now seeing weakness as Crude pauses. We believe Crude will continue to rise and that should ease the weakness that is trying to seep in on the sector in general.
Real Estate (XLRE) moved Regional Banks (KRE) out of last place. What little participation it was seeing is disappearing quickly as it has lost 3 more percentage points on its SCI.
This table is sorted by GCI values. This gives a clear picture of strongest to weakest index/sector in terms of long-term participation.
XLE holds the highest GCI reading and it improved by five percentage points this week. Long-term strength is visible and building.
Regional Banks (KRE) are in last place. This is group that continues to look weak. It didn't lose any percentage points on the SCI or GCI, but readings are very low and suggest we stay away from this group.
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 market bias is BEARISH in all three timeframes.
%Stocks > 20/50EMAs shrank this week on the decline, pushing readings below our 50% bullish threshold. We had seen readings over 50% on stocks above their 20-day EMA this week, but that condition disappeared as soon as it was visible. The SCI ventured above its signal line this week, but couldn't hold above it, moving the IT Bias back to BEARISH in the intermediate term. The GCI continues to decline below its signal line.
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 items with highlighted borders indicate that the BIAS changed today.
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CONCLUSION: Volatility for options expiration did not meet the expectation of low volatility on Thursday and Friday, which were two solid down days. Internal weakness is a problem with participation numbers shrinking and Stochastics falling vertically. Our original supposition was that this decline would be brief and we would return to rally. Unfortunately, this week our IT indicators turned down, confirming already declining short-term indicators. This condition and the Bias have us bearish moving forward. It is time to reengage shorts and hedges. Stops should be applied and tightened on longs.
Erin is 20% long, 6% short.
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BITCOIN
Bitcoin broke out as indicators suggested it would. The RSI is now overbought so a digestion phase could follow this weekend. Given the strongly rising PMO and Stochastics, we believe that overhead resistance at 31500 could be tested soon.
This chart is to show where some of the support/resistance lines come from.
INTEREST RATES
Yields pulled back today but it did nothing to help the market. Rising trends are steep and in some cases parabolic so an easing on rates may materialize. Ultimately, we do expect them to hold rising trends and move higher after a brief pause.
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 a second parabolic formation on $TNX. Today's decline didn't do much damage if any on the short-term rising trend. It brought the RSI out of overbought territory setting it up to accommodate more upside. The PMO is rising and Stochastics are oscillating above 80. We could see a small digestion phase, but ultimately indicators are positive enough to look for the yield to rise higher.
MORTGAGE INTEREST RATES (30-Yr)**
**We watch the 30-Year Fixed Mortgage Interest Rate, because, for the most part, people buy homes based upon the maximum monthly payment they can afford. As rates rise, a fixed monthly payment will carry a smaller mortgage amount, which shuts many buyers out of the market, and potential sellers will experience pressure to lower prices (to no effect so far).
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This week the 30-Year Fixed Rate changed from 7.57 to 7.63.
BONDS (TLT)
IT Trend Model: SELL as of 5/16/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: TLT managed a rally today as the 20-year yield declined. The PMO is declining after topping well below the zero line. It is incredibly weak right now. We can't even see support on the daily or weekly charts. Given indicators are in decline and weak, we should expect TLT to move even lower.
TLT Weekly Chart: The weekly PMO topped beneath the zero line setting up this extended decline. It is diving lower and is not oversold yet giving us a bearish outlook in the intermediate term. The monthly chart is not included today, but we will tell you that the next line of support is at 80 followed by 60. 60 is not out of the question.
DOLLAR (UUP)
IT Trend Model: NEUTRAL as of 7/13/2023
LT Trend Model: BUY as of 5/25/2023
UUP Daily Chart: The Dollar has spent most of October churning and digesting the extended rally out of the July low. The PMO has been declining most of the month but price hasn't been damaged overall. We expect the Dollar to resume its rally. The RSI is positive and has been so price is not overbought. Stochastics are rising slightly in positive territory. Look for more churn with a rally to follow.
This looks very flag-like. Bull flags suggest that a breakout from the flag will result in a rally the height of the flagpole. We're not so sure about the length of the rally, but this flag does suggest higher prices to follow this consolidation phase.
UUP Weekly Chart: UUP is about to challenge resistance at 30.50. We see it having no problem reaching that level based on the bullish weekly PMO. This digestion phase is beginning to take the weekly RSI out of overbought territory which would prepare it for the rally to 30.50. We are the currency of choice and with wars disrupting the globe, the Dollar is staying strong and likely will continue to.
GOLD
IT Trend Model: NEUTRAL as of 8/2/2023
LT Trend Model: BUY as of 10/20/2023
GOLD Daily Chart: As noted in the opening, Gold has had an excellent month. We believe the next month will be good for Gold as well. The Golden Cross should be soon followed by a Silver Cross (20-day EMA > 50-day EMA). The PMO is back in positive territory. One issue is the overbought RSI, but we do expect that it will move even higher. Stochastics are oscillating above 80 suggesting internal strength. Gold doesn't look ready to cool yet.
We rallied above the September high today and it spent time above 2000. We expect the May top to be challenged. Discounts on PHYS remain very high suggesting investors are bearish on Gold still. Sentiment is contrarian so this is positive. We also note that Gold is relatively strong against the Dollar. The reverse correlation has eased giving Gold the opportunity to rally even as the Dollar rallies.
GOLD Weekly Chart: The weekly PMO has turned back up and the weekly RSI is in positive territory. We could see Gold set new all-time highs next month.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners were down slightly today and it did siphon off a few stocks above their 20-day EMA. However, readings are well above our bullish 50% thresholds and we saw a new LT BULLISH Bias trigger as the GCI moved above its signal line. The rally in Gold is helping. Look for GDX to break out next week.
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 rallied this week but saw a pullback today. It didn't compromise the rising trend and with war in the Middle East, Crude is likely to continue higher. Supplies haven't been replenished and production is still tight. Demand may've softened (that was given as the reason we had the big pullback starting in September), but war should keep Crude on a rising trend. Indicators are positive and confirm our bullish stance.
USO/$WTIC Weekly Chart: Crude prices may be high, but they haven't reached overhead resistance yet at the 2022 high. The weekly PMO has bottomed above the signal line which is especially bullish in the intermediate term.
Good Luck & Good Trading!
Erin Swenlin and 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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Watch the latest episode of DecisionPoint on StockCharts TV's YouTube channel here!
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.
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.