Today the Gold Miners ETF (GDX) 20-day EMA crossed up through the 50-day EMA (Silver Cross), generating an IT Trend Model BUY Signal. There is a bullish short-term double bottom in February, and a longer-term double bottom between October and February.
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: We set a fresh all-time high on the SPY today as the rally marches ever higher. While the PMO is technically on a Crossover SELL signal, it is flat and well above the zero line which flashes 'pure strength'. The RSI is not yet overbought so price could move even higher.
We got the desired effect from yesterday's VIX puncture of the lower Bollinger Band on the inverted scale with a rally. It is now over its moving average which implies strength. Stochastics are not above 80, but they are elevated and not declining.
Here is the latest recording from 3/11:
S&P 500 New 52-Week Highs/Lows: Even though SPY closed at a new, all-time high, New Highs contracted sharply compared to prior readings. This is sealing in an already problematic negative divergence.
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) both moved up with gusto today. It wasn't enough to dispel the negative divergences, but it is bullish nonetheless. We didn't see the kind of expansion on %Stocks > 20EMA and %PMOs Rising that we would expect on a strong rally day. There are still more than a 1/3rd that have falling PMOs.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is SOMEWHAT OVERBOUGHT.
The ITBM and ITVM are rising strongly unperturbed. We still do not have that many PMO BUY Signals considering the strength of the rally. We really should be seeing more and that is what is setting up a very bad negative divergence.
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.
Yesterday's comments still apply:
"The market bias is BULLISH in all three timeframes.
We have robust readings for %Stocks > 20/50EMAs so we are listing the ST Bias as BULLISH. The Silver Cross Index looks very strong as it rises. Given %Stocks > 20/50EMAs are reading higher than the Silver Cross Index, it could continue to rise further. It is above its signal line so the IT Bias is BULLISH. The Golden Cross Index is angling up above its signal line so the LT Bias is also BULLISH."
We do note that the negative divergence on %Stocks > 200EMA has been relieved by higher readings.
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: The rally marches on and given strong internals like the VIX, Stochastics, STOs and a bullish bias in all three timeframes, it could march ever higher. However, we cannot throw caution to the wind given the lack of support from rising momentum within the index and lack of PMO BUY Signals that have created two of many negative divergences on our charts. Inflation data so far isn't coming in too hot and that seems to keep investors buying. More reports will be released on Thursday. We would still apply stops to your positions to protect profits. Portfolio expansion is still risky but can be done carefully with stops.
Erin is 75% long, 0% short.
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BITCOIN
Bitcoin pulled back today, but it didn't change the bullish outlook on the chart. This decline did offer the RSI an opportunity to at least begin moving out of overbought territory. The PMO is very strong and is indicating pure strength in this current move. We note that volume wasn't that elevated on selling. The OBV is confirming the rally.
BITCOIN ETFs
INTEREST RATES
Yields are looking bullish again and it suggests we will not see support tested this time around. We will see downside pressure being applied to Bond funds.
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 nearly saw a "Dark Cross" of the 20/50-day EMAs, but could be avoided with a close above the 50-day EMA and we think that is possible right now. This is a good area for support to be found. The RSI is still negative but is nearly in positive territory. The PMO is decelerating its decline. Stochastics are rising again.
BONDS (TLT)
IT Trend Model: BUY as of 3/6/2024
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: Yields are making the turn and you can see this in the 20-year yield in the last indicator window. We would look for a test at around 92. The PMO is still rising but has decelerated. The RSI is in decline and Stochastics just dropped below 80.
The double bottom hasn't been busted yet, that would take a move below 92. Still this looks like a meaningful 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 was up slightly but formed a bearish filled black candlestick that implies tomorrow we will see a decline. The PMO is still in decline and the RSI is negative. Stochastics are rising again, so the picture is brightening, we just don't believe this will turn into a big rally like we saw to begin the year.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold did not show relative strength to the Dollar today. The Dollar was up only +0.07% and Gold was down a whopping -1.09%. The rally was running hot so a pullback toward the breakout point was expected. With the Dollar looking slightly more bullish this may be the time for a bit more decline. The indicators are still bullish, although we aren't thrilled with Stochastics topping.
Today's decline nearly took the RSI out of overbought territory. This is good. We want to see those overbought conditions alleviated sooner rather than later. The inverse correlation with the Dollar is strong so we will want to see this rally in the Dollar end quickly.
GOLD MINERS Golden and Silver Cross Indexes: GDX declined most likely due to the drop in Gold today. A pullback is needed, but internals are so strong, we wouldn't be surprised if the rally started back up tomorrow. Another pullback would make this ETF very interesting for entry. With great participation and a rising Silver Cross Index, it is likely to move higher still.
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 is showing weakness and we believe we might see a handle put on this saucer/cup. We have a new PMO Crossover SELL Signal and falling Stochastics. We read this as diminishing strength and don't expect a deep decline, just enough to form a handle. We have three levels of support for it to find its legs: 50-day EMA, 200-day EMA and 70.00.
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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