Today the Silver Cross Index for the S&P500 topped and we noticed it wasn't the only one. In the chart below you can see that the Nasdaq and NYSE Silver Cross Indexes also topped.
Here is a chart of all of the market indexes we cover. You can see that all but the Dow Industrials and OEX have topped. The Dow and NDX held the same readings, but both look toppy.
Conclusion: While the intermediate-term biases remain bullish given the Silver Cross Indexes are above their signal lines, deterioration is being detected and should keep us alert to broader weakness within the market.
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: As the downside initiation climax suggested, the market declined for a fourth day in a row. January is starting bearishly and we suspect it won't let up.
The VIX continues to puncture the lower Bollinger Band. Bands tightened during the rally so this condition will likely persist as participants begin to get more fearful of the decline. We are looking for the Bands to begin expanding again. Stochastics dropped precipitously today moving into negative territory.
Here is the latest recording from 12/18 (no recording 12/25 or 1/1):
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S&P 500 New 52-Week Highs/Lows: We aren't detecting any New Lows yet, but New Highs dropped slightly. The 10-DMA of the High-Low Differential is beginning to accelerate its decline. It is nowhere near oversold territory yet.
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 DOWN and the condition is NEUTRAL.
Swenlin Trading Oscillators (STOs) have arrived in negative territory. While this is near-term oversold, we suspect both oscillators will continue to decline and get closer to oversold territory. We continue to see a decimation of PMOs. Only 1/4 of the index hold rising momentum. More will be needed to reverse the downtrend.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is EXTREMELY OVERBOUGHT.
The ITBM and ITVM are still highly overbought despite their recent descent. We now have only 43% holding PMO BUY Signals which is less than our bullish 50% threshold.
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.
The short-term bias is still bullish as %Stocks indicators are all above our 50% bullish threshold. However, we've seen a very large drop in %Stocks > 20EMA. This deterioration has caused the Silver Cross Index to top. Next we will see %Stocks > 50EMA drop. At that point we will watch for a negative crossover on the Silver Cross Index. It remains above its signal line so the IT Bias is still bullish. Similarly, the Golden Cross Index remains above its signal line so the LT bias is also 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 getting weak internally. We've lost numerous rising PMOs and PMO BUY Signals. We are now losing short-term participation as indicated by the loss of stocks above their 20-day EMA. Primary indicator sets are all in decline and none are close to oversold territory. We have to look for a continuation of this decline. We could certainly see a rogue rally, but internals aren't strong enough right now for a sticky rally. If you haven't already, it is probably time to let go of any weak positions (PMO SELL Signals or negative EMA crossovers). To preserve profit, you may want to tighten up your stops.
Erin is 75% long, 0% short.
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BITCOIN
Bitcoin is volatile right now and it is swinging the PMO back and forth. The RSI is positive, but Stochastics topped beneath 80. At this point we would look for more volatile sideways action.
INTEREST RATES
Yields are on the rise again and we have to wonder if we are in for a meaningful reversal rally. Declining trends have not been broken on most so for now we will continue to look for a drop toward 2023 lows.
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 is finally beginning to break out of its declining trend. We also see a new PMO Crossover BUY Signal. The signal could be a sign of strength, but it also could just mean diminishing weakness. Given Stochastics are back in positive territory, we could finally be seeing a recovery in yields. We're on the lookout but not quite convinced this will turn into a meaningful rally.
BONDS (TLT)
IT Trend Model: BUY as of 11/28/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: TLT is feeling the effects of a recovering 20-year yield. We spot a new rising trend in the yield that could signal an upcoming drop below current support for TLT. The PMO Crossover SELL Signal and tumbling Stochastics also suggest we will see a breakdown.
DOLLAR (UUP)
IT Trend Model: NEUTRAL as of 11/27/2023
LT Trend Model: BUY as of 5/25/2023
UUP Daily Chart: The Dollar cooled and finished unchanged today. It is very close to a breakout from the bullish falling wedge. The RSI is now above net neutral (50) and there is a new PMO Crossover BUY Signal. Stochastics are rising strongly. We are bullish on the Dollar.
The 50-day EMA is holding as overhead resistance, but we will look for a breakout.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: The Dollar was idle and it afforded Gold an opportunity to rally which it did. The RSI is holding in positive territory, but we don't think that it will continue to hold there given the PMO Crossover SELL Signal and falling Stochastics.
GOLD Daily Chart: Discounts are elevated so investors are getting very bearish on Gold. This should eventually work in Gold's favor as sentiment is contrarian.
GOLD MINERS Golden and Silver Cross Indexes: Gold was up today and that probably helped GDX finish in the green since the market was of no help. Participation readings are decaying overall suggesting internal weakness. Stochastics have topped and the PMO is on a Crossover SELL Signal. Support may've been met at this level, but internal weakness will likely win out with a breakdown.
CRUDE OIL (USO)
IT Trend Model: NEUTRAL as of 11/7/2023
LT Trend Model: SELL as of 12/18/2023
USO Daily Chart: Crude Oil wants to rally as seen by the PMO surge above the signal line. However, the RSI is negative and Stochastics look ready to turn down again on one day of decline. The PMO tells us to be optimistic. We just aren't ready to announce the next leg up for Crude.
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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