Today the U.S. Dollar (UUP) 20-day EMA crossed down through the 50-day EMA above the 200-day EMA, generating an IT Trend Model NEUTRAL Signal. We'll discuss the implications in its section.
Also, the Gold Miners ETF (GDX) 20-day EMA crossed up through the 50-day EMA, generating an IT Trend Model BUY Signal. We will address this signal in the Gold Miners section.
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 StockCharts TV's YouTube channel here!
MARKET/INDUSTRY GROUP/SECTOR INDEXES
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: The market remained in "pause" mode after a rather quiet holiday trading week. The rally may finally be digesting the rally out of the October low.
The VIX is very overbought, but in bull markets we've seen even lower readings. This does tell us that fear is not a factor. Stochastics have camped out above 90 so internal strength is also not a problem. Total volume was low, but understandable as some may've extended their holiday.
Here is the latest recording from 11/27:
S&P 500 New 52-Week Highs/Lows: New Highs expanded on today's decline which also suggests internal strength. There were no New Lows so we do have broad participation.
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) turned down today. They have been twitching quite a bit, but one thing is clear, the negative divergence remains. All of these indicators are overbought so a pause or decline would be welcomed to alleviate those conditions.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT.
All of our IT indicators need to see overbought conditions relieved. They still have a little more headroom, but as with short-term indicators a decline is needed. They all continue to rise or in the case of %PMO BUY Signals, maintain an overbought condition so there is still strength.
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.
There is no arguing the strength of these participation indicators. We have every indicator reading above our 50% bullish threshold. Both the Silver Cross Index and Golden Cross Indexes are above their signal lines which gives us a bullish bias in both the intermediate and long terms. Our concern right now are the overbought conditions of %Stocks > 20/50EMAs.
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.
**************************************************************************************
CONCLUSION: There are two themes to today's report. Like last week, the first theme is "internal strength". We have broad participation and a bullish bias in all three timeframes. The second theme is "overbought conditions". All of our indicators have entered overbought territory. Most have more headroom, but overbought extremes are around the corner. STOs have topped again suggesting a possible decline ahead. The market appears to be pausing the rally, but a decline is what is needed to clear overbought conditions. We should say that overbought conditions can persist in a strong rally move, but eventually the market will have to exhale. Portfolios should endure a pause with no problem, but think about stop levels that could absorb a pullback, but protect against a correction.
Erin is 70% long, 0% short.
**************************************************************************************
Have you subscribed the DecisionPoint Diamonds yet? DP does the work for you by providing handpicked stocks/ETFs from exclusive DP scans! Add it with a discount! Contact support@decisionpoint.com for more information!
BITCOIN
Bitcoin seems to have found a ceiling at 38,000. The RSI remains positive, but with the PMO in decline and Stochastics topping beneath 80, we would expect at best sideways consolidation beneath resistance at 38,000.
INTEREST RATES
Yields are in declining trends and we suspect those will hold up longer. Consensus is the FOMC may cut rates in early 2024. While we are not in the consensus, the market as whole appears to be pricing this 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
Gap support is holding but we don't think it will continue to hold much longer. There is an ugly head and shoulders pattern and the PMO is in decline. Most troublesome is Stochastics topping beneath 20.
BONDS (TLT)
IT Trend Model: SELL as of 5/16/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: The drop in yields afforded TLT the opportunity to rally in a big way. Price closed a tad above resistance today. $TNX has a head and shoulders, TLT has a bullish reverse head and shoulders. The minimum upside target isn't far away at the 200-day EMA. We think it will get there. We have a Silver Cross BUY Signal on tap for tomorrow.
DOLLAR (UUP)
IT Trend Model: NEUTRAL as of 11/27/2023
LT Trend Model: BUY as of 5/25/2023
UUP Daily Chart: We haven't been bullish on the Dollar for some time and today's Dark Cross of the 20/50-EMAs suggests we remain bearish. The RSI is negative and the PMO has already been declining. Stochastics topped beneath 20 which is very weak. Look for this support level to be broken. At this point our downside target is 28.75.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: A bearish Dollar is good for Gold. Given the relative strength Gold has been showing against the Dollar this could really work to its benefit. Today price on GLD popped above overhead resistance. The indicators are very bullish with the positive RSI, PMO BUY Signal and Stochastics holding above 80. We expect the rally to continue.
GOLD Daily Chart: A breakout here means all-time highs are next. The volatility index for Gold ($GVZ) is holding above its moving average which is bullish. Additionally, discounts are fairly low, meaning the investors overall are feeling bullish about Gold. This should continue to work in its favor.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners look very bullish right now. Today's Silver Cross BUY Signal is icing. We have a bullish reverse head and shoulders that will be confirmed on a breakout above 30. The RSI is positive and the PMO rising on a BUY Signal. Most important, participation is robust. If we had a complaint it would be that conditions are very overbought on %Stocks > 20/50EMAs. However take a look at March. Overbought participation indicators can stay overbought for some time. We expect a rally to 33.00.
CRUDE OIL (USO)
IT Trend Model: NEUTRAL as of 11/7/2023
LT Trend Model: BUY as of 8/3/2023
USO Daily Chart: Crude Oil is starting to look more bearish as the PMO is trying to curl lower beneath the signal line. Stochastics have topped in negative territory. This is a great reversal area for Crude, but it isn't behaving. The declining trend hasn't been broken. The sector is looking interesting again, but Crude really needs to rally before that sector can really get going. With holiday travel upon us, demand should increase and offer Oil and opportunity to rally. For now we expect to see the declining trend hold with a test of 67 probable.
Good Luck & Good Trading!
Erin Swenlin and Carl Swenlin
Technical Analysis is a windsock, not a crystal ball. --Carl Swenlin
(c) Copyright 2023 DecisionPoint.com
Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
DecisionPoint is not a registered investment advisor. Investment and trading decisions are solely your responsibility. DecisionPoint newsletters, blogs or website materials should NOT be interpreted as a recommendation or solicitation to buy or sell any security or to take any specific action.
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.
Helpful DecisionPoint Links:
DecisionPoint Alert Chart List
DecisionPoint Golden Cross/Silver Cross Index Chart List
DecisionPoint Sector Chart List
Price Momentum Oscillator (PMO)