We were curious as to which of the major market indexes we track have performed best from the October 2023 lows, so we created this performance chart for reference. The leaders have been the Russell 2000 and S&P 600 Small-Cap Indexes. Conversely, they are the leaders to the downside from the December top. Admittedly, this is a bit of an eye chart exercise, but you can figure it out with some determination.
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 hollow red candlestick did not bring a rally with it. Instead the market is accelerating downward. Support has arrived on the 20-day EMA but given we had a PMO Crossover SELL Signal today, we believe there is more downside to absorb.
The VIX again penetrated the lower Bollinger Band and many times that results in an upside reversal. Again, we aren't optimistic. Stochastics have now dropped below 80 which is also a sign of more downside to come.
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: New Highs dropped as we would expect. The October rally pushed most stocks well above their lows so we aren't seeing any New Lows yet. The 10-DMA of the High-Low Differential continues its decline.
Climax* Analysis: There were climax readings on three of the four relevant indicators today, giving us a downside initiation climax.
*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 left overbought territory but have a long way to go before they get oversold. The index is really starting to see stress as we have lost many rising PMOs. We also notice that we are finally seeing some deterioration in %Stocks > 20EMA. All of this is indicative of a market turning over.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is EXTREMELY OVERBOUGHT.
The ITBM and ITVM are now declining but remain highly overbought. They need much more downside to clear these conditions. We note only half of the index have intact PMO BUY Signals.
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 the market bias is still considered bullish in the short term, we saw a big loss on %Stocks > 20EMA. Additionally we will likely see the SCI begin to move lower as we have fewer stocks above their 50-day EMA than those with silver crosses. We already had lost PMOs rising, now the deterioration is moving into participation indicators. The IT and LT biases remain bullish as both the SCI and GCI are above their signal lines.
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: We said January would be difficult and here we are. PMOs have deteriorated the internals to the point that we are now losing participation. Today's PMO Crossover SELL Signal on the SPY is joined by PMO SELL Signals on the Nasdaq 100, OEX and Dow. The downside initiation climax adds insult to the injury on already declining primary indicators. Erin noticed a number of inverse ETFs in her scan results today suggesting hedges could be considered in the very short term. Stops should already be in place.
Erin is 75% long, 0% short.
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BITCOIN
Bitcoin is somewhat frustrating. Just as we got a breakout and the indicators were favorable, we saw a big decline. This has caused the PMO to top beneath the signal line which is very bearish. The failed breakout is concerning. Be careful with crypto right now.
INTEREST RATES
Long-term yields were down on the day. We continue to look for support to be met at 2023 lows. Declining trends will need to be broken before we look for rates to rally meaningfully.
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's rally failed keeping the declining trend intact. The RSI has topped in negative territory, but the PMO is still working its way to a Crossover BUY Signal. We see that as a sign of diminishing weakness not a sign of new strength. We expect rates will hold the declining trend longer.
BONDS (TLT)
IT Trend Model: BUY as of 11/28/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: TLT rallied strongly on the decline in the 20-year yield. It formed a bullish engulfing candlestick that suggests we will see a rally again tomorrow. This rebound is coming right off support. The PMO still looks pretty ugly, but for now we are cautiously bullish on Bonds.
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 rallied again today, but it has yet to break out of the bullish falling wedge. The indicators are looking very favorable so we do expect that upside breakout from the pattern this time.
This bounce is coming off very strong support so this is a good place to see a rally continuation.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold fell on the day, dropping below support at the 20-day EMA. It did form a bullish hollow red candlestick, but given the PMO is about ready to give us a Crossover SELL Signal, we are expecting lower prices from here. Stochastics also hint at further downside.
GOLD Daily Chart: Relative strength against the Dollar is failing and with the Dollar looking bullish again, we are expecting Gold to continue to flounder. We saw a big spike in discounts 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 Miners tanked today as Gold and the market fell in earnest. Support has arrived and while it looks fairly sturdy, the lack of participation tells us it isn't likely to hold. We expect the Silver Cross Index to drop beneath its signal line for a bearish bias very soon.
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 managed a strong rally today despite the ugly indicators we saw yesterday. Today's big rally gave us a PMO bottom above the signal line. These PMO "surges" typically reveal themselves before a good rally. We aren't that bullish here, but the picture is beginning to brighten a bit.
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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