We'll discuss the signal change for Crude in that section. What we were waiting for was the earnings announcements for AAPL, AMZN, and META. As expected AAPL disappointed and is trading down in after hours trading. But AMZN and META results were very well received, and after hours has AMZN up about +7.50% and META up about +14.0%. This bodes well for tomorrow, because at this writing the Nasdaq and SPX futures are up about +2.24% and +1.80% respectively.
Here are charts of the Magnificent 6 at the close. Note that the PMOs on all but one are moving lower, so this shot in the arm may not inoculate against short-term decline.
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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: The SPY made up ground against the big loss that occurred yesterday. It has so far prevented the PMO from a Crossover SELL Signal. The RSI is no longer overbought which is a condition we welcome.
The VIX is below its moving average on the inverted scale so there is still some weakness visible. Stochastics are also in decline despite today's strong rally.
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S&P 500 New 52-Week Highs/Lows: The 10-DMA of the High-Low Differential is rising, but it is overbought. New Highs continued to pare back which is a negative divergence with rising prices for the day.
Climax* Analysis: Today there was only one climax reading, but the other three relevant indicators "almost" climaxes, and SPX Total Volume was strong, so we're calling it an upside initiation climax. This was not expected after yesterday's downside initiation climax, but it is what it is.
*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 SOMEWHAT OVERBOUGHT.
The Swenlin Trading Oscillators (STOs) kept up their decline today in spite of the rally. We saw significant improvement on both %Stocks > 20EMA and %PMOs Rising. Still, we would like to see more rising PMOs in order to keep the rally going should mega-cap leadership wane.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
IT indicators turned up today lending credence to our upside initiation climax. %PMO Xover BUY Signals saw an upside reversal above the signal line which bodes well.
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 short-term market bias is BULLISH.
The intermediate-term market bias is BEARISH.
The long-term market bias is BULLISH.
We only saw one day of a BEARISH short-term climax. Given readings on %Stocks above their 20/50-day EMAs are above 50%, we must move the short-term bias back to BULLISH. The Silver Cross Index is beginning to act like it will find a meaningful bottom here, but given we only have %Stocks > 50EMA reading less than the SCI, it is more likely to continue its decline shortly. It is below its moving average so the IT Bias is BEARISH. The Golden Cross Index is above its signal line so the LT Bias remains 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: Earnings turned the table on yesterday's clearly bearish activity among our indicators. With a high likelihood of more rally by key Magnificent 7 members and today's bullish upside initiation climax, we have to look for more upside tomorrow. This could likely lead into more rally next week, but given STOs are still in decline, we don't want to get too bullish here. Earnings euphoria could dwindle, but for now it appears it will keep the market propped up. We still need more participation from the broad market to ensure the rally can continue should mega-cap leadership begin to fail as it appeared it was yesterday. We would still be leery of expanding exposure at this time. Stops are still a good idea.
Erin is 45% long, 0% short.
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BITCOIN
Bitcoin gave us a PMO Crossover BUY Signal today, but price is still stuck in a sideways trading range. The indicators are bullishly configured, although Stochastics did top, they remain above 80. We expect Bitcoin to hold support.
BITCOIN ETFs
INTEREST RATES
Rates are now testing the near-term support level. We expect them to continue lower back toward the second level of support.
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 had a deep decline today and has hit support. Given the PMO topped beneath the zero line and Stochastics are vertically falling, we would expect to see this support level broken.
BONDS (TLT)
IT Trend Model: BUY as of 11/28/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: The 20-year yield lost ground and that afforded TLT the opportunity to rally higher. The PMO is nearing a Crossover BUY Signal and Stochastics just pushed above 80. We expect rates to continue to soften and that will push TLT even higher.
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 is stuck below resistance at October lows. The indicators are deteriorating and could suggest a breakdown ahead for the Dollar, but the PMO is so far hanging tough so we will look for more sideways movement along the top of the 20/50-day EMAs.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold is beginning to make a move toward all-time highs again. The PMO is still beneath its signal line, but it has turned back up. The RSI is positive and Stochastics are slowly rising. We expect the rally will continue further.
The inverse correlation between Gold and the Dollar has lessened so a good Gold chart doesn't necessarily mean the Dollar is on the ropes. The discounts have pared back slightly as investors start to warm to Gold.
GOLD MINERS Golden and Silver Cross Indexes: We said that GDX was at a decision point yesterday with indicators not really flagging which direction it would go. Today it made its decision and with the strong rally came new participation as far as %Stocks > 20/50EMAs. Stochastics are rising and the RSI is back in positive territory. It appears safe to get in the water.
CRUDE OIL (USO)
IT Trend Model: SELL as of 2/1/2024
LT Trend Model: SELL as of 12/18/2023
USO Daily Chart: Today the USO 20-day EMA crossed down through the 50-day EMA (Dark Cross) below the 200-day EMA, generating an IT Trend Model SELL Signal. This trade has gone south as price has failed to overcome resistance and dropped precipitously today. This has caused the PMO to top and the RSI to move into negative territory. This decline won't be easy to pull out of.
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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