Mega-cap performance had begun to wane a bit last week, but this week they have grabbed the reins and are likely to continue to skew the large-cap indexes. Below is a chart of the SPY and equal-weight RSP. At first glance it is easy to see that RSP has not seen the same rally shape. It is struggling at all-time highs whereas the SPY continues to log them. The relative strength line of RSP to the SPY shows a definitive push downward as mega-caps take command once again.
This is likely to give us the impression that the market overall is healthy while underneath the surface the broad market isn't keeping up.
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/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: We are covering the monthly charts today. The SPY logged another all-time high after taking a brief break. This was spurred primarily on earnings from AMZN and META. The RSI is nearing overbought territory once again. The PMO is holding onto its Crossover BUY Signal.
The VIX spent most of the week below is moving average which would imply some concern on the part of investors, but not much. Stochastics are holding above 80. We already mentioned the outperformance by the SPY v. RSP.
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SPY Weekly Chart: The weekly RSI is now in overbought territory, but noting activity in 2021, it can stay overbought for some time. The weekly PMO is safely rising and is not yet overbought. It has avoided a negative divergence as it rose above the last top.
SPY Monthly Chart: The monthly chart looks very good. We have a PMO Crossover BUY Signal that occurred well above the zero line which bodes very well for the long term. Based on the RSI, price is actually not overbought in the longer term.
New 52-Week Highs/Lows: New Highs did expand, but not to the levels we saw back in December. The 10-DMA of the High-Low Differential is rising, but it remains very overbought.
Climax Analysis: In spite of robust price gains, there were no climax readings today. Also, note that SPX Net A-D and SPX Net A-D Vol were negative. This also speaks to the rally being mostly driven by mega-caps.
*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.
This chart is very worrisome. After two big rally days, both the Swenlin Trading Oscillators continue to decline. We also saw a contraction in participation indicators. More stocks lost support at the 20-day EMA and more stocks lost rising PMOs. We didn't even mention the negative divergences.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
Another surprise. The ITBM turned down on today's rally. There is definitely something going on under the surface. The ITBM did move higher, but barely. %PMO Xover BUY Signals held steady, no new 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.
The strongest IT Bias belongs to Consumer Staples (XLP) and it managed to gain on both the SCI and GCI this week. Rotation is making its way back to that defensive area of the market.
Energy (XLE) holds the lowest IT Bias as the sector slumps once again. It lost more of the foundation given the decline in the GCI.
This table is sorted by SCI values. This gives a clear picture of strongest to weakest index/sector in terms of intermediate-term participation.
It is notable that there were few Silver Cross Indexes that showed improvement, and most were unchanged or lost percentage points. The worst performers were Regional Banks (KRE) and Utilities (XLU).
Real Estate (XLRE) is losing some ground and saw a loss of silver crosses. The sector does not look healthy right now.
This table is sorted by GCI values. This gives a clear picture of strongest to weakest index/sector in terms of long-term participation.
The long-term foundation seems fairly solid as most gained percentage points on the GCI.
Biotechs (IBB) hold the lowest GCI, but did manage to gain a point overall. The group still looks weak given the loss of SCI percentage points.
The highest readings go to Financials (XLF) and Semiconductors (SMH). Both are holding steady providing a good foundation. SMH in particular saw a 10 percentage point gain on the SCI, but these readings are highly overbought so we would still be careful among this group.
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.
It is important to note that %Stocks > 20/50/200EMAs all declined on today's over 1% rally. They do remain above our bullish 50% threshold so the short-term bias can be listed as Bullish for now, although this current deterioration has us concerned. The SCI is moving lower below its moving average so we have an IT Bias that is Bearish. The GCI is currently rising and is above its signal line so we read the LT Bias 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: Price advances are being carried by the mega-cap stocks. When we get two of the Magnificent 7 stocks logging huge one-day advances (AMZN +7.87% and META +20.32%!!), the picture looks extra rosy, even though breadth, SPX Net A-D and SPX Net A-D Vol, was negative. Also note, that the Nasdaq 100 advanced +1.69%, while it's BIAS turned bearish (its Silver Cross Index crossed down through its 10-day EMA). Additionally, we saw STOs moving lower and participation contracting across the board. Negative divergences plague the charts. We would temper our enthusiasm for this current rally. Expanding exposure isn't wise given the underlying weakness we are detecting. It may be time to start tightening stops.
Erin is 30% long, 0% short.
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BITCOIN
Bitcoin is in a trading range and based on the indicators we suspect that it will linger. Support appears safe given the PMO Crossover BUY Signal and positive RSI. Stochastics also look good above 80. We could see a break above the 44000 level.
This chart is to show where some of the support/resistance lines come from.
BITCOIN ETFs
Today:
This Week:
INTEREST RATES
Interest rates bounced off support today. It was a strong move higher and does suggest we could see them make their way higher once again. Prior rising trends have not been recaptured yet.
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
While $TNX rebounded strongly off support, the PMO is still in decline. This move did not recapture the prior rising trend. We do believe this could be a pivot point that will bring the yield even higher, but we won't get too bullish until we see more positive action out of the PMO. The top below the zero line still looks pretty ugly.
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 6.60 to 6.69.
BONDS (TLT)
IT Trend Model: BUY as of 11/28/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: The rally was dashed by the rising 20-year yield today. This has formed a handle on a cup-shaped bottom. The PMO is nearing a Crossover BUY Signal, but we have to wonder if it is arriving a little too late. It was one day of strong rate rise, we need to see some follow through before we get to bearish.
Price is holding above support at the March 2023 low and above key moving averages.
TLT Weekly Chart: This week's rally has the PMO accelerating higher and the weekly RSI is rising again in positive territory. Another reason that we don't want to get too bearish too soon.
TLT Monthly Chart: The monthly PMO is rising nicely out of oversold territory. This could be a sign of new strength or more than likely a show of diminishing weakness in the long term. The long-term picture is still fairly bearish given the declining trend out of the 2020 top.
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 finally broke from its congestion area. The RSI has been very positive and it isn't overbought yet. The PMO is still rising, as are Stochastics. We should expect this rally to continue.
We believe it could begin to challenge the 2023 high.
UUP Weekly Chart: The weekly chart looks very bullish on the rebound off support at 27.00. The weekly RSI is positive and not overbought and the weekly PMO has turned back up above the zero line. The 2022 high isn't out of the question.
UUP Monthly Chart: The monthly PMO has surged above the signal line or bottomed above the signal line. It is unfortunately very overbought, but price is not based on the RSI staying well below 70. The picture is bullish in all three timeframes for the Dollar.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold was just getting going and the Dollar pushed it right back down. The picture is not bleak. We do see some upside possibilities for Gold right now. The PMO isn't on a BUY Signal yet, but it is still rising. The RSI is holding in positive territory. Stochastics are flat, but not falling.
The correlation continues to ease between Gold and the Dollar which would afford Gold the opportunity to rise even as the Dollar rises. It is showing no weakness relatively against the Dollar. More than likely we will see price congregate between the January low and all-time highs.
GLD Weekly Chart: It is hard to see, but the weekly PMO did top. The weekly RSI looks good though. As noted on the daily charts, we think that Gold is going to continue moving sideways.
$GOLD Monthly Chart: We ultimately believe that Gold will make new all-time highs once again, but it may take some more time as it encounters overhead resistance. The monthly PMO is rising and the monthly RSI is positive so it does favor an eventual breakout.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners have lost some shine. The short-term rising trend was broken on today's decline and it has taken the PMO downward. The RSI also lost positive territory. We note that participation readings are thinning not gaining. The SCI is turning down beneath its signal line. The GCI looks good, but given we have fewer stocks above their 50/200-day EMAs, it isn't going to rise much longer. We would avoid this group until Gold gets going again.
CRUDE OIL (USO)
IT Trend Model: SELL as of 2/1/2024
LT Trend Model: SELL as of 12/18/2023
USO Daily Chart: Crude Oil started the week in good standing having rallied steadily, but the bottom fell out on the trade. The indicators have clearly turned south with the PMO looking especially bearish right now. Stochastics are falling fast and the RSI is negative again. It had just seen a Silver Cross of the 20/50-day EMAs and then it immediately whipsawed into an IT Trend Model SELL Signal. Energy will likely feel the pain as price continues lower toward support.
USO/$WTIC Weekly Chart: We have a symmetrical triangle on the weekly chart. These are continuation patterns so the prior trend is expected to be 'continued'. That means we should eventually look for an upside breakout. The weekly PMO is trying to turn up, but the weekly RSI is negative again. The daily picture is bearish, but the intermediate term doesn't look as bad.
WTIC Monthly Chart: The long-term chart of $WTIC displays a very negative looking monthly PMO. The monthly RSI is negative. Crude Oil holds a bearish bias in the long term.
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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