If there was one thing responsible for today's rally, it had to be Apple's (AAPL) announcement of a $110 billion share buyback. Astoundingly, that represents only one-third of AAPL's cash on hand. Since AAPL is such a large part of the Dow and S&P 500, it swept the market higher in a broad-based rally.
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Today the Nasdaq Composite ETF (ONEQ) 20-day EMA crossed up through the 50-day EMA (Silver Cross), generating an IT Trend Model BUY Signal. It is vulnerable to a bearish reverse island, but we do note that the PMO and Stochastics are rising as is the Silver Cross Index. We still need to see stronger participation as all percentages are below our bullish 50% threshold. Relative strength is picking up so keep an eye on the Technology sector.
We may have bullish indications on the daily chart, but we have the problem of a weekly PMO Crossover SELL Signal. Stay cautious.
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/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: Today's gap up rally broke the short-term declining trend, however it does leave the market vulnerable to a bearish reverse island formation. Given the rising PMO and positive RSI we should see more upside follow through.
The VIX is near the upper Bollinger Band but hasn't penetrated it yet. If it does that often suggests market participants are too bullish and it leads to a downside reversal. Stochastics have reversed higher and hit positive territory above net neutral (50) which suggests new internal price strength.
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SPY Weekly Chart: We are seeing a rebound off the 17-week EMA, but we still have a weekly PMO in decline and on a Crossover SELL Signal. This could be a bull flag formation, we would like to see the PMO decelerate or turn back up to give us a more bullish outlook in the intermediate term.
SPY Monthly Chart: The SPY is coming off another parabolic advance that does beg for a more serious decline. However, at this time the monthly PMO is still rising and is not overbought so we may not get the breakdown that a parabolic formation usually calls for.
New 52-Week Highs/Lows: As we would expect New Highs popped higher which does suggest this rally is broadening. The High-Low Differential is still rising bullishly.
Climax Analysis: We were expecting a climax day, but there was only one climax reading on the four relevant indicators, and SPX Total Volume actually contracted. This doesn't stand in the way of upside follow through next week, but it doesn't reflect the enthusiasm demonstrated by the rally.
*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) are rising and have reached positive territory. Participation has expanded over our bullish 50% threshold. The rally does appear to be broadening somewhat.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
The ITBM and ITVM are also rising to confirm rising short-term indicators. They are still in negative territory and we do need to see more PMO Crossover BUY Signals. We don't have a reading above the 50% bullish threshold.
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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.
Utilities (XLU) have been on fire and that is reflected in the +30 IT Bias. The Silver Cross Index and Golden Cross Indexes continue to gain percentage points, but we have to wonder how much further this sector can go.
Technology (XLK) has the worst IT Bias and this is primarily due the more solid Golden Cross Index reading versus its Silver Cross Index reading. XLK led for awhile and that is demonstrated by the higher GCI reading.
This table is sorted by SCI values. This gives a clear picture of strongest to weakest index/sector in terms of intermediate-term participation.
Regional Banks (KRE) gained the most SCI percentage points and appears ready to move higher.
Biotechs (IBB) hold the lowest SCI value, but we did see a small increase and the chart is looking very constructive right 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.
Financials (XLF) hold the highest GCI value, but we can see that this sector is deteriorating as both the SCI and GCI lost ground this week.
Transports (IYT) lost the most GCI points this week telling us that the foundation is cracking for this industry group.
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.
Now that we have over 50% of stocks above their 20/50-day EMAs we can move the short-term bias to BULLISH. However, we must caution that the last time this happened this week, the bias immediately shifted back to bearish. Both the Silver Cross Index and Golden Cross Indexes are below their signal lines so we have a BEARISH IT and LT 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.
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CONCLUSION: The market bias has moved to bullish in the short term and both STOs are rising. The ITBM and ITVM are confirming bullish short-term indicators. We saw a nice expansion in New Highs and in participation which suggests the rally may already be broadening out. However, Apple (AAPL) goosed the market as did a soft jobs report so we have to wonder if this enthusiasm will carry through next week. We nearly saw an upside exhaustion on our climax chart. Ultimately we have to expect upside follow through given positive indicators that include a newly rising PMO. Portfolio expansion is still dicey, but could be done using tighter stops for protection.
Erin is 30% long, 0% short.
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BITCOIN
Bitcoin Daily Chart: Bitcoin recovered to finish the week after dropping bearishly below support. The indicators are starting to mature somewhat with a rising RSI and decelerating PMO. It's still too early to bank on this reversal given the current declining trend will need to be broken.
Bitcoin Weekly Chart: The parabolic rise in Bitcoin has started to see the expected breakdown. The next basing support area is near 50,000 which is where the parabolic should resolve. The weekly PMO is in decline and nearing a Crossover SELL Signal. Don't get too bullish on Bitcoin.
BITCOIN ETFs
Today:
This Week:
INTEREST RATES
Yields are beginning to correct downward and will likely continue lower as some of the rising trends are beginning to be compromised. Bond funds will benefit.
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 had the very bullish breakout from a bearish rising wedge but it didn't hold up as price has now retreated back within the pattern. We have a strong support zone here, but the RSI just moved into negative territory and the PMO is on a new Crossover SELL Signal. Stochastics are moving vertically lower. We don't expect support to hold. We would watch the 200-day EMA as the stronger support level.
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 7.17 to 7.22.
Here is a 50-year chart for better perspective.
BONDS (TLT)
IT Trend Model: SELL as of 3/20/2024
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: Yields are coming down as we saw from our interest rate chart earlier. The 20-year yield is in a declining trend. TLT has a great opportunity to rally from a small reverse head and shoulders pattern.
The new PMO BUY Signal lends credence to the current rally. The RSI is now positive and Stochastics are rising almost vertically.
TLT Weekly Chart: The intermediate-term picture is not as bullish as the short-term. Primarily this is due to the weekly PMO top below the zero line and Crossover SELL Signal. However, we do note that price is traveling within a bullish falling wedge that could resolve to the upside.
TLT Monthly Chart: The rally is coming off strong support at the 2022 low. So far the monthly PMO hasn't been able to cross above the signal line, but it is trying. As noted earlier this is a good opportunity for TLT to rally further.
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 finally saw the reverse island move that we have been waiting for. The gap has put price back within a bearish rising wedge. The RSI just moved into negative territory and the PMO is in decline on a Crossover SELL Signal. Stochastics look terrible. We expect to see more downside in the short term.
UUP Weekly Chart: Price had just broken out to new highs and now it is retreating. The weekly PMO is beginning to top. The weekly RSI is still in positive territory, but is headed lower on the decline. Strong support is near.
UUP Monthly Chart: The monthly chart is bullish. We have a nice rising trend, a positive monthly RSI and a rising monthly PMO that suggest that we will ultimately see a rising Dollar in the long term.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold is traveling within a bullish falling wedge. The weakened Dollar has done nothing for Gold except to keep it elevated above the 50-day EMA. The indicators are still bearish on Gold although Stochastics have turned up. While the pattern suggests and upside breakout, the PMO is still in decline.
There is basically no correlation between the Dollar and Gold which is why you have seen them not fulfill the 'normal' inverse relationship. With the Dollar looking so weak, we are on the lookout for an upside reversal, but the correlation isn't working in our favor and neither is Gold's relative strength to the Dollar.
GLD Weekly Chart: After breaking long-term overhead resistance this year, Gold is finally beginning to digest this rally. The decline of the past two weeks hasn't hurt the weekly PMO and it did the weekly RSI a favor by bringing it out of overbought territory. We expect after this digestion we will see a resurgence in Gold.
$GOLD Monthly Chart: We do have a parabolic pattern developing that bothers us in the long term. If we were to see a breakdown here, the likely stopping point will be at prior all-time highs. We aren't that bearish however. The monthly RSI is positive and the monthly PMO is rising so ultimately we should see Gold do well in the long term.
GOLD MINERS: It was a volatile week for Gold Miners. Given the PMO configuration and this topping pattern, we would be very careful with GDX. Overall participation remains robust enough and Stochastics are rising again. Support should hold here, but have your stops in place in case we do see a drop below support.
CRUDE OIL (USO)
IT Trend Model: BUY as of 2/12/2024
LT Trend Model: BUY as of 2/27/2024
USO Daily Chart: Crude Oil slid lower this week and doesn't look interested in an upside reversal. Support is arriving at the 200-day EMA and 73.00, but indicators look bad. The RSI is negative, near the bottom of its range. The PMO is in decline on a Crossover SELL Signal and Stochastics are below 20. None of this bodes well for Crude.
USO/$WTIC Weekly Chart: Price hit overhead resistance and was turned away. This is a sturdy trading channel and unfortunately price is at the top. This looks like a bearish double top developing. The weekly RSI is falling and should hit negative territory on the next decline. The weekly PMO is trying to top.
WTIC Monthly Chart: The monthly chart does not inspire confidence. The monthly RSI has dropped into negative territory and the monthly PMO continues lower. There is a declining trend in place in the long term coming out of the 2022 top. Crude Oil doesn't look bullish in any timeframe.
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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