Big news today would be that the Swenlin Trading Oscillators (STOs) on the major indexes turned up today. As we looked at the ONEQ chart, we noticed that the indicators weren't nearly as overbought as they are on the SPY.
This does tell us that ONEQ's price could move higher before these indicators reach extremely overbought conditions. They have an opportunity to expand further. We did notice a few problems on the chart below, negative divergences. There are negative divergences with price for the STOs and the ITVM so overbought extremes may not need to met before price turns lower.
Here is the SPY chart for comparison regarding overbought conditions. All of these indicators are overbought on the SPY. We don't have a negative divergence on the ITVM as we do on ONEQ, but the STO divergences remain.
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/SPX SECTOR/INDUSTRY GROUP INDEXES
Change Today: 
Change for the Week:
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: Yesterday's upside initiation climax did play out with a rally today. This is starting to look a lot like the last digestion phase. This time we aren't so sure we'll avoid a decline, but that is for January.
The PMO has surged (bottomed) above the signal line. The RSI is back in overbought territory. The VIX is still below its moving average on the inverted scale and Stochastics are falling so we do spot weakness seeping in.
Here is the recording from last Monday, 12/18 (no recordings on 12/25, 1/1):
SPY Weekly Chart: SPY continues to make new all-time highs. The weekly RSI isn't quite overbought yet and the weekly PMO is rising strongly and is not overbought. This implies more upside.
New 52-Week Highs/Lows: New Highs expanded from yesterday, but are still below prior readings. The 10-DMA of the High-Low Differential is looking toppy but is managing to rise despite extremely overbought conditions.
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.
ST indicators are not overbought for the most part. Participation of stocks above their 20-day EMA is overbought, but STOs and %PMOs Rising are not. STOs not only reversed, they accelerated higher and could hit overbought conditions rather quickly next week. As noted in the opening, negative divergences persist.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is EXTREMELY OVERBOUGHT.
Both the ITBM and ITVM reversed higher alongside STOs. They are extremely overbought and precarious. We see a declining trend in %PMO Xover BUY Signals. Fuel is diminishing for the rally fire.
_______
PARTICIPATION: The following tables summarize participation for the major market indexes and sectors. The 1-Week Change columns inject a dynamic aspect to the presentation. There are three groups: Major Market Indexes, Miscellaneous Industry Groups, and the 11 S&P 500 Sectors.
The highest IT Bias is Utilities (XLU) but we don't see them as bullish right now. Currently they hold a Bearish bias in the intermediate term. We see weakness coming in as the SCI lost three percentage points this week.
The lowest IT Bias is Energy (XLE). XLE is a mixed bag. The bias is so low because the GCI is still very high in comparison to the SCI. The SCI gained nine percentage points, but the GCI lost four points. Not a great setup, but we see the shorter term as bullish for this sector based on the SCI gains.
This table is sorted by SCI values. This gives a clear picture of strongest to weakest index/sector in terms of intermediate-term participation.
Semiconductors (SMH) and Real Estate (XLRE) have every single stock within showing a 'Silver Cross' or 20-day EMA greater than the 50-day EMA. These sectors continue to show strength as the GCI is gaining. The main problem is that they are as high as they can get so the only thing left for them is to go down. Clearly these two areas of the market are highly overbought.
XLE holds the lowest SCI value but as noted earlier, it is gaining strength so we don't see this as a negative.
This table is sorted by GCI values. This gives a clear picture of strongest to weakest index/sector in terms of long-term participation.
SMH holds the top GCI spot and it continues to show new strength.
The biggest gainer for the GCI was KRE which gained 16 percentage points. This group is still showing excellent internal strength.
The lost value is seen in Consumer Staples (XLP). This group has been underperforming and is not showing any improvement under the hood. It could have its day in the sun should the market weaken.
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 when we look at the percentage of stocks above their 20/50/200-day EMAs. While these overbought conditions can persist, they don't usually stay up here as long as they currently are. We need to stay vigilant. This internal strength gives us a bullish short-term bias for now. The SCI is above its signal line and is still rising so the bias is bullish in the intermediate term and the GCI is above its signal line so the bias is bullish in the long term.
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: Holiday trading should continue to be our friend. Santa is delivering and we expect he will continue to deliver next week. The market is beginning to show signs of strain in terms of overbought conditions and negative divergences, but given sharply rising STOs, we see more upside in the short term. After that, in January, we believe it will be time to pay the piper as the holiday hangover begins. We don't see it necessary to pare back holdings yet, but certainly it is a good time to employ stops.
We wish you a very Merry Christmas and lovely holiday weekend! There will be no DecisionPoint Trading Room on 12/25 or 1/1.
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 broke out of a symmetrical triangle or pennant on a flagpole. This implies more upside. There is still speculation that a new Bitcoin ETF would attract mainstream investors and that seems to be goosing price. The PMO isn't making a move yet, but Stochastics look bullish as they moved above 80 and the RSI is positive above net neutral (50). Overhead resistance is being met so it may take a little more consolidation to push it above resistance. It should happen.
This chart is to show where some of the support/resistance lines come from. We don't see strong overhead resistance until we get to about 48,000.
INTEREST RATES
Yields are in declining trends and expect this to continue. Equilibrium is nearing at about 3.4%, but until then we expect them to continue falling. Short-term yields continue to thwart the yield curve.
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 broke down from a bullish falling wedge. That is especially bearish. They did manage a move higher the past few days but this doesn't look like a credible level for a reversal. The RSI and Stochastics couldn't be much more bearish. The PMO does look like it wants to turn up, but it would be flashing diminishing weakness not new strength.
MORTGAGE INTEREST RATES (30-Yr)**
**We watch the 30-Year Fixed Mortgage Interest Rate, because, for the most part, people buy homes based upon the maximum monthly payment they can afford. As rates rise, a fixed monthly payment will carry a smaller mortgage amount, which shuts many buyers out of the market, and potential sellers will experience pressure to lower prices (to no effect so far).
--
This week the 30-Year Fixed Rate changed from 7.03 to 6.95.
BONDS (TLT)
IT Trend Model: BUY as of 11/28/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: Bonds are enjoying the declining interest rates but to end the week TLT did pull back. Overhead resistance is being hit so it isn't a surprise that we might see it struggle here. The big problem is that PMO has turned down so we see diminishing strength. Stochastics are above 80 so for now we do expect to see price reverse back up.
TLT Weekly Chart: We have a breakout from a bullish falling wedge on the weekly chart. The RSI is positive and the weekly PMO looks particularly bullish. While we may see strength subsiding somewhat, the intermediate-term picture is very healthy.
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 is traveling within a bullish falling wedge, but this week it failed to rise to meet the top of the pattern. That suggests internal weakness. The RSI is negative, the PMO in decline and Stochastics are below 20. There is a distinct bearish bias on the Dollar.
Support is nearing at the 2023 tops so will monitor and see if price can rebound and break out of the bullish falling wedge.
UUP Weekly Chart: This is a strong support level based on the weekly chart, but the weekly indicators look terrible. The RSI just dropped beneath net neutral (50) and the weekly PMO is declining on a Crossover SELL Signal. This chart tells us support probably won't hold.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GOLD Daily Chart: Gold showed strength against the Dollar as it was up +0.44% and the Dollar was only down -0.04%. A perfect inverse correlation would see the Gold up only +0.04% and that wasn't the case. Unfortunately, price formed a bearish filled black candlestick that does imply Gold will finish lower when the market reopens on Tuesday.
However, with the Dollar weakening, we do favor Gold and Silver right now. GLD is about to break to new all-time highs. There is a new PMO Crossover BUY Signal sitting alongside strong Stochastics and a positive RSI. The technicals tell us to expect higher prices.
GOLD Weekly Chart: The weekly PMO and weekly RSI both tell us to expect a breakout to new all-time highs very soon. Discounts are quite high and that will help Gold along as well given sentiment is contrarian.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners followed suit with Gold and formed a bearish filled black candlestick (close was well below the open). GDX is nearing overhead resistance, but given a positive outlook for Gold and the market in the coming week, we could easily see a breakout there. Participation is strong and the PMO is rising. The RSI is positive and not at all overbought. We should see a breakout.
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 Oil continues to confound. It is in a rising trend, but it hasn't broken out of its declining trend channel. The PMO and Stochastics suggest it should, but then the RSI is negative. We favor a breakout here based primarily on the PMO.
We do see that price failed at overhead resistance and now it has had a chance to consolidate in preparation for a possible breakout.
USO/$WTIC Weekly Chart: We did see price get back above the rising bottoms trendline, but it needs to pop above the 17/43-week EMAs in order for them to avoid a negative crossover. The weekly PMO is in decline, but appears to be decelerating as the weekly RSI rises. This would be a good area to see a solid reversal.
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)