Reddit Inc (RDDT) debuted yesterday to much fanfare. It opened with a bang shooting prices up over 20%, but since then it has cooled losing the original gains. IPOs are interesting animals. Often times we will see similar patterns with an explosion to start trading followed by a cooling off period. We will be interested in seeing a daily chart when we finally have enough data to view it. For now, the PMO is in decline suggesting RDDT will have rocky trading next week.
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/SPX SECTOR/INDUSTRY GROUP INDEXES
Change Today: 
Change for the Week:
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: We have eight 'wobbles' for the market on its way up. What begins as a strong decline ends with a whimper and more rally. The market could continue higher from here but we are seeing a few problems beneath the surface that we need to discuss.
The PMO gave us a new Crossover BUY Signal today and it remains flat well above the zero line indicating pure strength. The VIX is near the upper Bollinger Band on our inverted scale. This is reversal territory. Stochastics have turned down but remain above 80 signaling strength.
SPY Weekly Chart: The rising trend is holding up despite its steep appearance. It's been a magnificent rally out of the October lows taking price up more than 50% since then. The weekly PMO is rising strongly suggesting strength in the intermediate term.
New 52-Week Highs/Lows: New Highs were lower as expected on a decline. Yesterday's pop apparently was a sign of a blowoff. The 10-DMA of the High-Low Differential topped today, setting up a negative divergence with price.
Climax Analysis: There were no climax readings today. We did see upside initiation climax on Wednesday that led to higher prices, but the rally stalled out 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) are now in overbought territory. They could certainly accommodate more upside. We want to see them lose their negative divergences. We continued to lose rising PMOs within the index. The percentage is nearly below our bullish 50% threshold.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is SOMEWHAT OVERBOUGHT.
The ITBM and ITVM were mixed today with the ITBM turning lower and the ITVM rising. We don't like seeing this weakness seeping in particularly when STOs are overbought. We've generally seen STOs fall in concert with the ITBM/ITVM. Not so this time and that has us alert. We still have 57% of stocks holding PMO Crossover BUY Signals. That percentage is destined to move lower given only 52% have rising PMOs.
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PARTICIPATION: The following tables summarize participation for the major market indexes and sectors. The 1-Week Change columns inject a dynamic aspect to the presentation. There are three groups: Major Market Indexes, Miscellaneous Industry Groups, and the 11 S&P 500 Sectors.
The strongest IT Bias belongs to Gold Miner (GDX) which exploded this week. They are pulling back, but internals are still bullish enough to look for a rebound.
The weakest IT Bias goes to Regional Banks (KRE) which has struggled despite a strong Financial sector. They lost more ground on the Golden Cross Index.
This table is sorted by SCI values. This gives a clear picture of strongest to weakest index/sector in terms of intermediate-term participation.
As mentioned above, the Financial sector is performing very well and consequently it holds the highest Silver Cross Index reading and it is improving as the sector gained one percentage point on the SCI this week.
Regional Banks (KRE) hold the lowest Silver Cross Index reading and it didn't see any improvement this week. We would avoid this area of the market for now.
This table is sorted by GCI values. This gives a clear picture of strongest to weakest index/sector in terms of long-term participation.
Energy (XLE) gained 22 percentage points on the Golden Cross Index (GCI) suggesting the foundation is getting stronger for these stocks.
Utilities hold the lowest GCI reading and that got worse this week. The sector doesn't look terrible, but there is weakness seeping in.
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.
All participation readings are above our bullish 50% threshold so the ST Bias can be read as BULLISH. The Silver Cross Index did top today and given we have lower percentages of stock above their 20/50EMAs, it could continue lower, erasing its current bullish bias by moving below its signal line. For now it is above its signal line so the IT Bias is BULLISH. The Golden Cross Index is rising and 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: The SPY logged its best week for the year despite today's hiccup. The rally appears teflon, nothing seems to perturb it. However, we see a few problems developing. The ITBM top and overbought STOs imply the rally may continue to stumble going into next week. The VIX implies a possible near-term reversal. Negative divergences can be spotted on nearly every chart we displayed this week. The current market environment is not as conducive to a rally continuation as we would like. Participation is slipping as are PMOs. We shouldn't throw caution to the wind next week. So far the strategy of setting stops and letting the market take us out is working. We're able to take advantage of a rally that won't quit with a safety net just in case. Expanding exposure is still a risky proposition, but can be done with the use of stops.
Erin is 65% long, 0% short.
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BITCOIN
Bitcoin Daily Chart: Bitcoin retreated this week after the parabolic breakdown. Support is nearing, but that PMO looks particularly negative. The RSI has also dipped below net neutral (50). Stochastics did tick up today which is interesting, but it isn't enough to look on Bitcoin favorably in the near term.
Bitcoin Weekly Chart: The parabolic move is clear on the weekly chart. Notice this week's decline has not taken us to the next base at 50,000. We aren't saying it will crash, but based on the parabola it should continue lower than it has.
BITCOIN ETFs
Today:
This Week:
INTEREST RATES
Yields overall pulled back this week as they continue to show weakness. They haven't lost rising trends yet, but it does appear they will be tested soon. Near-term we are bearish 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
The decline came right at overhead resistance. The next level of support has been reached but now we are seeing the development of a bearish double top. The rising trend is intact, but will likely be tested next week. At the same time, there is a slightly bullish aspect to the chart. We have a flat top and rising bottoms right now that would form a bullish ascending triangle. A break of the rising trend would bust the pattern and would tell us that the double top is the correct formation. We suspect the double top will win out.
MORTGAGE INTEREST RATES (30-Yr)**
**We watch the 30-Year Fixed Mortgage Interest Rate, because, for the most part, people buy homes based upon the maximum monthly payment they can afford. As rates rise, a fixed monthly payment will carry a smaller mortgage amount, which shuts many buyers out of the market, and potential sellers will experience pressure to lower prices (to no effect so far).
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This week the 30-Year Fixed Rate changed from 6.74 to 6.87.
Here is a 50-year chart for better perspective. They aren't as high as you might think.
BONDS (TLT)
IT Trend Model: SELL as of 3/20/2024
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: With 20-year yield weakening, TLT had the opportunity to rally this week. It wasn't a spectacular rally, but it did get the PMO to turn back up as well as Stochastics. We expect we'll see higher prices for TLT that would take price to overhead resistance at 96.
Near term may look bullish, but if we zoom out we can see the development of a bearish descending triangle.
TLT Weekly Chart: Price is in a declining trend. The weekly PMO has flattened beneath the zero line which signals pure weakness. Again we like Bonds in the near term, but past that it gets less appetizing.
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 and today popped above overhead resistance at the February top. The chart is very favorable and suggests the Dollar will continue to rise.
Overhead resistance is arriving at the October top and it is not far away. The Dollar could stumble there.
UUP Weekly Chart: There was a bearish double top forming on the weekly chart. It is still technical viable as we need a breakout above those tops, but it looks as though we will see that. The weekly RSI is positive and not overbought and the weekly PMO is rising above the zero line on a new Crossover BUY Signal. That pattern will likely be busted.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: A positive Dollar is making it hard for Gold to resume its rally. We still like Gold but as we noted yesterday, it may require a drop to stronger support at the 50-day EMA. We'd like to see it hold in this current trading range, but we see that Gold is losing strength against the Dollar and with the Dollar so bullish, it does seem likely this trading range won't hold.
We do see a bull flag, but confirmation of the pattern is muddy given the last two days of decline. We don't see the pattern as busted yet. A drop below support would bust the pattern.
GLD Weekly Chart: It may have been a difficult decline the past two days, but Gold was up on the week. It is trading near all-time highs. We will watch to see if we get a bull flag on this chart. Discounts were elevated, but aren't in oversold territory yet.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners rallied strongly on Wednesday and we expected to see follow through. No such luck as price has pulled back. With a strong Dollar and weakening Gold, this group may struggle a bit longer. However, with participation percentages so high, we would expect a rebound soon. It would help if Gold got going again.
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 rallied earlier this week but ended on a sour note with three days of decline. We still like the Crude Oil trade and do expect an upside reversal soon. Our target is overhead resistance at 83.00. It did see a higher high and a higher low today. Stochastics aren't encouraging, but the PMO is still holding flat above the zero line signaling strength.
USO/$WTIC Weekly Chart: We continue to monitor the bullish symmetrical triangle. These are continuation patterns and the prior trend was up. We should expect an upside breakout. The weekly PMO is in agreement as it rises on a Crossover BUY Signal above the zero line.
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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