The market opened with a gap down, continuing the decline that began the last five minutes of trading on Friday. The gap posed resistance for the market all through the trading day. When gaps are covered by price, you'll usually see follow through in that direction. If they don't get covered, you'll find that price will revert to the trend that caused the gap. Price fell perilously to finish today's trading, setting up a bearish configuration for trading tomorrow.
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 is slowly making its way lower after forming the bearish filled black candlestick. There is a distinct possibility that this will turn out to be another wobble, but we should prepare for more downside. The PMO logged a new Crossover SELL Signal today.
We adjusted the rising wedge to include the last price top. This keeps the bearish formation intact. The expectation of a rising wedge is breakdown out of the pattern. It hasn't materialized yet, but again we should use caution. The VIX remains above its moving average and Stochastics are above 80. Additionally the PMO is flat above the zero line which indicates strength alongside the VIX and Stochastics.
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S&P 500 New 52-Week Highs/Lows: As we would expect, New Highs did pare back. We aren't seeing a large amount of New Lows and given the strong internals of the market, it may be some time before we start seeing higher readings on New Lows. We have a negative divergence between price and the 10-DMA of the High-Low Differential.
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 OVERBOUGHT.
Swenlin Trading Oscillators (STOs) have turned down in overbought territory. Note the huge loss of rising PMOs within the index. This is the first place we will see market deterioration and we are seeing it.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is SOMEWHAT OVERBOUGHT.
The ITBM and ITVM remain mixed with the ITBM falling again and the ITVM rising. Both are somewhat overbought. Today %PMO Xover BUY Signals dropped beneath its signal line and with only 40% holding rising PMOs, that percentage is likely to continue its decline.
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.
Internals remain strong with %Stocks > 20/50EMAs showing readings well above our 50% bullish threshold which gives us a ST Bias of BULLISH. The Silver Cross Index has topped but it remains above its moving average so the IT Bias is also BULLISH. The Golden Cross Index has also topped, but like the Silver Cross Index, it remains above its signal line so the LT Bias is BULLISH too.
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 have strong participation readings and internals so this rally could continue to march onward. However, there are problems developing, particularly with PMOs. Momentum is the first place we will see deterioration and that is occurring right now. It hasn't affected participation yet, but it could manifest itself with a more concerted market decline which would affect participation. STOs both turned down today and the market finished the day with a strong decline suggesting we might actually see another decline. That would be significant in that it would mark a third day of decline, something that hasn't happened since the first week of January. We would continue to play it safe by monitoring your stop levels.
Erin is 65% long, 0% short.
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BITCOIN
Bitcoin held its rising trend this weekend and is on the rebound. The indicators are already shaping back up so we should see more follow through on this rally. ETF holders are continuing their volatile ride.
BITCOIN ETFs
INTEREST RATES
We think that yields will remain in a broad trading range, as we have seen for the last year or so, for quite a while.
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 did bounce off support today, but the PMO is still in decline and is vulnerable to logging a Crossover SELL Signal. Stochastics are dropping vertically so we don't expect this level of support to hold.
BONDS (TLT)
IT Trend Model: SELL as of 3/20/2024
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: TLT dropped today. It was unable to overcome resistance at the 200-day EMA. The PMO is flat along the zero line so this is about as neutral as you can get. Stochastics are starting to rise, but we see more sideways movement ahead.
We see a bearish descending triangle on the 1-year daily chart. It implies a breakdown of the support line. Note that price did not reach the top of the pattern before turning back down; that is bearish and suggests this time we could get that breakdown. Yields are looking soft so we could see support hold a bit longer.
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 is on a nice rally with a steady rising trend. The RSI is not overbought and the PMO is rising on a Crossover BUY Signal above the zero line. This indicates strength. Stochastics are rising above 80 which tells us we have internal price strength as well.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold is consolidating after a decisive long-term breakout. Stochastics have topped which suggests a rally could be delayed. Gold's relative strength line is moving sideways so the rally in the Dollar isn't hurting Gold as much as it could. Gold is moving sideways as the Dollar is moving higher. That's a win.
The inverse correlation with the Dollar is easing and that will also work in Gold's favor should the Dollar continue to rally higher.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners enjoyed a rally alongside Gold today. Price does look a bit toppy here, but participation remains robust. Notice that the Silver Cross Index is surging above its signal line and we have over 90% with price above the 20-day EMA. The internals suggest the rally will continue.
CRUDE OIL (USO)
IT Trend Model: BUY as of 2/12/2024
LT Trend Model: BUY as of 2/27/2024
USO Daily Chart: We see a small flag formation coming out of the handle to the cup. Today's rally confirms the pattern and suggests we will see upside follow through as Crude makes its way toward our target of about 84.00.
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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