Yesterday, there were great expectations for Nvidia (NVDA) earnings, which were outstanding, but surprisingly the announcement failed to spark a rally. As technical analysts we don't need to know why, but it could be a P/E of 117. Anyway, the lack of a rally is interesting. We'll want to keep an eye on the other Magnificent 7 stocks so we will be able to assess weakness seeping in. A slump on Magnificent 7 stocks will likely lead to a market slump.
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Also, the Materials Sector (XLB) and the Dow Transportation Average ETF (IYT) 20-day EMAs crossed up through their 50-day EMAs (Silver Cross), generating new IT Trend Model BUY Signals.
Materials look very interesting as they have been maintaining a rising trend since gapping up. The technicals are strong with participation high, but not too high.
IYT is also maintaining a rising trend in the very short term. IYT is showing overbought participation readings for %Stocks > 20EMA, but other than that the chart looks very good.
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.
Watch the latest episode of DecisionPoint on StockCharts TV's YouTube channel here!
MARKET/INDUSTRY GROUP/SECTOR INDEXES
CLICK HERE for Carl's annotated Market Index, Sector, and Industry Group charts.
THE MARKET (S&P 500)
IT Trend Model: BUY as of 11/14/2023
LT Trend Model: BUY as of 3/29/2023
SPY Daily Chart: Today's candlestick was a doji. Like yesterday's, it implies indecision within the market. Or, more likely it is indicative of holiday trading. Typically you don't see big moves in either direction during holidays.
The VIX is now extremely overbought and begs for a decline to shake things up, but it could move even higher on our inverted scale based on the location of the upper Bollinger Band. We generally don't look for pivot points until we get punctures of the Bollinger Bands. Stochastics are very strong.
Here is the latest recording from 11/13 (No trading room on 11/20):
S&P 500 New 52-Week Highs/Lows: New Highs popped today basically negating our prior negative divergence. The 10-DMA of the High-Low Differential is accelerating higher suggesting internal strength.
Climax* Analysis: There were no climax readings today.
*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 OVERBOUGHT.
The Swenlin Trading Oscillators (STOs) aren't that overbought right now, but our participation indicators are. This condition is persisting and could continue if we don't see a cool down period. We have an incredible 91% of stocks with rising momentum. That fuels rallies. The STOs are still in decline suggesting we should see consolidation at a minimum.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is SOMEWHAT OVERBOUGHT.
Yesterday's comments still apply:
"IT indicators continue to rise, but they are getting overbought. We could be getting close to an inflection point on this short-term rally."
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 BULLISH in all three timeframes.
We have strong readings above our 50% bullish threshold on all of the participation indicators with the exception of the Golden Cross Index; but it is rising on a new Bullish Shift. The Silver Cross Index is rising strongly above its signal line. We are getting concerned that %Stocks > 20EMA is overbought, but should the rally continue, we could see them remain so. We still have room for %Stocks > 50/200EMAs to move higher before getting overbought.
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: Today's rally negated one of the negative divergences we have been watching on New Highs. STOs are declining but the market isn't responding with a decline of its own. We suspect that holiday trading is keeping things afloat with investors choosing not to make big moves while on vacation. Internals are still very strong and IT indicators are rising. We are still expecting a cooling off period for the market in general, but we wouldn't fight the bullish bias by selling profitable positions just yet. On the flip side, we wouldn't add to our portfolio. Keeping positions open with stops should serve you well even if we get some chop and churn. Have a lovely and safe Thanksgiving holiday! The DP Weekly Wrap will be published on Friday evening.
Erin is 70% long, 0% short.
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BITCOIN
Bitcoin is struggling with overhead resistance at 38,000. The PMO is still in decline and Stochastics are indecisive. The RSI is still positive so we don't expect a big decline. Likely we will see it butt up against resistance longer. It should hold above support at 35,000.
INTEREST RATES
Yields mostly moved higher today. We are bearish on yields right now and do expect them to fall further. That should keep the market happy.
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
$TNX sports a bearish head and shoulders that was confirmed when price came down and tested current support. In so doing, it broke the rising trendline. The 20-day EMA is about to cross below the 50-day EMA giving us a "Dark Cross". As noted in the section on yields, we expect current support to be broken.
BONDS (TLT)
IT Trend Model: SELL as of 5/16/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: Yesterday's comments still apply:
"With yields in decline, we expect a breakout ahead for TLT. It's taking its time, but given the positive RSI and rising PMO in positive territory, it should breakout."
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 rallied today but formed a bearish filled black candlestick. Indicators are still quite negative and price is in a declining trend channel. We won't get bullish on the Dollar until the declining tops trendline is broken to the upside and the PMO turns up. For now we expect the decline will resume.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold is now at overhead resistance and we expect a breakout here. The RSI is positive and the PMO is rising on a Crossover BUY Signal. Stochastics are almost above 80.
GOLD Daily Chart: Price hit overhead resistance at the October top and was turned away. Right now Gold is showing strength against the Dollar, although that didn't come through today given the Dollar was up +0.34% and Gold was down further at -0.44%. The correlation is near zero so technically the Dollar and Gold have decoupled. This means Gold and the Dollar could travel in concert rather than inversely. With the Dollar looking bearish, we'd prefer the inverse correlation return.
GOLD MINERS Golden and Silver Cross Indexes: Yesterday's comments still apply:
"We now have even healthier participation so we are looking for a breakout. Maybe third time is a charm as it pushes against the 200-day EMA for a third time. We like GDX's odds for success right now.
CRUDE OIL (USO)
IT Trend Model: NEUTRAL as of 11/7/2023
LT Trend Model: BUY as of 8/3/2023
USO Daily Chart: Crude Oil had an interesting trading day. Price was much lower during the day but managed to close near the high. It kept price above the declining tops trendline. Everything on this chart tells us to expect more decline, but an interesting thing happened with Diamond Scans yesterday and today. Many Crude related stocks and ETFs came up as possible buys. We are still bearish on Crude, but this does suggest something might be going on under the surface, particularly with the Energy sector.
Good Luck & Good Trading!
Erin Swenlin and Carl Swenlin
Technical Analysis is a windsock, not a crystal ball. --Carl Swenlin
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