Gold (GLD) made a new, all-time high today, and what is interesting is that sentiment is still negative. We are referring to the fact the closed-end fund Sprott Physical Gold Trust (PHYS) is still selling at a discount to net asset value. Additionally, the Gold VIX ($GVZ) is reading high and that also suggests bearishness. Sentiment is contrarian so bearish sentiment isn't necessarily a bad thing. We'll discuss Gold in its section.
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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: For the sixth time since October the market has bounced up following a one-day down chop (see circles). The Fed didn't unleash anything new and that made investors feel just fine. The jobs report will be released tomorrow and could goose the market in either direction, but given the Fed's current stance of lowering rates in June, it shouldn't be all that climactic.
The PMO turned back up, but remains beneath its signal line. We are still bothered by the rising wedge on the SPY. Stochastics dipped below 80 and the VIX is below its moving average on the inverted scale. Both could suggest a little weakness, but it is best to read it as diminishing strength. They aren't that bearish.
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S&P 500 New 52-Week Highs/Lows: New Highs expanded and we only saw one New Low. The 10-DMA of the High-Low Differential is very bullish, but is also very overbought. For now it is flashing strength.
Climax* Analysis: There were no climax readings today.
There was, however, climactic NYSE New Highs today -- the highest reading in three years.
*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) didn't reverse today. They continued rising and it looks pretty strong. It will take much higher readings to extinguish the negative divergences. Participation expanded slightly. We saw more rising PMOs today. Nearly 2/3rds hold rising momentum. That can keep a rally fed, but we need to see more in order to alleviate negative divergences.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
The ITBM and ITVM look very bullish right now as they rise but as with our other indicators, negative divergences are still at play. The one that is most troublesome is the %PMO Xover BUY Signals. We had far more BUY Signals midway through this rally and with price so much higher, we should be seeing more.
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.
The ST Bias is BULLISH due to all of the participation indicators holding above 50%. We now have %Stocks > 20/50EMAs reading higher than the Silver Cross Index (SCI). This means the SCI could continue moving higher. It still shows a negative divergence, but this is very encouraging. It is above its signal line so the IT Bias is BULLISH. The Golden Cross Index is making headway. It is above its signal line so the LT Bias is BULLISH too.
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: It appears we have experienced the sixth market hiccup that didn't lead to a concerted decline. Many are using the word "teflon" to describe the market right now. The internals are strong enough to support more rally. In fact, based on those negative divergences, there is room for indicators to move higher without becoming overbought. At the same time those negative divergences tell us that the rally may not be a broad as it needs to be in order to rally much further. At this point with STOs, ITBM and ITVM rising, we can continue to be cautiously bullish. As we continue to reiterate, stops should be set and then you can let the market take you out should it reverse.
Erin is 60% long, 0% short.
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BITCOIN
Bitcoin had another good day, but it hasn't risen to meet the recent high yet. We think it will. The PMO looks far too bullish to expect a crash. Consolidation would be nice to clear the overbought RSI, but Bitcoin often ignores its RSI.
BITCOIN ETFs
INTEREST RATES
Yields mostly fell today. They headed back down toward support. That level should hold if it is even tested.
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 breaking down below support. It did close on the support line, but this looks very bearish. The RSI is in negative territory and the PMO is on a Crossover SELL Signal. Stochastics couldn't look much worse than they do now. They are below 20 and that means there is extreme weakness.
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 one of the few yields to move higher and that put downside pressure on TLT. Interestingly the decline arrived right at overhead resistance. Given the double bottom pattern and new IT Trend Model BUY Signal (20-day EMA > 50-day EMA, Silver Cross) we expect price to continue to tread higher. The PMO has now entered positive territory and that signals strength.
DOLLAR (UUP)
IT Trend Model: BUY as of 1/23/2024
LT Trend Model: BUY as of 5/25/2023
UUP Daily Chart: As we suspected, we did get a breakdown at the 50-day EMA and horizontal support. The indicators are going from bad to worse so we expect more decline for 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 took advantage of the falling Dollar, but also took advantage of incredible internal strength which can be viewed through Stochastics. The RSI is very overbought so we could see some consolidation ahead. The PMO suggests higher prices ahead. We don't expect a pullback yet.
Gold's relative strength to the Dollar is barreling higher so even if the Dollar were to find its legs, Gold should still do well. The inverse correlation has deepened between Gold and the Dollar. The Dollar ultimately looks very weak so this correlation will also work in Gold's favor.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners are off to the races. The rally in Gold will continue to help them move higher. A relentless market rally is helping as well. Internals are very strong with the Silver Cross Index rising very quickly. GDX is due for a pause at the very least, but we do expect to see overhead resistance at 32.00 tested.
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 was down slightly but held above support. We would like this level to hold. The saucer basing pattern does suggest a rally should get going here. The PMO is on a BUY Signal and the RSI is positive and not overbought. Stochastics are now turning back up in positive territory. We are cautiously bullish on Crude.
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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