Tesla (TSLA) was up over 15% today on news that their self-driving technology will be rolled out in China on a deal with Baidu (BIDU) to use their mapping technology in that country. We still believe that the electric vehicle mania is subsiding and that will eventually tug TSLA lower. For now, the chart looks very constructive and does bode well for the stock in the short term. We saw an earlier breakaway gap and now a continuation gap. Price is still vulnerable to a reverse island situation, but the indicators have really matured. The PMO is now a Crossover BUY Signal and the RSI is positive. Stochastics are above 80 again and relative strength is rising across the board.
One important problem we do see is a strong negative OBV divergence. With such a large pop in volume, we needed to see the OBV make a new high and we didn't. This move could already be set up for exhaustion.
Consumer Discretionary (XLY) popped primarily due to the move in TSLA. Looking under the hood, we still don't see readings above 50% on %Stocks > 20/50EMAs. Considering the big move we should've seen those numbers expanding more. Still the indicators do look good and suggest we could see even higher prices for this sector. We would just like to see more participation in the move.
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 short-term declining trend was broken on Friday. The rounded top hasn't faded into the background yet. The PMO has turned up but we aren't seeing much movement since.
The VIX is above its moving average on the inverted scale and Stochastics are rising strongly in positive territory so we do see internal strength.
Here is the latest recording from Monday, April 29th:
S&P 500 New 52-Week Highs/Lows: New Highs expanded slightly and we saw only one New Low. Most importantly, the High-Low Differential is rising above the zero line which is bullish.
Climax* Analysis: Only one of the four relevant indicators had a climax reading today. SPX Total Volume contracted and was lower than the one-year daily average volume. This all looks like exhaustion, though not an "official" one.
*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) declined after topping on Friday. This has us tempering our short-term bullish expectations. We did see nice expansion in participation of stocks above their 20-day EMA. We have almost 2/3rds of the index holding rising PMOs.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
The ITBM and ITVM are both rising unlike the STOs which gives us a more bullish outlook for the intermediate term than in the short term. PMO BUY Signals are expanding within the index. One one third hold BUY Signals. We need better participation.
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 and long terms.
We moved our short-term bias to BULLISH now that we have more than 50% of stocks above their 20/50-day EMAs. These numbers continue to expand. The Silver Cross Index is still reading below %Stocks > 20/50EMAs but it has turned up. More expansion should mean the Silver Cross Index will rise further. It is below its moving average so the IT Bias is still BEARISH. The Golden Cross Index is below its moving average so the LT Bias is also BEARISH.
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: Price was higher, but volume was paltry. We did see one climactic reading on our Climax Chart that could indicate a possible exhaustion of the current move. The STOs are still declining which also suggests we might see some decline ahead. However, past those very short-term indicators, we have bullish IT readings. In an interesting turn of events, the short-term bias has moved to BULLISH. Our sense is that we could see the market stumble here in the very short term. Internals are still strong enough that new positions can be added for the more aggressive. We would use stops given we are seeing signs of exhaustion.
Erin is 30% long, 0% short.
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BITCOIN
Bitcoin is headed back towards strong support. The last top did not test the top of the trading range which gives us a bearish bias. That will be confirmed when the 20-day EMA drops beneath the 50-day EMA. The PMO has entered negative territory and Stochastics have topped in negative territory. We think that support will be violated this time around.
BITCOIN ETFs
INTEREST RATES
Rates were down on the day but remain in strong rising trends. We don't expect a breakdown yet.
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 continues to struggle with overhead resistance. So far the PMO is rising. The RSI is in positive territory and Stochastics are above 80 so we are expecting an upside breakout.
BONDS (TLT)
IT Trend Model: SELL as of 3/20/2024
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: We have a small bullish double bottom formation building. Today, price did break from its short-term declining trend. Stochastics have turned up. The PMO isn't revealing much. This does look like a rally to build upon.
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 didn't have a good day. We are watching the large island that is developing. We could see a gap down into a reverse island formation. The PMO is nearing a Crossover SELL Signal and Stochastics are falling. We expect more decline, not necessarily a gap down.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: In the case of Gold we are optimistically following the large island with an eye toward a possible gap up for a reverse island. We aren't certain we will see that as the PMO still looks problematic and Stochastics are so low and drifting downward. More consolidation along support seems most likely.
GOLD MINERS (GDX) Golden and Silver Cross Indexes: The PMO has turned back up on Gold Miners. They are near 52-week highs and look ready to push past that level. We may see more volatility in preparation for a breakout. It should happen given the very strong participation numbers under the surface. Stochastics and the RSI are favoring that conclusion.
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 is clinging to its rising trend. The indicators are looking rather bearish right now with the PMO in decline and Stochastics topping. One good thing is that in spite of a declining PMO price hasn't lost much ground. We still expect more upside from Crude, but admit there are some problems beneath the surface.
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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