To determine the Long-Term Bias, we watch where the Golden Cross Index is in relation to its signal line or 20-day EMA. If it is above, the LT Bias is Bullish, if it is below the LT Bias is Bearish. Today, the Golden Cross Index crossed below its signal line causing a Bearish Shift in the long term.
The other index Golden Cross Indexes remain above their signal lines. This break in the Nasdaq 100 could be a sign of trouble for the rest of the indexes.
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/INDUSTRY GROUP/SECTOR INDEXES
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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: Intraday saw another all-time high. The market was mostly flat on the day with earnings from MSFT and GOOGL. The expectation was we would see more upside follow through, but instead both were down on the day.
We are now seeing a flattening of the relative strength line between the SPY and RSP. Mega-caps are starting to lose leadership and now the broad market will need to catch up.
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S&P 500 New 52-Week Highs/Lows: New Highs perked up today alleviating the negative divergence somewhat. The 10-DMA of the High-Low Differential has reversed higher which is bullish near term.
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 SOMEWHAT OVERBOUGHT.
The Swenlin Trading Oscillators (STOs) are both moving down again. While we do have more than half of the index holding rising momentum, we should be seeing far more given the strength of the rally. This will make it harder to maintain higher prices when mega-cap leadership fails.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
IT indicators are all rising which does bode well for the intermediate term. Short-term weakness may not translate into intermediate-term weakness should we finally start seeing a more concerted decline.
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 short-term market bias is BULLISH.
The intermediate-term market bias is BEARISH.
The long-term market bias is BULLISH.
%Stocks indicators as well as the Silver Cross Index and Golden Cross Index are above our bullish 50% threshold for now. The Silver Cross Index is likely to continue lower given we have a lower percentage of stocks above their 20/50-day EMAs. It is below its signal line currently so the intermediate-term bias is bearish. The Golden Cross Index is looking very toppy, but for now we have a higher percentage of stocks above their 50/200-day EMA so it could continue to advance. While it remains above its signal line, the LT Bias is Bearish.
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: The first of the major indexes (QQQ) lost its long-term bullish bias. More are likely to follow. The STOs have topped which is a problem and we are seeing a decline in leadership amongst the mega-cap stocks. The broader market will need to pick up slack and given we aren't seeing a tremendous amount of rising momentum or PMO BUY Signals, they likely won't. The negative divergences set a bearish backdrop and remind us that the index isn't as healthy as it should be under the circumstances. Overbought conditions tell us we should be leery of adding to our portfolios. You may want to tighten up some stops to preserve profit should the market begin the short-term decline we expect.
Erin is 60% long, 0% short.
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BITCOIN
Yesterday's comments still apply:
"Bitcoin is making a move out of recent lows and has now overcome both the 20/50-day EMAs. It is still in a consolidation zone, but given the nearing PMO Crossover BUY Signal, we would look for a move toward the top of the range near 46,000."
BITCOIN ETFs
INTEREST RATES
Rates are showing near-term weakness and appear ready to move back down towards 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
The rising bottoms trendline is now being tested and given the PMO is beginning to top beneath the zero line, we are looking for rates to break down toward support at 3.8%. Stochastics confirm this outlook.
BONDS (TLT)
IT Trend Model: BUY as of 11/28/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: With yields beginning to deteriorate, Bond funds like TLT should benefit. Today we have a bullish hammer candlestick coming off a credible low. Price overcame the 200-day EMA and the RSI has reentered positive territory. The PMO is also beginning to turn back up with Stochastics rising strongly. Higher prices are likely ahead for Bonds.
DOLLAR (UUP)
IT Trend Model: BUY as of 1/23/2024
LT Trend Model: BUY as of 5/25/2023
UUP Daily Chart: Yesterday's filled black candlestick resolved as expected with a decline. We still see the rising trend holding up on the Dollar given the positive, not overbought RSI and rising PMO. Stochastics are above 80 but did tip lower so we could see a bit more downside before the rally picks up again.
Overhead resistance is likely the culprit that is keeping the Dollar from rallying more strongly.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold broke out of the symmetrical triangle to the upside, but it formed a filled black candlestick as it ended up closing back within the pattern. Indicators are very flat and aren't providing much direction so we will look for more sideways movement.
The PMO is turning back up but we aren't looking for a big rally. Gold isn't performing particularly well against the Dollar.
GOLD MINERS Golden and Silver Cross Indexes: Yesterday's comments still apply:
"Gold Miners are making their way higher. Participation did turn up and the PMO is flattening. We could be looking at the beginning of a reversal for Gold Miners. With Gold looking weak, we aren't completely in love with Gold Miners, but the chart is definitely showing signs of improvement."
CRUDE OIL (USO)
IT Trend Model: NEUTRAL as of 11/7/2023
LT Trend Model: SELL as of 12/18/2023
USO Daily Chart: We are about to see a Silver Cross of the 20/50-day EMAs. This gives Crude an added bullish bias to go with the rising PMO, positive RSI and rising Stochastics. We expect Crude to break out above overhead resistance.
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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