Of all of the indexes, sectors and industry groups we follow, only two hold IT Bullish Biases. This means that all other Silver Cross Indexes are below their signal lines.
Currently all of the members of XLE hold a Silver Cross or a 20-day EMA above the 50-day EMA. This is as strong as it can get, meaning the only place left to go is down. Price has definitely fallen off the map after closing at an all-time high. The PMO looks bearish with a new Crossover SELL Signal. It may hold a Bullish IT Bias, but this is a sector breaking down.
Gold Miners show nearly 100% of stocks with a Silver Cross or 20-day EMA above the 50-day EMA. We will talk more about Gold Miners in their section.
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
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: Today saw a bearish engulfing candlestick after a deep decline. Price has been rounding off, but now it appears the decline will begin in earnest. The PMO has broken away from its signal line and is headed toward the zero line.
Support has been hit but we expect it to break down. The VIX has been penetrating the lower Bollinger Band on our inverted scale for some time. Typically those punctures lead to upside, but this decline is too much for it. Stochastics are almost below 20 flashing increasing weakness.
Here is the latest recording from April 15th:
S&P 500 New 52-Week Highs/Lows: New Highs and New Lows are negligible. The High-Low Differential is in deep decline and is reading lower than we have seen in months.
Climax* Analysis: On Friday we had a downside exhaustion climax, the name of which might imply that the price decline could be at an end. To be sure, that was not the case. To clarify, climaxes are essentially exhaustion events, but we identify some of them as initiation climaxes because they appear to be initiating a change in market direction. Today there were unanimous climaxes on the four relevant indicators, giving us another downside exhaustion climax. We think that the exhaustion event may result in a little market churn, but we seriously doubt that the decline is over.
*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 DOWN and the condition is OVERSOLD.
Readings on all of our short-term indicators are oversold. We could certainly see them move lower, but maybe this is a sign we could see some consolidation ahead. With only 2% of stocks holding rising momentum anything other than a decline will be difficult.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
The ITBM hit negative territory today. Neither the ITBM nor the ITVM are oversold yet. We only have 10% of stocks holding PMO Crossover BUY Signals--another indication that a halt in the decline will be difficult.
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 short term and intermediate term.
The market bias is BULLISH in the long term.
With %Stocks indicators reading so low, the ST Bias must be read as BEARISH. The Silver Cross Index is in decline and is below its signal line giving us a BEARISH IT Bias. The Golden Cross Index is in decline and nearing its signal line. For now it is above the signal line so we read the LT Bias as 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 is likely stopping you out right now and that is likely a good thing given today's strong decline. We do see all of our primary indicators in decline and while some are oversold, the overall environment is bearish. Today's downside exhaustion climax and oversold VIX give us some hope the decline will end soon, but more than likely we will see a pause not a big upswing based on the low participation readings. Stops should be tightened and any losing positions should likely be closed. Short-term hedges can be put on.
Erin is 50% long, 0% short.
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BITCOIN
Bitcoin was supposed to see an upside breakout based on the symmetrical triangle. These are continuation patterns, meaning they should "continue" the prior trend. That did not happen and we see that as especially bearish. The indicators confirm this with the declining PMO on a Crossover SELL Signal and Stochastics headed lower. Support is near so we could see some consolidation at that level.
BITCOIN ETFs
INTEREST RATES
Rates are on the rise again as the Fed backs off on proposed rate cuts. Bond funds will likely continue to struggle.
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 broke out from a bearish rising wedge. Bullish conclusions to bearish chart patterns are especially bullish. The PMO is accelerating higher. The RSI isn't overbought yet, but it is getting close. We don't see any serious resistance until the October top is reached.
BONDS (TLT)
IT Trend Model: SELL as of 3/20/2024
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: With interest rates on the rise, Bond funds are really struggling. The declining trend has picked up speed. The RSI is nearly in oversold territory, but the PMO is continuing lower and building margin between it and its signal line. The 20-year yield looks bullish on its rising trend so expect TLT to continue lower.
Support will arrive at about 87.00 but we don't believe it will hold at this point.
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 broke upward out of a bearish rising wedge and that is especially bullish. What could work against it is the very overbought RSI which begs for a decline. The PMO is rising strongly and Stochastics are above 80 suggesting more upside ahead for the time being.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Today GLD had a pretty impressive turnaround, considering Friday's disappointing downside reversal, which we attributed to a general malaise in commodities and strength in the dollar. But today GLD was up in spite of the dollar holding its gains.
Today GLD put in a low that allows us to back off from parabolic concerns. It could still resume a steeper ascent, but right now we can consider the rising trend channel the dominant structure. Although, it looks as if price wants to escape to the upside.
GOLD MINERS (GDX) Golden and Silver Cross Indexes: Participation in Gold Miners remains awesome. The % Stocks > 20/50/200 EMAs have been hanging at the top of their ranges for about six weeks, which is unusually strong. Like Gold it does appear that it will need to test the bottom of the rising trend channel. The PMO did top. The market is now struggling and this could put a damper on it, but bullish Gold should prevail and Miners should then benefit.
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 remains in a rising trend, but did compromise it somewhat today. The PMO is in decline and does tell us to be cautious. We will be monitoring a possible flag formation that is building.
We do see a small double top formation too. With competing chart patterns, we will follow the primary rising trend, but as noted above caution is warranted.
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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