Unlike the SPY, Small-Caps (IJR) finished the day higher on follow through from yesterday's rally. This breakout is coming out of symmetrical triangle that suggested we would see the breakout. Symmetrical triangles are continuation patterns so we should expect the prior trend to hold up and it did. We have a strong PMO BUY Signal above the zero line and Stochastics are back above 80. Participation has improved a great deal with more stocks climbing above their key moving averages. The Silver Cross Index shows us a BULLISH IT Bias as it is above its signal line. It is also starting to rise. It will continue to do so given so many stocks are above their 20/50-day EMAs.
What is really important to note is the new outperformance against the SPY. Rotation does appear to be moving back into small-caps and that should keep the market afloat longer as participation improves within the broad markets.
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: The SPY finished slightly down on the day but did log a positive week, up +0.36%. Overhead resistance is arriving at all-time highs and that could explain why price faltered today after an upside initiation climax yesterday. This rally has been relentless and it continues to show strength as the PMO remains flat above the zero line. It is on a SELL Signal, but we don't see this as a problem yet.
The VIX is comfortably above its moving average on the inverted scale and Stochastics are above 80 and rising. This suggests that we still have internal price strength. Notice that the relative strength line against equal-weight RSP is declining. This tells us that the rally is not being ignited by mega-caps, it is broad market strength that is keeping the rally going.
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SPY Weekly Chart: The rising trend continues undaunted out of the October low. Price is very overbought based on the weekly RSI, but this hasn't hindered the rally. The weekly PMO is rising and is not overbought so we could continue to see higher prices still.
SPY Monthly Chart: We can see another parabolic advance is upon us based on the monthly chart. These don't end well, but given current strength within the market, we don't see a big breakdown ahead yet. The monthly PMO is rising above the zero line and is not at all overbought. The weekly RSI just hit overbought territory, but based on history that doesn't usually pose a problem.
New 52-Week Highs/Lows: New Highs expanded on today's small decline, but remember this is an intraday reading so some of those New Highs may've expired by day's end. We do like the new rising trend on the High-Low Differential. It is also rising.
Climax Analysis: There was only one climax reading today, and SPX Total Volume was solid but not climactic. Nevertheless, we should consider that there is upside exhaustion.
*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) were mixed on the day. They have been very twitchy, but we would like them to be in agreement. Participation didn't really move today. We didn't see any new rising PMOs, but we still have 2/3rds of the index holding rising PMOs.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT.
We are listing the ITBM/ITVM as overbought right now, but they could certainly accommodate more upside based on prior readings. Negative divergences still hold sway on both this chart and the ST Indicators chart above. We did see a few more PMO BUY Signals which is encouraging.
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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.
Gold Miners (GDX) not surprisingly holds the highest IT Bias reading. They have been on fire and look bullish moving forward. Notice the strong improvement to both the Silver Cross Index (SCI) and Golden Cross Index (GCI).
Regional Banks hold the most negative IT Bias, but they are seeing some near-term improvement based on the nine percentage point gain on the 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.
Energy (XLE) has been on a nice rally as the Crude Oil trades heats up. It is no surprise to see it at the top of the SCI table.
Regional Banks (KRE) have struggled leaving them with the lowest SCI value, but as noted above, we did see vast improvement to its SCI this week.
This table is sorted by GCI values. This gives a clear picture of strongest to weakest index/sector in terms of long-term participation.
The Financials (XLF) have been on a steady march higher. It is at the top of the GCI table and it gained one percentage point. At the same time though, it did lose a point on the SCI.
Utilities (XLU) hold the lowest GCI value, but it could start seeing improvement as the SCI is now gaining points again.
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.
Participation is healthy and well above our 50% bullish threshold so we read the ST Bias as BULLISH. The Silver Cross Index (SCI) is springing upward after avoiding a near Bearish Shift or cross below its signal line. Given we have higher percentages on %Stocks > 20/50EMAs, we should see it continue to rise. The SCI is above its signal line so the IT Bias remains BULLISH. The LT Bias is BULLISH as the Golden Cross Index (GCI) is above its signal line as well. We have a higher percentage of stocks above their 50/200EMAs so we would expect the GCI to continue to rise.
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 marched relentlessly upward as it advanced again this week. STOs are waffling, but the ITBM/ITVM are moving higher which eases our worries about indecisive STOs. Negative divergences continue to be a problem, but so far we haven't seen any damage. One way to look at these negative divergences is that there is room for improvement and that means the market can accommodate even more upside. They are still dangerous, but this could explain why we aren't seeing the decline yet. We didn't get the desired follow through on yesterday's upside initiation climax and today we saw signs of exhaustion so we could see some decline to begin trading next week. Overall we believe the market will likely continue its advance in the short term timeframe, but we should remain cautious particularly given a possible upside exhaustion today. Portfolio expansion can be done carefully. Hard stops will protect your profits and offer an easy out should the market finally turn.
Erin is 80% long, 0% short.
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BITCOIN
Bitcoin Daily Chart: Bitcoin looks a bit toppy right now as it consolidates sideways. The rising trend hasn't been compromised yet, but the PMO turning down below its signal line means we should at least see a test of the rising trendline. Stochastics are still rising so an advance isn't out of the question.
Bitcoin Weekly Chart: We have a clear parabolic advance on the weekly chart. You can see what happened after the prior parabolic. It is due for a pullback at the very least. Yet, the weekly PMO is very bullish and not yet overbought so that could prevent a correction. If we get the breakdown from the parabolic, we would look for a move down toward 50,000.
BITCOIN ETFs
Today:
This Week:
INTEREST RATES
Yields are in decline in the short term and we suspect that will continue. Bond funds should see more upside.
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
One of the reasons we aren't bullish yields in general is the $TNX chart. A bearish double top has formed. It won't be confirmed until a breakdown below the confirmation line near 4.05%. The PMO SELL Signal implies weakness seeping in and Stochastics are tumbling lower. While we aren't sure we will get the drop beneath the confirmation line, we do see it testing that level.
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 6.87 to 6.79.
Here is a 50-year chart for better perspective.
BONDS (TLT)
IT Trend Model: SELL as of 3/20/2024
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: TLT has set up a symmetrical triangle that implies an upside breakout ahead given the trend prior to the pattern was up. With yields looking weak we do see an upside breakout as likely. The PMO isn't that helpful as it is flat along the zero line. Currently it is on a Crossover BUY Signal.
TLT Weekly Chart: Price broke out of the bullish falling wedge as expected but it hasn't done much since. It has been in a declining trend. We could be looking at a possible bull flag formation, but the flag is getting extended. It should be longer than the flagpole. We do see the weekly PMO has moved above the zero line and the weekly RSI is positive. We should see some near-term upside.
TLT Monthly Chart: The monthly PMO nearly saw a positive crossover its signal line. While there is a strong declining trend, the weekly PMO suggests we could see prices move higher in the long term.
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 rallied this week and protected its rising trend. It looks quite bullish given the positive and not overbought RSI, PMO Crossover BUY Signal above the zero line and Stochastics above 80. There is nothing here to imply the Dollar will lose ground.
Overhead resistance is nearing and that could pose a problem or at least some consolidation.
UUP Weekly Chart: We can see on the weekly chart that there is further overhead resistance to deal with at the 2022 top. However, indicators are very bullish with the weekly RSI in positive territory and the weekly PMO rising on a Crossover BUY Signal above the zero line so we don't expect that to hold the Dollar back.
UUP Monthly Chart: The Dollar looks bullish in the long term as well. The only issue is that the monthly PMO is overbought. It is rising so we could see even higher prices this year.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold hit a fresh all-time high even as the Dollar rose. The Gold trade is really shaping up and we see more upside ahead for Gold despite a positive Dollar. Gold is beginning to outperform the Dollar. The PMO surged above the signal line so even though it is overbought, it is likely to move higher. The RSI is also overbought, be we don't see this as a problem given its propensity to hold overbought conditions in the near term.
The correlation with the Dollar has disintegrated. Gold is free to travel on its own and we think it will travel higher. We are still seeing discounts on PHYS so not everyone is bullish on the metal. Discounts have at least pared back as investors do warm back up to Gold.
GLD Weekly Chart: This breakout looks solid for the intermediate term. The weekly PMO is rising above the zero line and is not as overbought as it can get.
$GOLD Monthly Chart: We're finally seeing the upside breakout from the bullish cup with handle pattern. We do note that the rising bottoms trendlines are steepening and that means this is the beginning to form a parabolic rise. We aren't overly concerned about this yet as the rally is far from being vertical. The monthly PMO is rising on a Crossover BUY Signal and that implies more upside ahead in the long term.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners are back on track logging a strong rally to finish out the week. Interestingly, the RSI is not yet overbought. The PMO is accelerating higher above both its signal line and the zero line. The Silver Cross Index is accelerating higher as participation remains very high, near perfect. The Golden Cross Index will also continue to rise given we have far more stocks above their 50/200-day EMAs. Stochastics just popped above 80. With Gold looking very bullish and participation so robust, we expect an upcoming breakout above overhead resistance.
CRUDE OIL (USO)
IT Trend Model: BUY as of 2/12/2024
LT Trend Model: BUY as of 2/27/2024
USO Daily Chart: Today marks a breakout from a bull flag and that suggests more upside and a breakout above overhead resistance. The PMO is flat above the zero line which implies internal strength. Stochastics are rising above 80 and the RSI is not overbought. We see more upside ahead for Crude.
The flag formation suggests we will see a breakout above the 2023 top.
USO/$WTIC Weekly Chart: USO is preparing for an expected upside breakout from its symmetrical triangle. The weekly PMO is rising on a Crossover BUY Signal above the zero line. The weekly RSI is not overbought so we could see even higher prices in the intermediate term.
WTIC Monthly Chart: We see a bullish double bottom on the monthly chart for $WTIC and that suggests prices will move higher from here. The one problem is the monthly PMO is on a SELL Signal still and is falling. We have feeling we will see an upside reversal on the PMO as the ST and IT look very bullish for 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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