Gold and Gold Miners are rallying strongly, but there is another shiny metal that shouldn't be overlooked. The Silver ETF (SLV) has a chart that looks very familiar. The Gold Miners (GDX) chart that we cover every market day looks nearly identical.
There is a textbook reverse head and shoulders that was confirmed this week with a breakout above the neckline of the pattern. The minimum upside target of the pattern would coincidentally put price on resistance at the May/June highs. The RSI is positive and not overbought. The PMO is rising strongly after an especially bullish bottom above the signal line. The OBV is confirming the breakout with a breakout of its own. Stochastics have reached above 80 and are still rising. It is also outperforming the SPY right now. We are bullish on Gold and Gold Miners. You can add Silver to the list.
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
For Friday:
For the week:
SECTORS
Each S&P 500 Index component stock is assigned to one, and only 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.
For Today: 
For the Week:
RRG® Chart: XLB and XLK are the strongest sectors as they are both traveling in the bullish northeast direction within the Leading quadrant. Other sectors to keep an eye on are XLC, XLI and XLP. All three have a bullish northeast heading. XLY has fallen from favor as it has entered Weakening. XLV has the most negative configuration, as it moves southwest into Lagging. While XLU, XLF and XLE are lagging, they are beginning to turn back around toward Improving.
RRG® charts show you the relative strength and momentum for a group of stocks. Stocks with strong relative strength and momentum appear in the green Leading quadrant. As relative momentum fades, they typically move into the yellow Weakening quadrant. If relative strength then fades, they move into the red Lagging quadrant. Finally, when momentum starts to pick up again, they shift into the blue Improving quadrant.
CLICK HERE for an animated version of the RRG chart.
CLICK HERE for Carl's annotated Sector charts.
THE MARKET (S&P 500)
IT Trend Model: BUY as of 10/18/2021
LT Trend Model: BUY as of 6/8/2020
SPY Daily Chart: The short-term bearish rising wedge was confirmed on Wednesday's decline. However, price is already firming up again. The PMO which had been declining has now turned back up.
The RSI is now out of overbought territory and is rising again. Stochastics are attempting to bottom in positive territory above net neutral (50), but they haven't turned up in a meaningful way yet. We haven't annotated it, but technically we have what could be a bull flag that could be executing to the upside as the pattern implies. However, we're not ready to go "all in" on this late-week reversal.
SPY Weekly Chart: There is a long-term bearish rising wedge on the weekly chart and price is pulling back after hitting the top of the pattern. The weekly RSI is currently overbought and declining, but in contrast, there is still positive momentum given the PMO is rising toward its signal line.
PARTICIPATION: The following chart uses different methodologies for objectively showing the depth and trend of participation for intermediate- and long-term time frames.
- The Silver Cross Index (SCI) shows the percentage of SPX stocks on IT Trend Model BUY signals (20-EMA > 50-EMA).
- The Golden Cross Index (GCI) shows the percentage of SPX stocks on LT Trend Model BUY signals (50-EMA > 200-EMA).
Both the SCI and GCI topped this week, but as of today, the SCI is rising again. Although the GCI is falling, it is still carrying a healthy 82.6% reading.
New 52-Week Highs/Lows: While the market closed slightly higher yesterday, New Highs contracted. Today we got confirmation of this current rebound with an expansion in New Highs.
Climax Analysis: No climaxes this week as Volume Ratios remained well-below the 3.0 threshold. The VIX punctured the lower Bollinger Band on our inverted scale Wednesday and Thursday. Typically we will see a very short-term upside reversal when this happens. It appears that has come to fruition. Total Volume was higher today vs. yesterday, but both volume readings are well-below average, likely due to the Veteran's Day holiday yesterday.
*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 either initiation or exhaustion.
Short-Term Market Indicators: The short-term market trend is DOWN and the condition is NEUTRAL.
STOs have not turned back up even with today's strong rally. This suggests we could see price retreat early next week. %PMO rising has turned back up which is positive.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT.
IT indicators turned down this week. However, today the ITBM did rise slightly. The ITVM didn't join in. While it is positive to see the ITBM rising, %PMO BUY signals continues to lose ground suggesting deterioration in the intermediate term.
Bias Assessment: The short-term bias is neutral given the %Stocks > 20-EMA is below the SCI reading and %Stocks > 50-EMA is greater than the SCI. Given the healthy readings of the SCI and GCI, the intermediate-term and long-term bullish biases remain.
CONCLUSION: The SPY finally began to decline this week, but bulls wrested the reins from bears by week's end. There is a possible bull flag on the SPY daily charts that would suggest new all-time highs will return, but our short-term indicators aren't confirming this at present. IT indicators softened. The short-term bias is neutral so we are running with that. Look for price to move mostly sideways next week possibly trending higher. We suggest you consider new entries carefully. After a run to the upside of this magnitude, price needs to pause at the very least and is very vulnerable to more decline.
Calendar: Options expiration is next week. Expect lower volatility toward the end of the week.
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BITCOIN
Bitcoin confirmed the bull flag last week and it appeared it was off to the races. It made new all-time highs are broke above the October high. However, since then it has pulled back to support at the 20-EMA. The short-term rising trend is still intact and the RSI is positive. At this point it must deal with the negative PMO top below the signal line. That is a very bearish signal and it is accompanied by dropping Stochastics. The bull flag resulted in a rally, but given the deterioration of the PMO and Stochastics, that may be all we're going to get, at least in the near term.
INTEREST RATES
Rates reversed direction and are rising again. Declining trends are about to be broken on the 20/30-year yields. Shorter-term yields have already seen breaks from declining trends. We expect yields to continue rising.
10-YEAR T-BOND YIELD
The 10-year yield plummeted to begin the week, but finished strong by bouncing off the rising bottoms trendline and breaking out of the declining trend. The RSI is now positive and the PMO is rising alongside rising Stochastics. We expect yields to move higher.
DOLLAR (UUP)
IT Trend Model: BUY as of 6/22/2021
LT Trend Model: BUY as of 8/19/2021
UUP Daily Chart: The Dollar has been traveling in a short-term bearish rising wedge. Yesterday it hit the top of the pattern and today it pulled back. While this could result in a move down to the bottom of the wedge, the PMO and Stochastics aren't confirming that conclusion.
UUP Weekly Chart: The daily charts are bullish, but the weekly chart is more so. We are finally seeing confirmation of the bullish double-bottom with price breaking above the confirmation line. The RSI is positive and rising higher. The PMO is accelerating its climb.
GOLD
IT Trend Model: BUY as of 10/28/2021
LT Trend Model: SELL as of 8/9/2021
GOLD Daily Chart: [[comments]]
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GOLD Weekly Chart: [[comments]]
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners confirmed the reverse head and shoulders pattern this week by breaking out above the neckline and the 200-EMA. The RSI is now slightly overbought and typically we do see a pullback from those conditions. Under the hood, the PMO is rising and is not overbought. Volume is coming in. The SCI is rising strongly and participation of stocks above their 20/50-EMAs is nearly 100%, so the SCI should continue to rise. We also are seeing a huge improvement in long-term participation as this week 70% of stocks are now above their 200-EMA. The minimum upside target of the reverse head and shoulders suggest price could reach $39 and test overhead resistance at the May high.
CRUDE OIL (USO)
IT Trend Model: BUY as of 9/3/2021
LT Trend Model: BUY as of 3/9/2021
USO Daily Chart: We have a free article written by Carl that discusses the long-term monthly chart. The link is here.
Short term, USO is in a declining trend and is pulling back to support at the 50-EMA and the low earlier this month. The RSI has moved into negative territory and Stochastics have turned lower before reaching 80. It looks very toppy and suggests we could see the 50-EMA compromised.
USO/$WTIC Weekly Chart: The weekly chart isn't much better. Price hit gap resistance and was immediately turned away. The weekly RSI is still positive but the weekly PMO is looking iffy. Should we see a breakdown, we would look for it to put on the brakes at the July top.
BONDS (TLT)
IT Trend Model: BUY as of 11/8/2021
LT Trend Model: BUYas of 11/5/2021
TLT Daily Chart: This week TLT tested overhead resistance, but was turned away. It had looked very bullish given the breakout occurred out of a bearish rising wedge. However yields began to rally and that pushed TLT back down into the wedge. Today it broke below slightly. There is strong support here at the key moving averages and the August low, but yield charts look too bullish to expect TLT to hold this level of support. The PMO is turning lower and while the RSI is currently positive, it is headed lower as well.
Stochastics are also very bearish right now. Notice that the rising bottoms trendline drawn from the second October low was broken today. We expect Bond prices to begin falling in earnest next week.
TLT Weekly Chart: The weekly chart shows that overhead resistance is reaches back further than just the summer highs. The weekly RSI is still positive and the weekly PMO looks very bullish as it has bottomed above the signal line. However, we know downward pressure is strong based on yields. We aren't expecting a breakout.
Technical Analysis is a windsock, not a crystal ball.
-- Carl & Erin 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)
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