One way to get the temperature of the broad market in general is to take a look at the NYSE. Today saw a nice rally, a rally that was larger than the SPX itself. New Highs have hit levels we have not seen in over two and half years. The 10-DMA of the High-Low Differential has turned up on this boost to New Highs. This could be a possible blowoff so we should temper our enthusiasm. For a rally continuation we need to see the broad markets participate.
Speaking of participation, we note that %Stocks indicators are all reading above our 50% bullish threshold. They can definitely accommodate more upside before getting overbought. The Golden Cross Index is worrisome as it has turned over, but the Silver Cross Index is on the rise after surging above its signal line. We will need to see more expansion in participation to keep the Silver Cross Index rising and we certainly need more above their 200-day EMA to ensure the Golden Cross Index turns back up.
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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 saw the formation of a bearish filled black candlestick today that could mean lower prices tomorrow. The PMO is in the process of crossover above its signal line for a Crossover BUY Signal. This is occurring well above the zero line so we see this as a continuation of pure strength.
We got a small upside breakout from the bearish rising wedge formation. This can be considered especially bullish, but we'd like to see a bit more follow through before getting too excited about this breakout. The VIX punctured the upper Bollinger Band and that can often times mean a short-term downside reversal. Stochastics look incredibly strong right now above 80.
Here is the latest recording from 3/18:
S&P 500 New 52-Week Highs/Lows: Today was the highest number of New Highs in almost three years, which could be a blowoff event. It doesn't require a price reversal, but a period of consolidation is not out of the question.
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) thrust higher today. This has moved them into overbought territory already. We are seeing the requisite expansion to PMOs Rising, but we should still see higher numbers than we did previously given this rally is teflon.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT.
We saw both the ITBM and ITVM continue to track higher. The STO-V has overcome its last top. Now we want to see the same from the STO-B. %PMO Xover BUY Signals crossed above its signal line today but is still reading much lower than it should causing a negative divergence to add to the ones we have on the ITBM/ITVM.
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.
The Silver Cross Index turned back up today and given we have a higher percentage above their 50-day EMAs versus the Silver Cross Index, that condition could continue. It 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. We have strong readings above 80% on participation so we list the ST Bias as 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: The rally continued today but we did notice it was weakening most of the day which formed the bearish filled black candlestick. We have a VIX puncture of the upper Bollinger Band and a possible blowoff on New Highs. The very short term does seem weak. However, STOs and IT indicators are rising strongly and participation is strong so the intermediate term is reading bullish. Short term we could see some consolidation, although with this rally we are beginning to wonder. We still suggest stops be deployed and expanding exposure should be done very carefully with stops, mental or otherwise.
Erin is 65% long, 0% short.
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BITCOIN
Bitcoin is essentially holding a declining trend despite yesterday's pop higher. Today some of those gains were erased. The indicators are still very bearish with the RSI almost in negative territory. Stochastics are nearing 20 suggesting internal price weakness. Be careful here, there is likely more downside to absorb.
BITCOIN ETFs
INTEREST RATES
Yields halted their decline, but still look near-term weak. Rising trends are still intact, but near-term weakness has been seeping in.
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 has halted on support at the 20/50-day EMAs, but Stochastics and the topping PMO suggest we could see more weakness in the near term.
BONDS (TLT)
IT Trend Model: SELL as of 3/20/2024
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: The 20-year yield is still holding onto a rising trend and that will continue to put downside pressure on TLT. It did manage a rally today, but finished with a bearish filled black candlestick that would suggest a decline tomorrow. The PMO is still headed lower and while Stochastics have turned up they are still in weak territory below 20.
DOLLAR (UUP)
IT Trend Model: BUY as of 1/23/2024
LT Trend Model: BUY as of 5/25/2023
UUP Daily Chart: Yesterday's giant bearish engulfing candlestick turned out to be harmless as the Dollar rallied and held onto its rising trend. There is a new PMO Crossover BUY Signal and Stochastics are rising and should get above 80 tomorrow barring a terrible decline. The RSI tells us that despite this rally, price is not overbought yet.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: GLD finished lower, but managed a higher high and a higher low. The rally isn't likely ending. Indicators are still bullish.
Gold has lost some strength against the Dollar, but the inverse correlation is easing somewhat. The Dollar will still hold sway on Gold, but could find its legs even on a Dollar rally.
GOLD MINERS Golden and Silver Cross Indexes: GDX gave back some of yesterday's big rally. This is likely a hiccup given Gold's decline. Participation is still incredibly strong. We would like to see the Silver Cross Index rising strongly again. It should find its legs given we have higher readings on %Stocks > 20/50EMAs. We don't think the rally is finished given internal strength.
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 again today, but it didn't compromise the PMO which is still rising. Stochastics are a problem, but we expect to see Crude make its way higher again soon. It needed a cooling off period.
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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