The SPY was quiet for most of the day, but near the end we saw a pop higher. However, that rally was not sustained and we ended up with a fairly strong decline to finish out the trading day. Support held, but given the declining 5-minute PMO, poor Stochastics and negative 5-minute RSI, there is a good chance this decline will see a continuation tomorrow morning.
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.
Watch the latest episode of DecisionPoint on our YouTube channel here!
MARKET/INDUSTRY GROUP/SECTOR INDEXES
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: The market continues ever higher. Despite a decline, we did see a higher high and a higher low. The market is loathe to decline in a meaningful way as can be seen from the five prior times it attempted a breakdown. The RSI is almost in overbought territory above 70 so a pause or decline would be helpful to clear this condition.
The PMO is floating well above the zero line and is flat implying pure strength. Stochastics are rising above 80 and the VIX is above its moving average on the inverted scale so there is internal price strength as well.
Here is the latest recording from 3/4:
SUBSCRIBE TO THE DECISIONPOINT YOUTUBE CHANNEL HERE!
S&P 500 New 52-Week Highs/Lows: New Highs hit levels we haven't seen in over a year. Internals are strong. The 10-DMA of the High-Low Differential is at levels we haven't seen since 2021. There was a period of highly volatile trading in a decline, but ultimately price did right itself.
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) continue to twitch, this time they moved higher. Intrinsically, the market does look strong based on participation of stocks above their 20-day EMA and the percentage of rising PMOs. The big problem are the negative divergences which remind us the market still has some work to do to get those indicators back to the levels we saw previously.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
The ITBM and ITVM are healthy and rising. This continues to tell us that any market decline ahead will likely be reserved for the short term. We like seeing the expansion of PMO BUY Signals, but again, negative divergences persist.
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 is robust and above our bullish 50% threshold so we have a ST Bias that is bullish. The Silver Cross Index is very near a positive crossover, but today instead of a crossover we saw a decline. This leaves us bearish in the intermediate term. The Golden Cross Index is rising strongly and is above its signal line giving us a bullish long-term bias.
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.
**************************************************************************************
CONCLUSION: There is no denying that the internals are strong right now and can sustain this rally further. The negative divergences remain a problem, but we could see them slowly clear if the rally broadens as many suggest it already is. We aren't so sure that small-caps are participating enough. STOs turned up today and that bodes well although based on our opening chart a decline may be in order first. The IT Bias is still bearish, but it came very close to changing bullish as the Silver Cross Index is closing in on a Bullish Shift above the signal line. The RSI is getting overbought so there may be more pause to clear those conditions. Increasing exposure is okay, but we would apply stops for protection especially given the nearly overbought RSI.
Erin is 70% long, 0% short.
**************************************************************************************
Have you subscribed the DecisionPoint Diamonds yet? DP does the work for you by providing handpicked stocks/ETFs from exclusive DP scans! Add it with a discount! Contact support@decisionpoint.com for more information!
BITCOIN
Bitcoin is off to the races. After forming a bull flag, price burst forward and is in the process of setting up another flagpole. The overbought RSI is not a problem for Bitcoin which defies gravity even while extremely overbought. The PMO is very bullish and signaling pure strength.
BITCOIN ETFs
INTEREST RATES
Yields ticked up today, but still appear rounding off toward another run at support. We're not so sure they'll make their way down that far, but near-term we should expect more decline.
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
We have a bearish rounded top on $TNX that suggests we will see it drop further. The PMO is in agreement as it closes in on a Crossover SELL Signal. Support could hold at the 200-day EMA, but we would be prepared for a breakdown there.
BONDS (TLT)
IT Trend Model: SELL as of 2/20/2024
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: As yields slowly decline, Bond funds have enjoyed mild rallies. We expect the yield to continue lower so TLT should see more rally. The PMO has just given us a Crossover BUY Signal and Stochastics are well above 80 suggesting new strength could be coming in.
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 reading neutral right now. The rising trend was broken, but drifted out, it didn't see a heavy decline. We are looking for more of the same. The PMO is on a SELL Signal but is still flat above the zero line so while it is a SELL Signal, we see it as diminishing strength versus pure weakness.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold is off to the races. It has taken much time and patience to get here. Price is already overbought based on the RSI so we may see a pause in the action which would likely offer a good entry. The PMO is rising strongly and in our minds represents pure strength in this move. Stochastics also show us internal strength.
GOLD Daily Chart: Discounts on PHYS are slimming somewhat which implies investors are not so bearish on Gold now. We have a feeling these discounts will shrink further as a function of rising prices. The relative strength line against the Dollar is rising vigorously so a rally in the Dollar isn't likely to harm Gold as much as it usually does.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners are off to the races as well. The rally Gold goosed this group which is finally waking up. Participation woke up with a bang! %Stocks indicators rocketed skyward and today the Silver Cross Index shifted above its signal line giving GDX a bullish IT Bias. The PMO is rising resolutely upward. We would look for this move to propel GDX toward overhead resistance at 32.00.
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 Oil formed a bearish engulfing candlestick today which portends a decline tomorrow. Price is still above support and this saucer shaped base does imply more upside. We have heard that OPEC+ will be cutting production and that would also work in Crude's favor.
Good Luck & Good Trading!
Erin Swenlin and Carl Swenlin
Technical Analysis is a windsock, not a crystal ball. --Carl Swenlin
(c) Copyright 2024 DecisionPoint.com
Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
DecisionPoint is not a registered investment advisor. Investment and trading decisions are solely your responsibility. DecisionPoint newsletters, blogs or website materials should NOT be interpreted as a recommendation or solicitation to buy or sell any security or to take any specific action.
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.
Helpful DecisionPoint Links:
DecisionPoint Alert Chart List
DecisionPoint Golden Cross/Silver Cross Index Chart List
DecisionPoint Sector Chart List
Price Momentum Oscillator (PMO)