Today the Crude Oil ETF (USO) 50-day EMA crossed up through the 200-day EMA (Golden Cross), generating an LT Trend Model BUY Signal. USO is in a barely detectable up trend from the December low, sneaking into a bullish posture. We'll discuss Crude in more detail in its section later in the report.
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: The market closed up today, but remains in a very short-term declining trend. It still looks rather toppy.
We've now identified one of our favorite chart patterns, the wedge. In this case it is a rising wedge which is bearish and suggests we will see a breakdown. The PMO remains above its signal line, but Stochastics did top out today on the rally. Investors aren't nervous yet given the VIX is above its moving average on the inverted scale.
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S&P 500 New 52-Week Highs/Lows: New Highs contracted on a rally day which is negative. Most concerning is the topping 10-DMA of the High-Low Differential.
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.
Swenlin Trading Oscillators (STOs) both rose on the day which does give us a sense that the market could continue to inch higher. We saw slight expansion in participation indicators. Over half of the index hold rising PMOs.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
Both the ITBM and ITVM moved higher, essentially confirming what we're seeing on the STOs. Negative divergences still plague this chart.
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 the short term.
The market bias is BEARISH in the intermediate term.
The market bias is BULLISH in the long term.
All of the relevant indicators are reading above 50% which is above our bullish threshold so the ST Bias must be listed a BULLISH. The SCI has flattened, but remains beneath its signal line so our IT Bias is listed as BEARISH. The GCI has also flattened, but remains above its signal line so the LT Bias is 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 looks toppy, but the STOs and the ITBM/ITVM have all reversed higher which does bode well. However, we noticed some deterioration on our New Highs/New Lows chart. Investors are waiting on the CPE reports on Thursday and that will likely lead to muted trading tomorrow. Participation is still robust enough to keep the market elevated, but we continue to be concerned by the negative divergences on nearly every chart. The market needs to decline, but bulls have simply held the reins too tightly. Thursday will reveal much when we see economic reports. For now, keep on keeping on with stops. The market will take us out when it is time.
Erin is 70% long, 0% short.
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BITCOIN
Bitcoin is off to the races executing the prior bull flag formation to perfection. It is setting up a flagpole for another trip higher. The PMO is showing pure strength as it has surged above the signal line well above the zero line. Overbought conditions aren't generally a problem for Bitcoin. Stochastics are above 80 as well. Bitcoin looks very favorable right now.
BITCOIN ETFs
INTEREST RATES
Yields rose on the day. We are expecting the advance to continue. We wouldn't be surprised if 2023 highs were tested again.
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 struggling against overhead resistance and Stochastics have dipped below 80. The PMO and RSI remain healthy so our expectation is an eventual breakout. Given Stochastics, we may see more sideways movement along the 20-day EMA before a possible breakout.
BONDS (TLT)
IT Trend Model: SELL as of 2/20/2024
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: The 20-year yield was back on the rise today so TLT was lower. The indicators are not in agreement. The RSI is negative and the PMO has topped beneath the signal line. Stochastics decelerated, but are rising. We see a bearish bias on TLT and expect lower prices. 90.00 is a good area to look for support.
DOLLAR (UUP)
IT Trend Model: BUY as of 1/23/2024
LT Trend Model: BUY as of 5/25/2023
UUP Daily Chart: Yesterday's comments still apply:
"The rising trend has now been broken. At the same time, we have a new PMO Crossover SELL Signal. Stochastics look particularly bearish right now. We expect to see more decline in the Dollar."
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold is going nowhere but we do have some bullish indications. The RSI is above net neutral (50) and the PMO is rising on a Crossover BUY Signal. Gold is showing rising relative strength against the Dollar and the Dollar looks weak. We are expecting to see Gold make its way higher. It just seems it is going to make us wait awhile before it tests overhead resistance.
The inverse correlation is strong right now between Gold and the Dollar. This tells us a weak Dollar will work in Gold's favor.
GOLD MINERS Golden and Silver Cross Indexes: We like Gold right now, but it is taking its time to rally. GDX needs the rally now so that we can get a bullish double bottom pattern. The indicators are still very weak as is participation. The market in general looks toppy and that will not work in GDX's favor. This industry group carries a lot of risk right now.
CRUDE OIL (USO)
IT Trend Model: BUY as of 2/12/2024
LT Trend Model: BUY as of 2/27/2024
USO Daily Chart: Crude Oil is looking more bullish on today's "golden cross" of the 50/200-day EMAs. We have a constructive cup-shaped basing pattern that should provide good foundation for a rally continuation. Today's breakout move was also welcome. The RSI is positive and not overbought and the PMO is rising on a Crossover BUY Signal. Stochastics have even turned up above 80. We like Crude's chances right now.
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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