Most did not expect the Fed to change interest rates today, and that is what happened. Some people has been saying that the Fed will have to raise rates again this year; however, in his comments Chairman Powell said that a rate hike is unlikely to be the Fed's next move. This caused an intraday relief rally, but it faded into the close.
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Today the Nasdaq Composite ETF (ONEQ) 20-day EMA crossed down through the 50-day EMA (Dark Cross) above the 200-day EMA, generating an IT Trend Model NEUTRAL Signal. We've been watching this one for about a week, and it finally made the crossover today. An upside reversal tomorrow could cause a whipsaw BUY, so watch it closely.
Price is flirting with support and looks very toppy right now. The weekly PMO is falling on a Crossover SELL Signal. The intermediate-term picture is not encouraging.
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.
Watch the latest episode of DecisionPoint on our YouTube channel here!
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 short-term declining trend was broken today. We are now back into a declining trend. The PMO topped beneath the zero line which is quite bearish. Yesterday's downside initiation climax played out as expected with another decline.
The VIX was actually down on today's decline. It is holding above its moving average on the inverted scale. However, Stochastics have topped in negative territory. That implies internal weakness.
Here is the latest recording from Monday, April 29th:
S&P 500 New 52-Week Highs/Lows: New Highs were down slightly on the day. We saw the most New Lows we've seen in some time which also suggests weakness. On the bright side, the High-Low Differential is still rising.
Climax* Analysis: There were no climax readings today.
*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 NEUTRAL.
Swenlin Trading Oscillators (STOs) are back in negative territory. We didn't see a deep decline in participation, but it remains below our bullish 50% threshold. Only 36% of stocks hold rising PMOs. That's not a lot.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
The ITBM and ITVM continued to move lower and confirmed falling STOs. %PMO Xover BUY Signals 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 BEARISH in all three timeframes.
Yesterday's comments still apply:
"We had just moved the ST Bias to bullish and it is now back to BEARISH given %Stocks > 20/50EMAs dropped beneath our bullish 50% threshold. This has caused the Silver Cross Index to top beneath its signal line. The Golden Cross Index is now falling fast. Both Indexes remain below their signal lines so both the IT Bias and LT Bias are BEARISH."
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 Fed allayed some fear that a rate hike could be in consideration, but that wasn't enough to get a positive close. Looking at the Bias Table above we note that all of the indexes we cover hold bearish biases in the intermediate and long terms. In the short term, we have a falling PMO, falling Stochastics and falling STOs. As confirmation, both the ITBM and ITVM are declining. We need to be very careful right now. We also note that a six-month period of unfavorable seasonality is upon us. Probably best to manage current positions and not open any new ones. Our indicators are clearly bearish.
Erin is 30% long, 0% short.
Calendar: The six-month period of unfavorable seasonality begins today.
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BITCOIN
As we anticipated, Bitcoin dropped beneath support and is headed toward the 200-day EMA. We do have some support levels arriving, but the PMO is falling in negative territory. Stochastics are falling in negative territory. We don't think the decline is over for Bitcoin.
Today's breakdown begs us to look at the weekly chart, which emphasizes how serious the breakdown is. The next level of strong support doesn't arrive until price drops below 50,000.
BITCOIN ETFs
INTEREST RATES
Yields fell today as the Fed made no changes to interest rates.
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
Stochastics are dropping fast on $TNX and the PMO has topped. This level of resistance is sturdy. We see rates ultimately rising, but in the short term, we should prepare for more decline.
BONDS (TLT)
IT Trend Model: SELL as of 3/20/2024
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: The 20-year yield shows a new declining trend so we could see more upside out of TLT. The PMO hasn't quite crossed its signal line for a BUY Signal, but it's close and Stochastics are rising. We think we will see a small rally for TLT. Not likely anything spectacular.
DOLLAR (UUP)
IT Trend Model: BUY as of 1/23/2024
LT Trend Model: BUY as of 5/25/2023
UUP Daily Chart: The large island formation continues to develop. It is vulnerable to a gap down move into a reverse island formation. The PMO is still positive and Stochastics are above 80 so we should see more consolidation with a possible melt up.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold came back to life today. We have now identified a bullish falling wedge pattern that implies an upcoming upside breakout. Sentiment is bearish but not as bearish as we've seen. Note that the long-term breakout came after very high discount readings.
The PMO, RSI and Stochastics are configured negatively so we should prepare for more decline near-term.
GOLD MINERS (GDX) Golden and Silver Cross Indexes: Gold Miners rallied today, but made up only a little bit of yesterday's big loss. The chart is leaning bearish with the PMO and Stochastics in decline. Participation is still reading above our bullish 50% threshold so we could see support hold here.
CRUDE OIL (USO)
IT Trend Model: BUY as of 2/12/2024
LT Trend Model: BUY as of 2/27/2024
USO Daily Chart: Big decline on Crude today which wasn't that unexpected given indicators were already leaning bearish. The PMO and Stochastics are very negative and suggest we will see more downside, likely to test the rising trend.
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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