Today the iShares 20+ Year Bond ETF (TLT) 20-day EMA crossed down through the 50-day EMA (Dark Cross) below the 200-day EMA, generating an IT Trend Model SELL Signal. This is the third signal change in about a month because the moving averages are flat and very close together, so this doesn't announce any change in trend. The PMO is flat and on the zero line, indicating zero inclination to go anywhere.
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: Today the Fed kept interest rates unchanged. The narrative was such that investors were placated and a rally ensued. This gave us a breakout to new all-time highs. The PMO is on a SELL Signal, but is very near to an upside crossover. It is flat above the zero line which continues to indicate "pure strength".
Price moved back to the top part of the bearish rising wedge. Should we see an upside breakout from the pattern that would be considered especially bullish. The VIX penetrated the upper Bollinger Band today on the inverted scale as investors remain quite complacent. However, these punctures are often accompanied by a downside reversal. We aren't so sure this will happen, but it is worth consideration.
Here is the latest recording from 3/18:
S&P 500 New 52-Week Highs/Lows: New Highs expanded greatly today which has helped alleviate the prior negative divergence. The 10-DMA of the High-Low Differential is rising again which is bullish.
Climax* Analysis: Three of the four relevant indicators had climax readings, and SPX Total Volume was not at blowoff levels, so we have an upside initiation climax. We should expect price to continue higher.
*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.
Yesterday both the Swenlin Trading Oscillators (STOs) turned up and today they popped higher and back into positive territory. Negative territory has been an oversold signal. We saw an excellent expansion in rising PMOs and we now are at 80% of all stocks holding above their 20-day EMA.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT.
Both the ITBM and ITVM continued higher, but we are far from clearing the negative divergences on this chart. Still, it is good to see rising indicators. We should see more PMO BUY Signals is rising PMOs continue to expand.
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 all three timeframes.
We saw the Silver Cross Index top today. It could turn back up soon given there is a higher percentage of stocks above their 50-day EMA versus stocks holding a Silver Cross. %Stocks > 20/50EMAs are well above our bullish 50% threshold so the ST Bias is BULLISH. The Silver Cross Index is above its signal line so the IT Bias is BULLISH. The Golden Cross Index is above its signal line so 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: We noticed a big change in our indicators yesterday when they reversed higher. They are continuing to rise bullishly. Today's upside initiation climax suggests this rally will see a continuation tomorrow. Looks like another market wobble is in the rearview mirror and more rally is up ahead. We really didn't like what we were seeing on the STOs and ITBM/ITVM, but they look far more bullish. We have to pivot as necessary. While we do expect more upside, we would still employ stops, particularly on any new positions.
Erin is 60% long, 0% short.
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BITCOIN
Bitcoin rallied strongly after its recent parabolic breakdown. There is still a visible declining trend and the PMO is still in decline, but this bounce is coming off support, actually right above support. We would be cautious going in on Bitcoin as that declining trend needs to be broken.
BITCOIN ETFs
INTEREST RATES
Yields pulled back on the Fed announcement and could see more decline. The rising trends are all intact though and until they are broken we remain bullish on yields.
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
$TNX hit overhead resistance and was turned away. This could be the beginning of a double top formation out of the February low so we could see it move even lower.
BONDS (TLT)
IT Trend Model: SELL as of 3/20/2024
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: Price is holding above support, but going nowhere. Yields are looking more bearish so we could see a rally here, but we wouldn't look for a big move higher. Yields are still holding rising trends.
DOLLAR (UUP)
IT Trend Model: BUY as of 1/23/2024
LT Trend Model: BUY as of 5/25/2023
UUP Daily Chart: The bearish filled black candlestick did portend today's decline. Today it formed a bearish engulfing candlestick that implies more decline tomorrow. This will give Gold a shot in the arm.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: We are getting a breakout from the bull flag formation. The formation tells us to look for an upside target around 225.00. This isn't out of the question. The RSI is currently overbought, but we expect that condition to last longer. Stochastics turned up above 80 and the PMO is rising above the zero line.
We saw a bearish spike on discounts for PHYS. Those high readings should work in Gold's favor as sentiment is contrarian.
GOLD MINERS Golden and Silver Cross Indexes: GDX skyrocketed today on Gold's big rally and the Fed's good news. A bearish Dollar helped as well. The rounded top turned out to be harmless. This looks like a good springboard to higher prices given the strong participation readings.
CRUDE OIL (USO)
IT Trend Model: BUY as of 2/12/2024
LT Trend Model: BUY as of 2/27/2024
USO Daily Chart: Crude pulled back today after five days of rally. It was time for a pause. This has taken the RSI out of overbought territory. The PMO still rising unperturbed so we expect higher prices will resume soon.
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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