Today's rally was clearly led by the Magnificent 7+. Apple continues to struggle, but managed a small rally today. META continues to kill it even after its big 20%+ jump after earnings. NVIDIA is leading the Semiconductor industry group higher and even Tesla (TSLA) saw a nice rally today despite being the weakest of the group.
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 managed a nice rally today bringing us to fresh all-time highs for the SPY. The RSI has now entered overbought territory, but a look at the past couple of months, this hasn't posed much of a problem.
The VIX is holding overbought readings as investors are quite complacent regarding market conditions. Of course who can blame them with the market marching ever higher. Stochastics are strong above 80. Based on the relative strength of the SPY v. RSP we know that mega-cap leadership is holding things together.
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S&P 500 New 52-Week Highs/Lows: The 10-DMA of the High-Low Differential has turned back up which is bullish in the very short term. We did some New Lows logged, but they did contract as we would expect on a rally day.
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.
Swenlin Trading Oscillators (STOs) were mixed today with the STO-B rising and the STO-V falling again. This isn't the best confirmation in the world, but it does suggest the rally may extend further.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
STOs weren't the only indicators that were mixed. The ITBM moved lower and the ITVM reversed higher. We also saw a small increase in PMO BUY Signals. The negative divergences are stark and problematic.
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.
We have negative divergences on all but the Golden Cross Index. With %Stocks > 20/50EMAs reading above our bullish 50% threshold, the short-term bias remains Bullish. The Silver Cross Index has accelerated its decline and is below its signal line so the IT Bias is Bearish. The Golden Cross Index is holding steady and is above its signal line so the LT Bias is listed as 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: Today's rally was led by the mega-caps. The broader market is still somewhat weak based on the amount of PMO BUY Signals being just 38%. We could see prices rise further as the 10-DMA of the High-Low Differential, STO-B and ITVM reversed higher. Participation in general is still fairly healthy and reading above our bullish 50% thresholds. Negative divergences are still a big problem and we are now entering overbought territory based on the RSI. We would be very careful expanding portfolio exposure with overbought conditions coming back. Prepare to be nimble.
Erin is 20% long, 0% short.
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BITCOIN
We mentioned yesterday that we could see a breakout on Bitcoin given positive indicators. We don't expect the rally to be straight up, but we do expect prices to continue the rising trend.
BITCOIN ETFs
INTEREST RATES
Yields ticked upward today. We still expect rates to rise further off support. The yield curve is inverted primarily in the short 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
Support held today and we expect it to continue to hold this support level given positive indicators. Stochastics look particularly strong and we have a PMO Surge above the signal line (bottom above the signal line). The RSI rebounded just above net neutral (50).
BONDS (TLT)
IT Trend Model: BUY as of 11/28/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: TLT looks very bearish as far as the indicators are concerned. Price itself is struggling at key moving averages. With the RSI moving lower in negative territory, the PMO moving down on a Crossover SELL Signal and Stochastics tumbling lower, we have to expect more decline on TLT.
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 didn't get to the top of the rising trend channel and that suggests we have more downside to go. We would look for a test of the bottom of the trend channel. Indicators are still fairly bullish so we expect the rising trend to hold up.
Overhead resistance will arrive at the 2023 high around 28.40.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: The Dollar was down and Gold did not take advantage. We know from the second chart below that the inverse correlation has disappeared so Gold has decoupled from the Dollar. It could continue lower even on the Dollar's pullback.
The indicators don't look bad, but they also don't look particularly good. More than likely Gold will continue to bounce around sideways.
GOLD MINERS Golden and Silver Cross Indexes: The rally today did not help GDX. Gold needs to get going to help push this industry group higher. A bottom here would be nice as it would set up a bullish double bottom. However, participation is still too weak to look for a solid rally right now.
CRUDE OIL (USO)
IT Trend Model: SELL as of 2/1/2024
LT Trend Model: SELL as of 12/18/2023
USO Daily Chart: Crude is making its way back up. It didn't have to touch support before it reversed and that is particularly bullish. Price is still under the 20/50-day EMAs, but with Stochastics turning up and the RSI moving above net neutral (50), we should see that resistance overcome.
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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