Yesterday the market fizzled on the close, today saw a big rally pop. The market was about to finish on a negative note until the final five minutes of trading. This pushed the 5-min PMO above the signal line and caused Stochastics to pop higher too. This could bode well for tomorrow.
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: As noted in the opening, the market nearly finished with a decline. Given yesterday's upside exhaustion climax we thought we get a down day. We didn't and that is very bullish.
The VIX was lower on the day, but it wasn't enough to push it past the upper Bollinger Band. That's a good thing as typically an upside puncture will lead to a market downside reversal. Stochastics are still rising and are well above 80 which signals internal strength.
Here is the latest recording from 12/18 (no recordings on 12/25 or 1/1):
S&P 500 New 52-Week Highs/Lows: New Highs expanded again, but remain in a bearish negative divergence with price tops. The 10-DMA of the High-Low Differential topped today which is bearish.
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 NEUTRAL.
Swenlin Trading Oscillators (STOs) were mixed today with the STO-B moving higher and the STO-V moving lower. Weakness is beginning to seep in. We also note there is a new negative divergence between %PMOs Rising and price tops.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is EXTREMELY OVERBOUGHT.
The ITBM/ITVM are incredibly overbought. Even after the 2021 rally neither of these indicators were reading this high. They are still rising strongly however so we don't foresee issues with the intermediate term yet. There is another negative divergence to point out, this time on %PMO Xover 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 market bias is BULLISH in all three timeframes:
The GCI has a bearish negative divergence with price, but the rest of the chart is healthy. We have a strong number of stocks above key moving averages, quite a bit more than our 50% bullish threshold. Given we still have higher percentages of stocks above the 20/50-day EMAs versus the SCI, we know that the SCI should continue to rise a bit further. Both the SCI and GCI are above their signal lines which gives us a bullish bias in the intermediate and long terms.
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.
**************************************************************************************
CONCLUSION: Santa continues to deliver, but we are noticing problems developing under the surface. Negative divergences are the primary problem, but now we have the STO-V falling along with the 10-DMA of the High-Low Differential. The market is still internally very strong based on the strong bullish bias in all three timeframes and based on very high participation readings. However, with these new negative divergences popping up, it is setting up a likely decline as we move away from the holidays. Positions should remain safe this week, but it will be time to take a hard look at them next week as the market readies for a decline.
Erin is 85% long, 0% short.
**************************************************************************************
Have you subscribed the DecisionPoint Diamonds yet? DP does the work for you by providing handpicked stocks/ETFs from exclusive DP scans! Add it with a discount! Contact support@decisionpoint.com for more information!
BITCOIN
Bitcoin indicators were moving bearish, but they are already beginning to firm up again. The RSI never hit negative territory. The PMO is turning back up and Stochastics have turned up. We see more sideways movement ahead with a likely breakout to follow. That conclusion may change if the PMO reverses with Stochastics again.
INTEREST RATES
Rates fell today. They are headed toward support at 2023 lows. We expect them to hit those levels before reversing higher.
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 decided to adjust the annotations to show a declining trend channel. You could very carefully draw the lines into a bullish falling wedge, but we aren't expecting the yield to reverse, we expect it will continue even lower. The RSI is very negative and falling. Stochastics have topped below 20 and most importantly, the PMO continues to decline well beneath the zero line.
BONDS (TLT)
IT Trend Model: BUY as of 11/28/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: Yields continued their decline and that put Bonds in the driver's seat. The 20-year yield is in a steady decline so while TLT is overbought based on the RSI, we think it will move even higher from here.
DOLLAR (UUP)
IT Trend Model: NEUTRAL as of 11/27/2023
LT Trend Model: BUY as of 5/25/2023
UUP Daily Chart: The Dollar just dropped below the bullish falling wedge. A bearish conclusion to a bullish chart pattern is especially bearish. The indicators are configured very negatively. Price did hit support at the late August low, but this drop is likely to set up a new declining trend channel just like $TNX.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold is making the most out of the Dollar's weakness. You'll note that relative strength to the Dollar is gaining. The PMO is rising after a Crossover BUY Signal well above the zero line which signifies pure strength.
GOLD Daily Chart: We've also noticed that the Gold volatility index ($GVZ) has nearly punctured the lower Bollinger Band on the inverted scale. Typically that condition leads to higher prices for Gold.
GOLD MINERS Golden and Silver Cross Indexes: Yesterday's comments still apply:
"We have to look for more upside from Gold Miners given the positive outlook for Gold. The market winds haven't changed yet given the bullish bias and that should also help GDX move higher. Under the hood we have very robust participation numbers so internal strength is very visible. Stochastics just accelerated above 80."
CRUDE OIL (USO)
IT Trend Model: NEUTRAL as of 11/7/2023
LT Trend Model: SELL as of 12/18/2023
USO Daily Chart: Crude is acting fishy again as it bounces around above the 20-day EMA. The PMO Crossover BUY Signal likely signaled diminishing weakness rather than new strength. Price is failing to overcome both the 50/200-day EMAs. Stochastics have now topped so we are less bullish. Still, the PMO is rising so we have to look for higher prices. We just think Crude is highly vulnerable right now.
Good Luck & Good Trading!
Erin Swenlin and Carl Swenlin
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.
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.
Helpful DecisionPoint Links:
DecisionPoint Alert Chart List
DecisionPoint Golden Cross/Silver Cross Index Chart List
DecisionPoint Sector Chart List
Price Momentum Oscillator (PMO)