Today the Retail ETF (XRT) 50-day EMA crossed up through the 200-day EMA (Golden Cross), generating an LT Trend Model BUY Signal. There is a growing sense that holiday expenditures will ride high as we saw on Black Friday results. The group is set to outperform further with a nice cup-shaped base. Participation is strong and not overbought. Both the Golden Cross Index (GCI) and Silver Cross Index (SCI) are accelerating upward. Price seems to have paused just under resistance at the July top, but we expect it to pop above that.
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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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: The market is trickling upward without a decline yet. The PMO is technically rising in overbought territory and the RSI just entered overbought territory. With new leadership seeping in based on the SPY v. RSP relative strength line, we could see prices begin inching higher.
The VIX is highly overbought right now, sitting on a very low reading of 12.35. Investors are too comfortable, but given no decline yet, why wouldn't they be? Stochastics have turned back up and should get back above 80 on Monday barring a big decline. The market continues to reflect internal strength.
SPY Weekly Chart: We are very close to all-time highs and that could be a sticking point. However, the weekly PMO is rising on a new Crossover BUY Signal so a breakout seems likely.
New 52-Week Highs/Lows: Although New Highs expanded today, we still see a bearish negative divergence. The 10-DMA of the High-Low Differential looks like it wants to turn back up.
Climax Analysis: There were no climax readings today. We saw one climax this week, a downside initiation climax. It returned a big red candlestick the next day but that was all the decline it could muster. Another sign of internal strength.
*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.
%Stocks > 20EMA are still on the overbought side, but the rest of the indicators have moved into neutral territory. Swenlin Trading Oscillators (STOs) are declining steadily, but it hasn't resulted in lower prices. It does tell us we aren't out of the woods yet. %PMOs Rising is above our bullish 50% threshold, but is showing us internals aren't unanimously strong.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is EXTREMELY OVERBOUGHT.
The ITVM has reversed course. Typically these indicators travel in unison. Regardless of the direction of the ITBM/ITVM, they are extremely overbought and need to decompress. While that can occur on consolidation, a decline is what they really need. We still have 75% of stocks holding PMO BUY Signals, but given the decline in rising PMOs, that indicator will continue lower.
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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.
All but Energy (XLE) have a positive IT Bias so we can see that internal strength is prevalent. The highest IT Bias belongs to Regional Banks (KRE) which continue to rally strongly. KRE gained percentage points on both the GCI and SCI.
This table is sorted by SCI values. This gives a clear picture of strongest to weakest index/sector in terms of intermediate-term participation.
XLE holds the lowest SCI value and it got worse this week, losing nine percentage points. The sector was seeing rising momentum to begin the week, but that was lost as support was broken.
XLF holds the highest SCI percentage alongside KRE. This sector is clicking as it continues to see improvement to both the SCI and GCI.
This table is sorted by GCI values. This gives a clear picture of strongest to weakest index/sector in terms of long-term participation.
XLE's long rally before this dastardly decline had the GCI reading near 100 earlier this year. It continues to bleed off percentage points as the sector gets weaker and weaker. It is slow going for the GCI so it is taking time moving lower. The high GCI reading is part of the problem for XLE's IT Bias.
Utilities (XLU) have stagnated in the long term based on the low GCI value, but strength is beginning to show on the SCI so the GCI will likely follow suit. Still this is probably one of the least desirable areas of the market right now.
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 bias is BULLISH in all three timeframes.
While we have a bullish bias across the board, we do see negative divergences on the SCI and GCI. %Stocks > 20/50/200EMAs are healthy and above our bullish 50% threshold. Both the SCI and GCI are above their signal lines so we have a bullish bias in both the intermediate and long terms. Of primary concern are the negative divergences on both the SCI and GCI.
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: We discussed yesterday how this pause could be all we get as an expression of market weakness. The internals are still very strong as far as participation. However, we do have some negative divergences and STOs are declining. IT indicators look toppy. We have to be on guard for a possible decline based on divergences and our STOs. At the same time we must acknowledge the strength that is still visible. Our best protection is setting stops. We don't see an immediate need to sell off, but profit taking might be a good idea, particularly on positions where momentum has turned down. Hedges are another way to protect against a possible decline. Stay nimble!
Erin is 65% long, 2% short.
Calendar: (1) The Fed will announce interest rate changes, if any, on Wednesday next week. (2) Options expiration is next week. We should expect low volatility on Thursday and Friday, as well as very high volume on Friday.
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BITCOIN
Bitcoin took a small breather this week, but ultimately is ready to rise further. Speculation is the likely cause of this parabolic rally as investors wait for new ETFs to develop. We expect this rally to continue further based on the rising PMO. The RSI is incredibly overbought, but that generally isn't a problem for Bitcoin. Stochastics are above 80 suggesting internal strength.
This chart is to show where some of the support/resistance lines come from. The next level of overhead resistance to watch is at about 48,000.
INTEREST RATES
Yields rallied today after spending most of the week in decline. The drop has gotten overdone so a little upside isn't surprising. In the intermediate term, we do expect the decline in rates to continue as they get closer to prior support.
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 is back in a falling wedge and today nearly rallied out of it. The wedge pattern does suggest an upside breakout ahead so short-term we are somewhat bullish on the 10-year yield. However, we don't expect the reversal to carry it very far. We would look for 4.4% to hold as overhead resistance.
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).
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This week the 30-Year Fixed Rate changed from 7.22 to 7.03.
BONDS (TLT)
IT Trend Model: BUY as of 11/28/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: The 20-year yield rose today and that pushed TLT below its 200-day EMA. This is a somewhat strong area of overhead resistance at the July low so it may consolidate sideways as yields rise in the short term.
Given resistance has been met, we wouldn't be surprised if we see a bit more decline.
TLT Weekly Chart: The decline isn't likely to continue based on the weekly chart. We have an upside breakout from a bullish falling wedge pattern and a nice weekly PMO Crossover BUY Signal.
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 breaking away from a declining trend channel. It is struggling against overhead resistance but based on today's new PMO Crossover BUY Signal, we expect price will continue higher. Today's filled black candlestick doesn't inspire confidence, but we also have Stochastics back above 80 signaling internal strength.
Resistance is arriving at the October lows.
UUP Weekly Chart: There is a weekly PMO Crossover SELL Signal on the weekly chart, but the weekly PMO is already beginning to flatten on this week's rally. The weekly RSI turned up in positive territory. We find it bullish that price reversed before reaching support at prior 2023 highs.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GOLD Daily Chart: Gold is likely to continue struggling given the bullish outlook on the Dollar. Additionally, GLD is losing relative strength against the Dollar. The PMO is crossing below its signal line for a SELL Signal. The RSI is headed toward negative territory. Stochastics are already in negative territory. We have to expect Gold to continue lower.
GOLD Weekly Chart: This is the fourth try for Gold to reach new all-time highs and break out. Unfortunately based on the daily chart, we believe we should look for price to dip toward the 43-week EMA. The weekly PMO is still configured bullishly so we don't think the bottom will drop out, simply more pullback.
GOLD MINERS Golden and Silver Cross Indexes: GDX has been hit hard by the decline in Gold. Support is here at the 50-day EMA, but given the loss of very strong support at autumn highs, we believe they will move even lower. The PMO has topped and participation continues to slide. We expect the SCI will move lower soon. We expect GDX to test lows at 27.00.
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 its best rally in days. This isn't where we expected to see recovery, but there are hints that that is exactly what USO is doing. The RSI is rising, the PMO is attempting to turn back up and Stochastics have reversed upward. We wouldn't go 'all in' on this trade, but it does have us less bearish. Maybe demand is beginning to pick up for the holidays.
USO/$WTIC Weekly Chart: This week price dipped below the rising bottoms trendline. While USO could be recovering, the weekly chart suggests we'll see 60.00 tested as support in the intermediate term. The weekly PMO is on a Crossover SELL Signal. This chart tells us not to get too bullish on Crude yet.
Good Luck & Good Trading!
Erin Swenlin and Carl Swenlin
Technical Analysis is a windsock, not a crystal ball. --Carl Swenlin
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