Better than expected jobs growth turned the market down for much of the day, setting up a declining trend. The expectation is rate cuts to begin soon by the FOMC, but today's data didn't jibe with that line of thinking. This could continue to put downside pressure on an already weak market.
Price did finish the day with a rally that put the market in positive territory. The 5-minute PMO looks very good and Stochastics are above 80, but price is still in a declining trend so we wouldn't read too much into it.
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/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: Price is finding some support at the 20-day EMA. The RSI is staying in positive territory, but the PMO is in decline below the signal line. Today looks like a day of indecision overall.
The VIX did move higher on our inverted scale so traders aren't all that bearish in the face of no rate cuts. Stochastics have dropped below 20 signaling internal weakness.
Here is the latest recording from 12/18 (no recording 12/25 or 1/1):
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SPY Weekly Chart: Price has now pulled back to strong support at the prior all-time high. The weekly PMO did see some damage as it is decelerating. It is near-term overbought.
New 52-Week Highs/Lows: New Highs continue to move lower, but no New Lows have been logged yet. That goes to show you how broad this rally has been, a rising tide that has lifted all boats. Unfortunately, the 10-DMA of the High-Low Differential is continuing its decline toward the zero line.
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 NEUTRAL.
Technically Swenlin Trading Oscillators (STOs) are in neutral territory; however, they are near-term oversold based on the last time we saw negative readings. We expect more downside that will finally bring STOs to actual oversold territory. Today's small rally did turn a few PMOs up, but %Stocks > 20EMA lost ground.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is EXTREMELY OVERBOUGHT.
We are still looking at overbought extremes for both the ITBM and ITVM. They are declining, but not fast enough to move out of overbought territory so far. We had another big loss on %PMO Xover BUY Signals which are now reading below our 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.
The highest IT Bias goes to Consumer Staples (XLP) which are seeing great improvement under the surface. Note the increase in both the SCI and GCI.
The lowest IT Bias belongs to Energy (XLE). XLE is seeing some improvement to the SCI, but the GCI is reading so high from the prior rally, it has the bias reading very negatively.
This table is sorted by SCI values. This gives a clear picture of strongest to weakest index/sector in terms of intermediate-term participation.
Both Semiconductors (SMH) and Real Estate (XLRE) hold the highest SCI value. Given both are showing signs of deterioration, we see both of the SCIs as doomed to move lower.
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. They have made steady improvement since the banking crisis. The GCI is still gaining strength. The SCI didn't show signs of improvement, but it is already at a very healthy 92%.
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.
All of the participation percentages are reading above 50% so the bias is bullish in the short term. We do see quite a bit of deterioration to %Stocks > 20EMA. This tells us that the short-term bias is beginning to weaken. The SCI topped this week which doesn't bode well in the short term either. Since both the SCI and GCI are above their signal lines, the bias is still bullish in both the intermediate and long terms.
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 may've finished higher on the day, but it didn't brighten our expectations. It is looking less likely that we will get a rate cut right away. Investors have been pricing this in since October and with their expectations likely to be dashed by the Fed, more downside pressure will be applied. The weekly PMO is already showing signs of distress with just one week of downward price action. PMOs within the broad market are depressed with only 27% showing rising PMOs and PMO BUY Signals have been decimated. Momentum is the first to go. Next up is participation. Participation is still high, but that condition won't hold up given the PMO troubles. Primary indicators continue to decline so we should prepare for a possible correction. Tighten up those stops. It is imperative that we stay cautious and defensive.
Erin is 75% long, 0% short.
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BITCOIN
Bitcoin has been all over the place and so has the PMO, moving up one day and down the next. Stochastics look bearish giving us a negative bias. The PMO is back to moving lower. The RSI is still positive so we could be looking at more volatile sideways movement.
This chart is to show where some of the support/resistance lines come from. Price is finding resistance at 45,000. It isn't surprising that it is having trouble breaking out.
INTEREST RATES
Interest rates are on the rise with some declining trend being broken. We expect we will see rising rates in the near term, but we are still eyeing support at 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
We have a strong breakout from a declining trend for $TNX. The PMO looks very bullish and the RSI is almost in positive territory. Stochastics are rising almost vertically toward 80. Look for rates to continue to make their way higher in the near term.
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 6.61 to 6.62.
BONDS (TLT)
IT Trend Model: BUY as of 11/28/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: Bonds are in trouble as yields are making their way higher. We expect this condition to continue as the indicators are negative. The RSI is still above net neutral (50), but another decline will move it into negative territory. The PMO is on an overbought Crossover SELL Signal. Stochastics are near 20. Support is arriving at the 200-day EMA, but we would look for price to make its way past that to the 50-day EMA.
Support has been met and it does look sturdy. The problem is that interest rates look too bullish.
TLT Weekly Chart: The weekly chart looks healthy enough, but the RSI is tumbling which could be a precursor to a topping PMO. For now we will stay bullish intermediate-term, but bearish short-term.
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 had a great week and we expect it to continue higher as it is now breaking away from a bullish falling wedge. The RSI is now positive and the PMO is rising on a Crossover BUY Signal. Stochastics just hit 80. We would look for more rally ahead for the Dollar.
It could be struggling a bit here given overhead resistance at the 50-day EMA. That level should be overcome.
UUP Weekly Chart: This is a great place for a bounce for the Dollar. It is coming off strong support. The weekly RSI has moved back into positive territory and the weekly PMO did decelerate a bit. We like this setup for the Dollar.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GOLD Daily Chart: Gold had a bad week and we suspect troubles will continue for the metal. The PMO is falling on a Crossover SELL Signal and Stochastics just moved below net neutral (50). Gold wants to rally, but momentum is working against it right now. A bullish Dollar will continue to put downside pressure on Gold.
This week discounts were very elevated so investors are bearish on Gold. Discounts are at levels that have meant an upside reversal, but we think this condition will persist as we saw back in February. The reverse correlation to the Dollar is strong suggesting more upside from the Dollar will mean more downside for Gold.
GOLD Weekly Chart: This is the fourth time Gold has tapped against all-time highs. The weekly chart isn't really bearish and it does tell us that current weakness will likely be short-term. The weekly RSI is positive and the weekly PMO is still on the rise. We do see that discounts could get more oversold.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners are on the outs and we expect that to continue as long as Gold and the market are weak overall. The rising trend hasn't been broken yet and price is sitting on support, but notice the GCI has topped and we've seen a bleed of stocks above their 20/50/200-day EMAs. While a small rally here makes sense, overall we see more downside ahead for Gold Miners.
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 is making a comeback as instability in the Middle East is coming back into the forefront. We have a PMO "surge" above the signal line (bottom above the signal line). The RSI has just moved back into positive territory and Stochastics have made it above 80. We are cautiously optimistic on Crude.
This could be setting up a nice reverse head and shoulders, but again we are only cautiously optimistic.
USO/$WTIC Weekly Chart: The rising trend is intact on USO so this does look like a good place for a rally to begin in earnest. The weekly RSI is rising, but it is still negative. The weekly PMO has decelerated but is declining. A PMO bottom above the zero line would get us very bullish on Crude Oil.
Good Luck & Good Trading!
Erin Swenlin and Carl Swenlin
Technical Analysis is a windsock, not a crystal ball. --Carl Swenlin
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