While the broad market suffered badly today, the Energy Sector (XLE) moved to new, all-time highs. The weekly chart is especially positive because XLE broke out of a rising wedge formation, from which we normally expect a break down.
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: The OBV negative divergence Carl pointed out last week seems to continue exerting it's negativity on the market.
The rising wedge still contains price, just barely.
Here is the latest recording from 4/1/2024:
S&P 500 New 52-Week Highs/Lows: New Highs continued to contract, and New Lows expanded.
Climax* Analysis: There were two climax readings (and two "almosts") on the four relevant indicators today, giving us a downside initiation climax. SPX Total Volume fell short of the one-year daily average, showing a lack of conviction in the decline. This is not surprising since quick, upside reversals following a few days of decline have been the rule since October. Today was the third down day in a row, so this could be an exhaustion day, but we wouldn't count on it.
*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 contracted today.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT.
The ITBM and ITVM have both topped.
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.
However, we are probably in a situation where things are as good as they will get. Look for participation to begin 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: Growing doubt about rate cuts is weighing on the market, and the advance is beginning to falter. The ITBM ITVM have topped again, perhaps this time is charmed. A key issue is that the big-cap tech stocks seem to have run out of steam, and are due for correction. As we said earlier, things have gotten as good as they are going to get, and it is time for things to begin getting worse for a while.
Erin is 75% long, 0% short.
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BITCOIN
The rising trend was broken today. Possibly, difficulty in the stock market is splashing on cryptos.
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 above the double top resistance, but settled right on the line.
BONDS (TLT)
IT Trend Model: SELL as of 3/20/2024
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: Bonds broke down from the triangle, but have settled 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 thought it odd that the Dollar and Gold were both up yesterday, as they are usually negatively correlated, but the reason was that the Swiss National Bank cut rates, which resulted in a positive outlook on the Dollar because our Fed is still holding off rate cuts.
Today there was a pullback after yesterday's breakout.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold continues make all-time highs. A free article on mauldineconomics.com gives some good background as to why gold is so positive, and why the dollar and gold being positively correlated is not a problem.
GOLD Daily Chart: Gold has gone parabolic in the very short term.
GOLD MINERS Golden and Silver Cross Indexes: Gold pressed higher, but Miners stalled at resistance. Nevertheless, we think that Miners will be pulled higher by Gold.
CRUDE OIL (USO)
IT Trend Model: BUY as of 2/12/2024
LT Trend Model: BUY as of 2/27/2024
USO Daily Chart: We expect the rally in Crude to continue.
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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