Buy signal continues to decline | decision point

all golden cross A buy signal is generated when the 50-day EMA of a price index crosses the 200-day EMA. DecisionPoint Golden Cross Index (GCI) It represents the percentage of stocks in the price index showing the Golden Cross BUY signal and is expressed as follows: long term strength.

all silver cross A buy signal is generated when the 20-day EMA of a price index crosses the 50-day EMA. DecisionPoint Silver Cross Index (SCI) It represents the percentage of stocks in a price index that have a Silver Cross BUY signal, expressed as: mid term strength.

Let’s focus on the Silver Cross Index in the chart below. We can see a decline from a high of around 90% in January to around 72%, creating a negative divergence for the SPY. To lose a Silver Cross BUY, the price must move below the 20-day EMA and 50-day EMA. By referring to the displayed chart panel %Stocks > 20EMA and 50EMA, 62% of stocks are currently below both EMAs, meaning SCI could fall another 10%. As the SCI continues to worsen, downward pressure will be placed on the S&P 500.

The long-term outlook for the Golden Cross Index is less pressing. GCI is currently at 73% and % Stocks > 200EMA is at 69%, which is not a serious potential deterioration level.

conclusion: The rally is weakening as the proportion of stocks with a Silver Cross BUY signal continues to deteriorate. If prices continue to rise, it means that the influence of large-cap stocks is growing, so there is no guarantee that prices will eventually fall. Nonetheless, this is not a healthy condition and requires extra caution.

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These are market, sector and industry group indices with individual Silver Cross and Golden Cross indices.

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