Nvidia's earnings report was well received with upbeat earnings forecast, so it is up about +7.8% in after hours trading. The Nasdaq is up about +0.5%, so not a frenzied rebound, but no crash either. More than likely the decline was due to profit taking in preparation for earnings. Many choose not to hold through earnings. We will see if traders jump back in with both feet.
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Today the Regional Banking ETF (KRE) 20-day EMA crossed down through the 50-day EMA (Dark Cross) above the 200-day EMA, generating an IT Trend Model NEUTRAL Signal. Price is struggling to get back above the 50-day EMA. The Silver Cross Index looks particularly bearish right now and we have seen a siphoning off of participation of stocks above their 20/50-day EMAs. Stochastics give us some hope that we'll see a rebound, but the rest of the indicators look weak with the PMO turning down beneath its signal line.
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: Price is looking very toppy. We've identified a short-term bearish double top. Price did manage a rebound off the 20-day EMA, but the PMO is still in decline on a Crossover SELL Signal.
After yesterday's VIX puncture of the lower Bollinger Band, we got the rally it suggested we would get today. Stochastics have turned down and the VIX is elevated so we see internal weakness seeping in.
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S&P 500 New 52-Week Highs/Lows: New Highs contracted on a rally day which is negative. On the bright side, we didn't see any New Lows. The 10-DMA of the High-Low Differential is rising slowly, but looks hesitant.
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.
In a positive turn of events, both the Swenlin Trading Oscillators (STOs) turned up. We saw a small expansion in the number of rising PMOs which puts our indicator above our bullish 50% threshold. It's still a 'barely there' bullish sign.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
The ITBM and ITVM were mixed today so it wasn't a good confirmation of the rising STOs.
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.
Participation indicators are all reading above our bullish 50% threshold so we have a ST Bias of BULLISH. We'd like to see more expansion to erase the negative divergences. The Silver Cross Index was stagnant today. It is below its signal line so the IT Bias is BEARISH. The Golden Cross Index is trending back up and it is above its signal line giving us a LT Bias of 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: NVDA's weak performance today didn't reverberate through the market. Other Mag 7 stocks picked up the slack. Overall we have good participation readings holding above 50% and STOs turned up on today's small rally. Unfortunately, it wasn't all good news as the PMO continues to fall alongside declining Stochastics. We are also far from shaking off the negative divergences on nearly every chart. The double top has us cautious as well. The market is vulnerable to a breakdown again, but holds a near-term bullish bias. We would continue to apply stops. Consider tightening stop levels as a safety net.
Erin is 55% long, 0% short.
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BITCOIN
Yesterday's comments still apply:
"Bitcoin is beginning to consolidate its rally and this is forming a bull flag. However, the flag is horizontal not trending downward and that could prevent the breakout here. The PMO is slowing, but still looks very healthy alongside Stochastics which have taken up residence above 80. The RSI remains the problem and this could finally be signaling a possible pullback ahead."
BITCOIN ETFs
INTEREST RATES
Yields are back on the rise. Rising trends are holding up so we would expect higher interest rates near-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
Yesterday's comments still apply:
"Today saw a Silver Cross of the 20/50-day EMAs which boosts an already bullish chart. The RSI is positive and not at all overbought. The PMO looks very strong and Stochastics are turning back up while above 80. We would look for the 10-year yield to move higher from here."
BONDS (TLT)
IT Trend Model: SELL as of 2/20/2024
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: TLT has lost near-term support or at least it is trying to. The chart is very bearish so we would expect price to move even lower. Stochastics look particularly bearish with the falling PMO.
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 looks particularly vulnerable right now given the topping PMO and nearing Crossover SELL Signal. The rising trend is mostly intact, but we suspect that it won't hold it very much longer. Stochastics are falling in agreement with the PMO.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: The Dollar is looking more bearish and that should help Gold. However, we have two days of bearish filled black candlesticks. The PMO has yet to give us a coveted Crossover BUY Signal, but we do see rising Stochastics and an RSI above net neutral (50). Candlesticks are one day patterns so it isn't a good outlook for tomorrow, but overall the chart is maturing.
We noted yesterday that sentiment has now hit extremely bearish levels and that bodes well for Gold. We sense that Gold is on the verge of a good rally.
GOLD MINERS Golden and Silver Cross Indexes: GDX hit resistance yesterday and fell back today. Gold and the market managed rallies today so we should have seen some positive movement and we didn't. Participation is still very thin. If Gold gets going as we believe it will that would likely afford GDX the opportunity to rally. Until we see a breakout from the declining trend, we would stay away from this industry group.
CRUDE OIL (USO)
IT Trend Model: BUY as of 2/12/2024
LT Trend Model: SELL as of 12/18/2023
USO Daily Chart: We are still waiting patiently for a breakout in Crude Oil. The indicators are in agreement that we should see one. We note that we are getting very close to a Golden Cross of the 50/200-day EMAs. Stochastics are comfortably above 80 and the PMO is rising.
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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