Today the Utilities Sector (XLU) 20-day EMA crossed down through the 50-day EMA (Dark Cross -- opposite of Silver Cross), generating an IT Trend Model SELL Signal. Sector rotation has been brutal to the defensive areas of the market, particularly Utilities. Despite a strong rally out of the October low, the 50-day EMA never was able to get above the 200-day EMA. Now gravity is taking its toll on participation. This is not an area you need to be exposed to.
The XLU weekly chart shows that it has been in decline since the all-time high in 2022, and the weekly PMO has topped below the zero line. So the IT and LT pictures are also very negative at this time.
Also today, the Gold Miners ETF (GDX) 50-day EMA crossed down through the 200-day EMA (Death Cross), generating an LT Trend Model SELL Signal.
The GDX weekly chart basically shows a long-term indecision pattern (symmetrical triangle), and the weekly PMO has topped above the zero line and is currently holding a Crossover SELL Signal. We assume that GDX will follow Gold, and there is ample room for a decline without breaking out of the triangle. We'll discuss more in the section on Gold Miners.
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: The market started off the day well, but price lost steam and closed beneath the open forming a bearish filled black candlestick. The PMO had a positive crossover, but the PMO has turned down slightly and could give us a SELL Signal. The RSI is overbought.
The VIX topped on our inverted scale and Stochastics turned back down. Neither are in bearish territory, but we aren't fond of this deterioration. Mega-caps continue to outperform equal-weight RSP. This rally isn't as broad as it may appear.
Here is the latest recording from 1/22:
S&P 500 New 52-Week Highs/Lows: New Highs did expand on the rally, but remember this is an intraday reading and we suspect that with the afternoon decline, some of those highs were lost. We do like the strong rise of the 10-DMA of the High-Low Differential.
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.
Another rally and we continued to lose rising PMOs within the index. We also saw stocks fall beneath their 20-day EMAs. STOs are rising, but it hasn't come close to erasing the strong negative divergences.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
The ITBM and ITVM continue to decline and are not even close to oversold territory. We did see slightly more PMO Crossover BUY Signals, but the loss of rising PMOs on the above chart is most concerning. This indicator will have a hard time continuing to rise if we continue to lose rising momentum within the index.
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 the short term.
The market bias is BEARISH in the intermediate term.
The market bias is BULLISH in the long term.
We have more than 50% of stocks above key moving averages which gives us a bullish short-term bias, but we see it deteriorating right now given the loss of stocks above their 20/50-day EMAs. The Silver Cross Index is falling and is below its signal line so the bias is bearish in the intermediate term. The Golden Cross Index has stalled and is trying to top. However, it is above its signal line giving us a bullish long-term bias. We would note that the GCI is not nearly as elevated as it was 2021.
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 filled black candlestick on the SPY tells us to expect a decline tomorrow. The market is acting toppy, but mega-caps continue to outperform and hold things together. In a broader sense, we see fewer rising PMOs and fewer stocks above key moving averages. This is occurring as prices are moving up which is certainly a negative divergence. Speaking of negative divergences, the short-term indicators all hold negative divergences with price tops. Turbulence should be expected moving forward. Keep stops in play. You may want to hold off opening any new longs.
Erin is 75% long, 0% short.
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BITCOIN
Bitcoin saw a small rally today, but it wasn't enough to clear bearish conditions. The RSI is still negative and the PMO has dropped beneath the zero line. Stochastics are below 20. Price didn't recapture prior support and is clearly vulnerable to more decline.
BITCOIN ETFs
INTEREST RATES
Yields mostly rose on the day. The rising trends are intact and suggest more short-term gains for interest 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
The 10-year yield formed a bullish engulfing candlestick (the open and close engulfed yesterday's OHLC bar). Stochastics which had turned down yesterday, reversed today moving them back above 80. Look for a continued rise in the 10-year yield.
BONDS (TLT)
IT Trend Model: BUY as of 11/28/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: TLT saw a big bearish engulfing candlestick today that suggests more decline ahead. The indicators confirm that possibility. The RSI is negative and falling, the PMO is headed to the zero line and Stochastics are oscillating beneath 20. All suggest more decline.
DOLLAR (UUP)
IT Trend Model: BUY as of 1/23/2024
LT Trend Model: BUY as of 5/25/2023
UUP Daily Chart: The Dollar formed a bullish hollow red candlestick today suggesting we will see a bounce off the 20/50-day EMAs. We will be watching to see if the prior gap is filled which would then suggest more downside. For now, the indicators are holding up so we do expect a bounce.
Price basically failed at overhead resistance.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold was also down with the Dollar. Unfortunately, Gold's candlestick is bearish as it engulfed yesterday's candle. This suggests more downside. Stochastics turned down below net neutral (50) which is a bad sign.
GOLD MINERS Golden and Silver Cross Indexes: GDX was up quite a bit during the day, but finished with a bust down over 1.8%. The PMO topped beneath its signal line below the zero line which is especially bearish. Participation is still very weak so it will be hard to see more off the latest bounce. We also know from the opening that the intermediate- and long-term conditions are also very bearish.
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 think that Crude Oil is ready to breakout. Erin noticed a handful of Oil & Equipment Services ETFs come through on her scans and Energy (XLE) may be making a meaningful bottom. We like that Stochastics are accelerating higher and the PMO is nearing positive territory. We'll know far more tomorrow when we see how price handles overhead resistance at the 200-day EMA and December top. We are cautiously bullish.
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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Bear Market RulesRT: 01-23-2023