With Gold on the ropes it isn't surprising to see Silver (SLV) suffering. Silver tends to travel in line with Gold as seen by the strong correlation between the two. We point out Silver's weakness today as it dropped below the rising bottoms trendline. While the EMAs are still configured positively with the fastest EMA on top and slowest on the bottom, price has dropped below all of them which puts both its golden cross (50-day EMA > 200-day EMA) and its silver cross (20-day EMA > 50-day EMA) in the crosshairs. When price drops below an EMA, it will automatically start traveling lower to meet it.
While support is arriving soon, given the deep decline and falling PMO, we doubt it will hold up. We'll want to revisit Silver as soon as Gold begins recuperating as Silver will likely follow.
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: The market marches higher after the lengthy digestion phase we saw over the past three weeks. The PMO is overbought. Typically the range for the PMO on indexes is -1.5 to +1.5. Currently the PMO is reading at 1.71. While overbought conditions can persist in a bull market move, we need to monitor this closely.
The VIX nearly penetrated the upper Bollinger Band today. Punctures usually arrive at pivot points so this is another situation that we'll monitor closely. Stochastics look incredibly strong as they have returned to territory above 80 and are making themselves comfortable there.
SPY Weekly Chart: We typically do not include a weekly chart except on Fridays, but we're watching for SPY to make new all-time highs. Getting close!
Here is the latest recording from 12/4 (no trading room on 12/11):
S&P 500 New 52-Week Highs/Lows: New Highs expanded hit very overbought territory today on a surge higher. This did negate the negative divergence that we were monitoring yesterday. The 10-DMA of the High-Low Differential is rising strongly but is getting very overbought.
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) accelerated higher today, but we still have a negative divergence with price. We also are noticing a negative divergence on %PMOs Rising. It isn't good to see readings on both %Stocks > 20EMA and %PMOs Rising contract on a rally today.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is EXTREMELY OVERBOUGHT.
The ITBM and ITVM continued higher and have hit extremely overbought territory. We do need to keep in mind that these indicators are "oscillators". Oscillators must oscillate. They could turn down even as the market moves higher to alleviate overbought conditions. However, if they top again, it will put us on alert.
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.
Internal strength is clear on the bias chart and on the table below. We have all of our participation indicators reading above our bullish 50% threshold. The Silver Cross Index and the Golden Cross Index are both above their signal lines giving us a bullish bias in both 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.
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CONCLUSION: Despite an upcoming announcement from the FOMC tomorrow, investors were happy to continue their buying spree. Clearly not a market on tenterhooks. We cannot ignore the strong market internals, but similarly we can't overlook negative divergences and overbought conditions. The market is well overdue for a pullback, but given internal strength, we are likely to continue to see higher prices through December. Seasonally this is a good time of year for the market (Santa Claus Rally) so this makes sense. Hedges probably aren't necessary as we move further into favorable seasonality.
Erin is 70% long, 0% short.
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BITCOIN
Yesterday's comments still apply:
"Bitcoin finally saw a significant end to the parabolic formation that has been in the making since the end of November. It appeared it would just consolidate and head higher, but no. Instead we saw a parabolic breakdown that has taken the indicators out of their bullish configuration. The RSI is still positive, but dropping like a rock on the decline. The PMO has topped and Stochastics dropped below 80. Indicators aren't completely bearish, but they are breaking down significantly. At this point, the 20-day EMA could still hold up as support, so we won't get too bearish yet."
INTEREST RATES
Yields were again mixed today. Declining trends are still intact.
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 had an opportunity to breakout with yesterday's move outside the bullish falling wedge. Instead it dove back into the pattern. The pattern is beginning to get stale as price soon will be at the apex of the wedge. For now given the flat PMO and rising Stochastics, we will look for a small recovery.
BONDS (TLT)
IT Trend Model: BUY as of 11/28/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: TLT resumed its rally, essentially forming a bull flag. Price may be stuck under the 200-day EMA, but given the bullish RSI and PMO we can look for another breakout here. The only spoiler right now is Stochastics which did drop below 80. Still, we like TLT's odds to move higher.
Overhead resistance was essentially met so a turnover here isn't unexpected.
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 hasn't done much since breaking out of its declining trend. It is beginning to look like a small double-top forming since the breakout. We are still bullish on the Dollar given rising Stochastics, but we are starting to see a breakdown in the RSI and PMO.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Weakness on the Dollar is doing very little to help Gold which was down despite a falling Dollar today. It wasn't down by a lot, but it is enough to add more relative weakness for Gold against the Dollar. We actually like seeing discounts expanding on PHYS. This means that investors are getting more bearish on Gold. Sentiment is contrarian so we want to see them get very bearish on Gold. You notice that before the October bottom and into the rally from there, sentiment was very bearish.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners lost their bullish bias in the intermediate term today. The Silver Cross Index dropped beneath its signal line which moves the bias to bearish. The Golden Cross Index is still holding up but given the decimation to participation of stocks above their key moving averages, we expect that won't last much longer. There is also a new PMO Crossover SELL Signal. This is not a group you want to be in.
CRUDE OIL (USO)
IT Trend Model: NEUTRAL as of 11/7/2023
LT Trend Model: BUY as of 8/3/2023
USO Daily Chart: We're glad we didn't get overly bullish on rising Stochastics yesterday as price dropped heavily today. Indicators are configured very bearishly so we would expect to see lower prices continue.
Support doesn't arrive until USO hits 60.00. We are looking for it to make its way down there.
Good Luck & Good Trading!
Erin Swenlin and Carl Swenlin
Technical Analysis is a windsock, not a crystal ball. --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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