One of the ways we can determine whether mega-caps are outperforming or leading the market is by comparing the SPY to equally-weighted RSP. The relative strength line on the chart below shows that RSP is beginning to outperform the SPY. This tells us that mega-cap leadership is weakening.
One issue we will likely run into is that the SPY itself could lose ground, but as we've heard this week, money is not rotating out of the market, it is rotating into small-caps. However, how much is it really expanding into small-caps? Based on the participation numbers for the SP600 (IJR) we haven't seen much expansion. We do see the Silver Cross Index rising and near a positive crossover or Bullish Shift. The Golden Cross Index is still expanding as well. A foundation seems to be coming together, but price is still all over the place. The declining trend has been broken, but today's decline was unwelcome. There is a new PMO Crossover BUY Signal so we should see an advance. If we do not, we will know that the rally isn't broadening enough to prop up prices should we see further Mag7 weakness.
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/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: As we were expecting, options expiration resulted in low volatility on Thursday and today with a price range of less than one percent for those two days.
The PPI report was hotter than hoped for, so upside follow through was quashed as dovish Fed projections were scrapped. Even though the rally was subdued, SPY still closed at new, all-time highs this week.
The PMO turned down on today's decline. The RSI tells us that price isn't as overbought as we might think.
The VIX spent most of the week below its moving average which implies internal weakness. However, that is being alleviated by rising Stochastics.
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SPY Weekly Chart: New all-time highs were printed during the week, but ultimately the SPY did finish lower on the week for the first time in well over a month. The weekly PMO is very bullish, but we do see that price is overbought based on the weekly RSI. Maybe short-term we're not seeing overbought conditions on the RSI, but longer-term, price is overbought.
New 52-Week Highs/Lows: A few New Lows were logged and New Highs were elevated. Remember this is an intraday indicator so the highest levels are what is on the chart. Some of those New Highs and New Lows may have been lost by day's end so we aren't looking at the level of New Highs as particularly enlightening. The 10-DMA of the High-Low Differential is back to declining.
Climax Analysis: There were no climax readings today. We saw three climaxes this week, in order, downside initiation climax (didn't resolve with lower prices), upside initiation climax (which did resolve as expected) and upside exhaustion climax (a bearish signal that did result in lower prices).
*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) tipped over today. They have been choppy and rather unhelpful, but we do want to take declines at face value as it is a caution flag. We lost some of the rising PMOs we had yesterday. They are still above our 50% bullish threshold, but barely. This indicator is distressing not only in its decline today, but in its low 51% value. This sets up a big negative divergence with price. You would think with the rally we saw in January that it would be at levels similar to December, but we are far from them.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
The ITBM and ITVM have also been chopping around sideways. They were mixed today. We did see an increase to %PMO Xover BUY Signals, but it is still reading below our bullish 50% 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.
Utilities (XLU) hold the lowest IT Bias and this is due to the earlier decimation of the sector. We did see an expansion on the Silver Cross Index (SCI) so it is attempting to turn it around. It still looks quite bearish to us.
The highest IT Bias goes to Consumer Staples (XLP). XLP is seeing new rotation and it is apparent based on the increase in the SCI. There is still work to do on the Golden Cross Index (GCI). The high IT Bias is due to the low reading on the GCI combined with a greatly improving SCI.
This table is sorted by SCI values. This gives a clear picture of strongest to weakest index/sector in terms of intermediate-term participation.
Financials (XLF) are at the top of the SCI table, but did lose some ground. We need to be careful to see if its current rally can hold up longer given the new decline in the SCI. It is a small decline, but a decline nonetheless.
XLU holds the lowest reading, but it did see improvement this week. It should outpace Gold Miners soon.
This table is sorted by GCI values. This gives a clear picture of strongest to weakest index/sector in terms of long-term participation.
XLF is at the top of the GCI table as well. No changes were logged so the foundation in the long term is strong.
Gold Miners (GDX) saw losses on both the SCI and GCI. It holds the lowest GCI value. This group is trying to make a reversal, but given the low SCI and GCI as well as weekly losses to both, we would be very careful with the latest rally. It has a high likelihood of failure.
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 did see losses to %Stocks > 20/50EMAs but not enough to bring the percentages below our bullish 50% threshold so the ST Bias remains BULLISH. The Silver Cross Index (SCI) is still in decline and it is below its signal line so the IT Bias is BEARISH. The Golden Cross Index (GCI) is rising and is 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 mega-caps are beginning to weaken and that has opened the door to rotation into the broader market. Today showed mega-cap weakness taking down the SPY and we did lose rising PMOs on the move so we are suspicious that rotation isn't expanding enough. We have to be careful given the new decline in the PMO and 10-DMA of the High-Low Differential. However, we don't want to get overly bearish right now. Our sense is the market as a whole is shaky, just like our STOs and ITBM/ITVM. Internals are strong enough to keep the market elevated, but deterioration to rising momentum suggests the market is vulnerable. Negative divergences are still a concern and with mixed news on the inflation front, investors are feeling less bullish regarding the Fed and that will apply downside pressure. Stops should be placed and updated. We continue to suggest letting the market stop you out. We don't want to miss out on this rally, but we want to be protected.
Erin is 70% long, 0% short.
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BITCOIN
Bitcoin continued its rally this week with a breakout move. The RSI is incredibly overbought, but that isn't usually a problem. The PMO is not overbought and is rising strongly. We don't see any reason to expect a breakdown here.
This chart is to show where some of the support/resistance lines come from. This week pushed price above the latest area of overhead resistance. The next strongest level is at all-time highs, but we could consider the psychological level of 60,000 as the next level.
BITCOIN ETFs
Today:
This Week:
INTEREST RATES
Yields had a bumpy ride this week but ultimately finished higher for the most part. We see rates as moving higher from here given the FOMC isn't likely to lower their Fed Funds Rate until at least summer.
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 hiccuped this week, but ultimately finished higher. Resistance is near but we are expecting a breakout. Stochastics are falling but remain above 80. The PMO is moving higher and the RSI is not overbought.
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 6.64 to 6.77.
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 struggling to hold resistance. We see it moving lower from here as interest rates still look very bullish. The RSI is negative and the PMO is falling. Stochastics are trying to turn back up, but they are very weak as they are below 20. Look for price to test support at 90.00 soon.
TLT Weekly Chart: The weekly chart is in line with our bearish outlook. The weekly RSI just moved into negative territory and the weekly PMO has topped. You can see the rising trend on the 20-year yield, that will continue to push TLT lower.
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 formed a bearish filled black candlestick today which suggests Tuesday will see a decline. UUP is stuttering on its way upward. Every breakout is followed by choppy trading. The rising trend does remain intact and the PMO is still on the rise. Despite the drop in Stochastics, we remain bullish on the Dollar.
UUP Weekly Chart: The weekly chart is also bullish and suggests this rally will overcome resistance at the 2023 high. We have a rising and not overbought weekly RSI and most important is the new weekly PMO Crossover BUY Signal.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold managed a rally despite a rising Dollar. This looks like a good reversal area, but the PMO is not yet on board for rally. Price needs to get above the 50-day EMA to prevent a Dark Cross of the 20/50EMAs.
Stochastics are on the rise and price did not have to touch the 200-day EMA before reversing which is bullish. We would say that Gold looks less bearish, but doesn't look bullish enough yet to expect a strong rally.
GLD Weekly Chart: The weekly PMO is nearing a Crossover SELL Signal. This is another reason why we aren't getting bullish on Gold overall. Discounts are elevated, but not to the levels we saw before the 2022 upside reversal. We don't think sentiment is lopsided enough to look for a reversal.
GOLD MINERS Golden and Silver Cross Indexes: We imagine that many of you are itching to get back into Gold Miners. While this does look like a great area for an upside reversal, we would be careful of not jumping the gun. The participation numbers are still depressed and both the Silver Cross Index and Golden Cross Index are in declines. A rally in Gold would help but as addressed above, we aren't bullish on Gold yet.
CRUDE OIL (USO)
IT Trend Model: BUY as of 2/12/2024
LT Trend Model: SELL as of 12/18/2023
USO Daily Chart: We saw a very tiny breakout above the January high. It is likely to see follow through given the positive configuration of our indicators. The RSI is not overbought, the PMO is rising nicely and Stochastics are above 80.
Should we get the breakout, the next level of strong resistance doesn't arrive until the late 2023 tops.
USO/$WTIC Weekly Chart: The weekly chart is beginning to see improvement. The weekly RSI has moved into positive territory and the weekly PMO is attempting to bottom above the zero line. There is a large symmetrical triangle on the chart. Those are continuation patterns and suggest an upside breakout ahead. It isn't out of the question.
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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