Yesterday Fed Chairman Powell rekindled hopes that there may be rate cuts this year, and that was enough to push the market higher earlier in the day, but during the day Minneapolis Fed chief, Neel Kashkari, proposed that maybe rate cuts would not be appropriate if inflation continues to move sideways. This pulled the plug on the market.
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: Yesterday we mentioned that he market was within inches of all-time highs, helped there by Chairman Powell. Today the market came within a hair of making new, all-time highs, but was torpedoed by Kashkari. SPY broke the rising trend line, as well as horizontal support. SPX Total Volume was slightly above the one-year average, not at blowout levels.
The rising wedge broke down.
Here is the latest recording from 4/1/2024:
S&P 500 New 52-Week Highs/Lows: Both New Highs and New Lows expanded.
Climax* Analysis: There were unanimous climax readings on all four relevant indicators, giving us a downside exhaustion climax. SPX Total Volume was solid, confirming the climax.
*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 still UP and the condition is NEUTRAL.
All these indicators declined again today.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT.
The ITBM and ITVM have topped, and we're waiting for a downside result from the negative divergences.
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 BEARISH in the intermediate- and short-term time frames.
Participation has begun to deteriorate.
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 is being whipped around by Fed news, but in the final analysis the bears carried the day. On the BIAS table above we can see that three major indexes switched to an intermediate-term bearish bias. And the negative divergences are starting to get their way. SPY breaking support and rising trend make us think that a decline has fianlly begun. }}}
Erin is 75% long, 0% short.
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BITCOIN
The rising trend was recaptured today, barely.
BITCOIN ETFs
INTEREST RATES
We believe that yields will remain in the trading range set from late-2022 to present.
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
The 10-Year Yield broke the support line today. We now have a bearish rising wedge.
BONDS (TLT)
IT Trend Model: SELL as of 3/20/2024
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: Bonds are still holding on support.
DOLLAR (UUP)
IT Trend Model: BUY as of 1/23/2024
LT Trend Model: BUY as of 5/25/2023
UUP Daily Chart: We have a new support line drawn under today's and last week's lows.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold made another all-time high intraday, but it may be topping for a correction.
GLD Daily Chart: Yesterday's comment still applies: "Gold has gone parabolic in the very short term. At some point we should expect should expect the angle of ascent to be mitigated with a pullback or a sideways consolidation, like there was in March."
GOLD MINERS Golden and Silver Cross Indexes: While we can still see the rising trend channel, it may soon close into a bearish rising wedge.
CRUDE OIL (USO)
IT Trend Model: BUY as of 2/12/2024
LT Trend Model: BUY as of 2/27/2024
USO Daily Chart: Yesterday's candlestick was a bearish shooting star. Today crude closed higher anyway.
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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