An ETF recently came to our attention. One that we will likely be adding to our ETF Tracker ChartList on the website. This ETF tracks the "Magnificent 7" and is a great way for us to evaluate where the market might go given these stocks lead the SP500 and Nasdaq. The market may be looking weak, but this chart doesn't look entirely weak. Certainly price is topping at overhead resistance, but we have an interesting PMO Crossover BUY Signal on tap above the zero line. The RSI is positive and Stochastics are back above 80. We do think the failure to overcome overhead resistance is a big black mark.
The broad market is where much of the current weakness resides, particularly the small-caps which led us out of the October low. These big guys could artificially keep the large-cap indexes elevated so this chart is worth keeping an eye on.
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: The SPY logged another intraday all-time high, but price fell below the open forming a bearish filled black candlestick. The PMO is still in decline, but the RSI is in positive territory and not overbought. This candlestick implies a decline will occur on Monday.
The VIX hasn't moved much and it is causing the Bollinger Bands to shrink again. Investors are still very complacent. Stochastics are above 80, but with a declining PMO we don't read that as overly positive.
This week's episode is not available on YouTube, but you can access it using the recording and download link below. Recordings will be taken down after two weeks:
Recording & Download Link HERE.
Passcode: January#8
SPY Weekly Chart: Last week price pulled back after the breakout to new all-time highs. The weekly PMO is still rising, but the weekly RSI is nearing overbought territory. We could see a continuation of the bull market, but near-term conditions are weak.
New 52-Week Highs/Lows: New Highs rose today but it wasn't enough to erase the new negative divergence with price tops. The 10-DMA of the High-Low Differential continues to concern us with its decline out of overbought territory.
Climax Analysis: There were no climax readings today. Monday's upside initiation climax did ultimately result in somewhat higher prices by the end of the week.
*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.
Bad news on short-term indicators. The Swenlin Trading Oscillators (STOs) topped today suggesting internal weakness. We continue to see a bleeding off of stocks above their 20-day EMAs and deterioration to %PMOs Rising.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT.
The ITBM and ITVM have been in decline all month but they remain highly overbought. The decompression is good, but it does concern us regarding the market's ability to keep prices elevated in the intermediate term. We now have even fewer PMO Crossover BUY Signals, in fact less than one quarter of the index hold BUY Signals.
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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.
Energy (XLE) continues to hold the most negative IT Bias and this is primarily due to the strong rally it had last year which pushed the Golden Cross Index into very overbought territory. Since then participation has been bleeding out and that condition continues. We don't like Energy right now.
Biotechnology (IBB) holds the highest IT Bias as it has had a great rally out of the October lows. Its GCI is in the process of improving, but we didn't get any improvement on the SCI this week.
This table is sorted by SCI values. This gives a clear picture of strongest to weakest index/sector in terms of intermediate-term participation.
Regional Banks (KRE) moved into first place alongside Real Estate (XLRE) as every member now holds a Silver Cross. XLRE held its SCI reading, but we know that the chart is beginning to break down.
XLE continues to lose ground on both the SCI and GCI. Clearly it is the worst performer among the group we follow.
This table is sorted by GCI values. This gives a clear picture of strongest to weakest index/sector in terms of long-term participation.
Financials (XLF) didn't see improvement to the SCI but it is already at a high 92%. The GCI did see some improvement, but overall the IT Bias is somewhat bearish.
IBB holds the lowest GCI reading, but it is improving and could overtake Staples (XLP) soon.
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.
While we could move the short-term bias to BEARISH based on the losses on %Stocks > 20/50EMAs, but ultimately readings are still above our bullish 50% threshold. This week the SCI crossed below its signal line moving the IT Bias to BEARISH. The GCI is safe from a negative crossover and given it is above its signal line, the LT Bias is BULLISH.
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: This week every major market index we follow (with the exception of the Dow Industrials) moved to BEARISH biases as their Silver Cross Indexes crossed below their signal lines. These crossovers tend to arrive just as the market begins a longer decline. The Mag7 are holding up but the BIGT chart shows failure at overhead resistance. STOs turned down today. Both ST and IT indicators are falling. We expect a decline next week. The severity of the decline will likely rest on the Mag7. This isn't a good time to add to your portfolio. Tighten up stops to preserve profit. Losing positions are likely to lose more.
Erin is 75% long, 0% short.
Calendar: (1) The U.S. markets will be closed on Monday for the Martin Luther King holiday. (2) Options expiration is next week. Expect low volatility on Thursday and Friday.
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BITCOIN
So much for the hullabaloo over new Bitcoin ETFs. Despite plenty of takers, actual Bitcoin is about to fail along support at the 50-day EMA. The PMO has triggered a Crossover SELL Signal and the RSI has dipped into negative territory. Stochastics are moving lower vertically. We would look for support to be broken at 40,000.
This chart is to show where some of the support/resistance lines come from. It isn't surprising that we saw failure at this price level given the strength of overhead resistance at the 2022 top.
BITCOIN ETFs
INTEREST RATES
The rally in interest rates was brought to a halt. Declining trends are mostly intact. With rate cuts not likely to be forthcoming this next time out, we do think in the short term we could see them rise once again. Ultimately we do see rates moving to 2023 lows in the longer term.
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 PMO is beginning to decelerate and the RSI is negative with Stochastics falling. The rally is likely over for the ten-year yield. We would look for a move to 3.8%.
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 6.61 to 6.62.
BONDS (TLT)
IT Trend Model: BUY as of 11/28/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: We've expected a decline ahead for TLT given the rising 20-year yield, but the yield is now in a declining trend, giving TLT an opportunity to rally off the 200-day EMA. The indicators are decidedly negative, but price has held up fairly well. Let's just say we are less bearish on Bonds.
TLT Weekly Chart: The weekly chart is holding together. The weekly RSI is positive and the weekly PMO continues to rise. Price is holding comfortably above the 43-week EMA. This puts a positive spin on TLT in the intermediate term. Short term is still somewhat bearish.
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 "broke" from the bullish falling wedge this week, but it did so by drifting out not actually breaking out. Price is still corralled by the 20/50-day EMAs. The indicators are positive, we just aren't getting any real reaction from price. Given the price stagnation, we are somewhat bearish on the Dollar.
UUP Weekly Chart: The weekly chart is mixed. The weekly RSI is positive, but the weekly PMO is still falling. We see that the declining trend on the weekly chart is still intact as well. This is likely applying gravity to current price action.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GOLD Daily Chart: Gold managed a rally today but formed a bearish filled black candlestick. We have a breakout from the short-term declining trend and indicators are beginning to look more bullish. The RSI is now positive and the PMO is attempting an upside reversal. Stochastics are rising again as well.
We are beginning to see some improvement in relative strength against the Dollar which should serve Gold well. Discounts on PHYS remain elevated so overall investors are bearish on Gold. The readings aren't as oversold as they can get, but they are in upside price reversal territory based on the past year.
GOLD Weekly Chart: Price is struggling to overcome all-time highs. The weekly RSI is positive and the weekly PMO is rising so there is a bullish bias to the chart. The rising trend is holding up. We see an eventual breakout ahead.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners popped on Gold's rally. We wouldn't think much of today's rally, particularly given the long wick on the OHLC bar (bearish shooting star), but participation was really goosed by the move suggesting this rally could be sticky. It is still a high risk play given the PMO is still in decline and the Golden Cross Index is dropping beneath its moving average which would give us a LT Bearish Bias. Miners also are subject to the winds of the market and if we are correct about a market decline next week, that will put downside pressure on Miners. For now we are cautiously optimistic.
CRUDE OIL (USO)
IT Trend Model: NEUTRAL as of 11/7/2023
LT Trend Model: SELL as of 12/18/2023
USO Daily Chart: It has been said that due to the problems in the Red Sea, Crude Oil will likely see a move higher. The problems in the Red Sea have been going on for some time and we haven't see a good reaction in price. Still, the chart is improving. The RSI is nearly above net neutral (50) and the PMO is rising again. Stochastics are rising but look tentative. We expect more sideways chop.
USO/$WTIC Weekly Chart: The rising bottoms trendline is holding up so far but notice the negative crossover of the 17/43-week EMAs. The weekly PMO is in decline and the weekly RSI is negative. We still see weakness in Crude.
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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