The first two indexes on our list have lost their Bullish Bias today. It is likely they are the first of many. We use the Silver Cross Index to determine what the Bias is in the intermediate term. If the Silver Cross Index is above its signal line, the bias is bullish. Today the Silver Cross Indexes on both the Nasdaq 100 (QQQ) and S&P 100 (OEF) dropped beneath their signal lines. This is likely the first of many warning shots. We would also point out that the PMOs are both in decline.
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 did not rally after yesterday's upside initiation climax. A bullish signal that doesn't work out is particularly bearish. On the bright side, we did see a bullish hollow red candlestick. The PMO is still in decline so momentum is not working in the SPY's favor right now.
Interestingly, investors didn't get bearish today as the VIX reads even lower than yesterday. Sentiment seems a bit too bullish. We do see that Stochastics are rising strongly so there is some internal strength.
The latest recording will not be on YouTube, but you can view the 1/8 Trading Room at this link:
Recording and Download Link HERE (This link will be inactive in two weeks)
Passcode: January#8
S&P 500 New 52-Week Highs/Lows: The 10-DMA of the High-Low Differential is a problem. New Highs have been maintaining the past two trading days and no New Lows have been detected yet.
Climax* Analysis: There was only one climax reading today. Not enough to call today a climax day.
*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) had just turned up yesterday, but today the STO-B turned back down. This could be considered another possible warning shot. We continue to see deterioration in rising momentum within the index.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT.
The ITBM and ITVM are still overbought. Both are declining suggesting there is decline in store for the intermediate term. %PMO Xover BUY Signals continues to bleed off. Without strong momentum, it will be hard to avoid a declining trend.
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 still see more than 50% of stocks above key moving averages, but numbers are beginning to deteriorate. We now have fewer stocks above their 20/50-day EMAs versus the Silver Cross Index. This means the SCI will likely continue lower. A negative crossover is usually a sign of a longer-term decline ahead. However, given both the Silver Cross Index and Golden Cross Indexes are above their signal lines, the bias remains BULLISH 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: The mega-cap indexes were the first to lose their Bullish Bias and the SPY isn't too far behind. Negative crossovers on the Silver Cross Index should be considered strong warning. The short-term had been shaping up yesterday, but today's failure to extend the rally suggests that weakness isn't in the rear view mirror. The topping Silver Cross Index combined with falling IT indicators suggest the intermediate term is likely to see a declining trend. Momentum is still an intrinsic problem, more PMOs are turning down and losing Crossover BUY Signals. We need to stay cautious. You may want to avoid expanding your portfolio right now, but if you do add, stops should be placed.
Erin is 75% 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
False news today that the SEC had approved new ETFs for crypto. A decision has not yet been made. News of this falsehood could likely be the reason we saw the decline today. We have heard that by the end of the week the SEC should make a decision. More than likely they will be approved and that will bring new crypto investors to the table who like a packaged possibly less volatile facsimile of Bitcoin. In any case, the indicators look bullish and we believe the ETFs will go through so we should see the rally in Bitcoin continue.
INTEREST RATES
Yields mostly tipped upward or were unchanged. We do see rates rising in the short term, but ultimately when they are ready to decline again, we will be watching 2023 lows as support. The yield curve is still highly inverted given short-term rates are so much higher than longer-term rates.
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
Price is still stuck beneath strong resistance at the 200-day EMA and March/July tops, but given the PMO is rising on a Crossover BUY Signal, we do expect a breakout here. Stochastics did tip over, but didn't move much otherwise so we don't take it as an overly bearish condition.
BONDS (TLT)
IT Trend Model: BUY as of 11/28/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: TLT has broken its rising trend and is struggling to move back above the 20-day EMA. The PMO looks particularly bearish and Stochastics are below 20. We see yields making a comeback and this will put more downside pressure on Bond funds.
This is a very strong area of support so we could see some sideways movement as it attempts to hold on to it.
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 has finally broken from the bullish falling wedge, but it did so moving mostly sideways. We'd like to see a breakout above the 50-day EMA. Based on the indicators, we should see that. The RSI is positive and rising. The PMO is rising on a Crossover BUY Signal and Stochastics are back above 80 signaling internal strength.
The breakout looks more impressive on the 1-year daily chart.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold managed a tiny rally...very tiny, but at least it wasn't a loss which is saying something given the nice rally on the Dollar today. We don't like the look for the indicators right now. The RSI is now in negative territory, the PMO is falling on a Crossover SELL Signal and Stochastics are nearing 20. While we'd like to see a rally off the 50-day EMA, we don't hold out much hope.
GOLD Daily Chart: Discounts on PHYS are elevated. We are seeing them pare back and that implies investors are getting less bearish on Gold. A market decline could sway them back to the metal.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners are struggling and today lost support at the 200-day EMA. The indicators look bad, particularly the PMO. The Silver Cross Index has dropped beneath its signal line so we have an official Bearish Bias. Participation of stocks above their 20/50-day EMAs is lacking and getting worse. We don't see an upside reversal ahead. Shore up those Gold Mining positions if you haven't already.
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 rallied strongly, but price is still all over the place. Despite a PMO Crossover BUY signal last month, price has done very little. Stochastics are sideways and not helpful. While the PMO has surged above its signal line, it is occurring well below the zero line which signals to us that this is diminishing weakness, not new strength. We aren't expecting much out of Crude except more of the same sideways action. Price should've done something off the PMO BUY Signal and it didn't.
Good Luck & Good Trading!
Erin Swenlin and Carl Swenlin
Technical Analysis is a windsock, not a crystal ball. --Carl Swenlin
(c) Copyright 2024 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)