Today the Gold Miner's ETF (GDX) 50-day EMA crossed up through the 200-day EMA (Golden Cross), generating an LT Trend Model BUY Signal. Price closed a bit below resistance, but we think this will prove to be a good long-term signal.
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 was lower on the day. We can see a thin trading range that could end up forming a small double top formation. The PMO is still on a Crossover SELL Signal. There is an OBV negative divergence visible on the daily chart.
We have a bearish rising wedge visible on the daily chart that implies a breakdown. It has been in effect for some time and so far it hasn't proved to be fatal. The VIX crashed on our inverted scale and implies more downside ahead. One thing that is positive would be rising Stochastics which are above 80. That is generally a positive condition.
Here is the latest recording from 4/1/2024:
S&P 500 New 52-Week Highs/Lows: New Highs pared back on the decline as we would expect. No New Lows have been logged. The High-Low Differential is rising, but is in overbought territory.
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) were mixed on the day. We do not like the declining trend visible on the STO-B. Participation took a hit today with fewer stocks now above their 20-day EMA and less than half of the index showing rising momentum.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT.
The ITBM and ITVM were also mixed today. The ITBM, like the STO-B, is now in decline while the ITVM is still rising in overbought territory. Breadth is beginning to show signs of distress. Negative divergences are continuing to keep us cautionary.
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.
While we did see some deterioration to %Stocks > 20/50EMAs they still remain above our bullish 50% threshold. The Silver Cross Index did top today, but remains above its moving average so the IT Bias remains BULLISH. The Golden Cross Index also topped today, but it also remains above its moving average 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 market is now in consolidation mode, staying within a tight trading range. It looks more vulnerable than it has. While we could see the market continue to make its way higher, there are problems beneath the surface. The STO-B and ITBM are both in decline which gives us some concern about breadth. There is a negative OBV divergence leading into this trading range that could imply a breakdown of the bearish rising wedge. Less than half of the market hold rising momentum. Negative divergences have camped out on our charts. We would still exercise caution with the use of stops.
Erin is 75% long, 0% short.
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BITCOIN
Bitcoin looks ready to top again and that would set up a bearish double top. Currently the rising trend is holding, but there is a distinct possibility that that trend could be broken. Still the indicators aren't that bearish yet so for now we expect more sideways movement for Bitcoin.
BITCOIN ETFs
INTEREST RATES
Yields reawakened after a week of decline. Rising trends are holding up so we wouldn't be surprised if they begin strengthening as inflation data comes in stronger than hoped.
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 double top on $TNX is about to be busted with a breakout. This was a strong enough move to get the PMO to turn back up and begin crossing above its signal line. Stochastics were also yanked higher. This does look like a setup for upside follow through.
BONDS (TLT)
IT Trend Model: SELL as of 3/20/2024
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: The symmetrical triangle on TLT is supposed to resolve upward based on the prior rising trend, but yields made a sharp turn upward leaving us with a bad taste in our mouth for Bond funds. Stochastics have tipped over and the RSI is in negative territory. We suspect we will get a breakdown from the triangle which would be especially bearish.
In the longer term, we suspect we have a bearish descending triangle (flat bottom, declining tops). The expectation is a breakdown below support.
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 continuing its strong rally higher, holding a nice rising trend. The RSI has reached overbought territory and typically the Dollar doesn't like that. However, the other indicators are favorable. This rally could run out of steam or see some consolidation if price gets too overbought.
This is a nice strong breakout above strong overhead resistance so there is likely more upside to be had in the near term.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold had no trouble rallying even with a strong Dollar rally. This is one of the reasons why we are seeing Gold outperforming the Dollar with its rising relative strength line.
GOLD Daily Chart: The PMO is accelerating higher after surging above the signal line. Stochastics are very favorable. The RSI is the main problem, but we can see that in the previous rally it had no problem holding onto those overbought conditions. We suspect that will continue to be the case. Notice the correlation has moved positive meaning the Dollar's rally won't perturb Gold. In fact, it could continue to rally in spite of the Dollar.
GOLD MINERS Golden and Silver Cross Indexes: Today's Golden Cross looks good on today's rally. We do see overhead resistance, but we don't believe that will be a problem. Participation is exceptionally good and with the Gold rally on again, we should see even higher prices out of Gold Miners.
CRUDE OIL (USO)
IT Trend Model: BUY as of 2/12/2024
LT Trend Model: BUY as of 2/27/2024
USO Daily Chart: The Crude rally is on and we don't see much that could get in the way. The RSI is getting a bit overbought, but the PMO is not and Stochastics are above 80. We expect the rally in Crude to continue.
The next level of overhead resistance to monitor is around 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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