A number of weekly Price Momentum Oscillators (PMOs) turned up this week, but two saw reversals above the signal line which is especially bullish in the intermediate term. We call these bottoms above the signal line "surges". It implies strength as the PMO did not trigger the SELL Signal first. Indicators tell us to be somewhat cautious in the short term, but these two charts suggest that a decline could look similar to April's not likely a bear market decline.
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: Another day with SPX Total Volume is only 66% of the one-year average daily volume which speaks to the lack of enthusiasm for this rally. We also saw a bearish filled black candlestick. These one-day patterns suggest a decline will follow the next trading day.
The VIX is getting close to the lowest readings for the year. We find it interesting that no fear is being expressed given the lack of volume on this rally. Stochastics are comfortably above 80 and are still rising so more upside isn't out of the question.
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SPY Weekly Chart: The SPY's weekly PMO turned up this week which bodes well in the intermediate term. Price is getting ever nearer all-time highs so we're not surprised the rally is softening at this point in time.
New 52-Week Highs/Lows: New Highs are expanding and that could mean the rally is broadening out somewhat. The High-Low Differential continues to rise strongly confirming the rising market trend.
Climax Analysis: There were no climax readings today. We saw two upside exhaustion climaxes this week. The rally has persisted nonetheless, but on lower and lower volume capped off with a bearish filled black candlestick. With strong overhead resistance nearing, we do expect these climaxes to return lower prices.
*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 OVERBOUGHT.
We're seeing some cracks in the foundation. The Swenlin Trading Oscillators (STOs) turned down today throwing shade on this rally. Participation is strong enough to keep things elevated given percentages are well above our bullish 50% threshold, however we do note that %PMOs Rising is overbought along with the STOs.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
Unlike STOs, the ITBM and ITVM are continuing their moves higher. PMO Crossover BUY Signals are shooting skyward, but we do note that they are near-term overbought. The intermediate-term picture looks brighter than the short-term one.
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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.
Utilities (XLU) hold the highest IT Bias as they continue to outperform the market by a mile. It even saw a huge improvement to the Golden Cross Index. It is just getting stronger.
Interestingly, Technology (XLK) holds the most negative bias. This is primarily due to its stronger Golden Cross Index reading versus the Silver Cross Index reading. On a positive note, the Silver Cross Index did gain seven percentage points this week.
This table is sorted by SCI values. This gives a clear picture of strongest to weakest index/sector in terms of intermediate-term participation.
The biggest improvement to the Silver Cross Index goes to Regional Banks (KRE) which saw an incredible 22 point gain. This is definitely a group to keep your eye on.
Energy (XLE) was the only one to actually lose points on the Silver Cross Index and it lost a lot. The Crude Oil trade is soft right now and that is posing a problem for this sector.
This table is sorted by GCI values. This gives a clear picture of strongest to weakest index/sector in terms of long-term participation.
Not surprisingly, Utilities (XLU) saw the biggest gain to the Golden Cross Index. It is building a nice foundation, but we do have to wonder how much further can it go?
Transports (IYT) are struggling and that can be seen by the large loss in the Golden Cross Index. Dow Theory suggests this is a bearish condition.
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 timeframes.
Big news is that the Golden Cross Index moved above its signal line today which gives us a new BULLISH bias in the long term. This week the Silver Cross Index moved above its signal line giving us a new BULLISH bias in the intermediate term. We have kept the ST Bias as BULLISH given we have strong participation readings of stocks above their 20/50-day EMAs.
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: Two bits of big news today. First would be the STOs turning back down and the second would be the new BULLISH bias in the long term based on the Golden Cross Index moving above its signal line. These don't jibe very well. While we do have a bullish bias in all three timeframes, we are sensing a lack of enthusiasm and softening of the rally. Reversing STOs suggest a decline may be ahead of reaching new all-time highs. At this point, indicators and biases imply we won't see a decline that would bleed into the intermediate term. We aren't counting on that and neither should you. Set your stops and let the market take you out. You could also consider letting go of your lackluster positions.
Erin is 40% long, 0% short.
Calendar: Next Friday is the last trading day before options expiration. It is not an end-of-quarter expiration, so there should not be higher than normal volume associated with it. Normally, on the last two days of the week we expect low volatility.
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BITCOIN
Bitcoin Daily Chart: Bitcoin has a decidedly bearish look right now. Price is bounded within a declining trend channel and appears ready to test the bottom of channel. The RSI is negative and falling. The PMO has topped twice beneath the signal line and Stochastics have turned down. At this point we would expect more downside.
Bitcoin Weekly Chart: We got the parabolic breakdown we expected. The weekly PMO is nearing a negative Crossover SELL Signal. The breakdown could finish at this support level, but we would look for a possible test of 50,000 before it is all over with.
BITCOIN ETFs
Today:
This Week:
INTEREST RATES
Yields are managing to hold rising trends. We are expecting to see a breakdown of those rising trends but so far they are holding tight. The current range will likely remain for some time, but they are due for a drop toward support.
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 refuses to breakdown further as it holds tight within its rising trend channel. As we've said this week, this is an excellent place to see a reversal given the combination of 50-day EMA, horizontal support and the rising bottoms trendline. The PMO still has us expecting a breakdown here, but we do note that Stochastics are making a move, but they remain negative below 20.
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 7.22 to 7.09.
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: We don't like the look of Stochastics. With the 20-year yield holding a long-term rising trend, the outlook for TLT is getting less bullish. The PMO is below the zero line and flattening out. This rally may be coming to a close soon.
Overhead resistance held tight and with yields trying to reverse, it wouldn't surprise us if TLT reverses lower from here.
TLT Weekly Chart: The weekly PMO is still in decline, but we do have a bullish falling wedge. We would suggest that price will likely need to test the bottom of the wedge again.
DOLLAR (UUP)
IT Trend Model: BUY as of 1/23/2024
LT Trend Model: BUY as of 5/25/2023
UUP Daily Chart: The rising trend channel puts a bullish spin on the daily chart, but indicators don't suggest that we will see a rally here. More than likely we will see a test of the bottom of the rising trend channel. That could happen with decline or we could see it through sideways action. Stochastics topping in negative territory is a big problem.
UUP Weekly Chart: The weekly chart looks pretty good. The weekly PMO is turning back up above the signal line and the zero line. We have the breakout. It appears we will see the Dollar eventually move upward within its rising trend channel on the daily chart.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold rallied again today, but formed a bearish filled black candlestick that would suggest the rally will cool on Monday. The indicators are shaping up, even the PMO is beginning to flatten in anticipation of a bottom. You'll also note that Gold's relative strength line is on its way up versus the Dollar. We should see more rally, but Monday may see a pause.
This bounce is coming off the 50-day EMA which has been a good indicator of price support.
GLD Weekly Chart: Discounts are elevated, but not to levels we saw coming out of the October low. We'd like to see them get even higher. The weekly PMO is on the rise and this does look like a bull flag. The intermediate-term picture, like the short-term picture is bullish.
GOLD MINERS: Surprisingly Gold Miners struggled a bit today. With Gold up we would've expected more out of GDX. The PMO is on the rise again and participation is excellent with readings above 90%. Stochastics have now pushed above 80. We are looking for more follow through on the rally we saw this week.
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 formed a bearish engulfing candlestick on its big decline today that implies we will see another down day on Monday. There was a puncture of the lower Bollinger Band on $OVX and many times that can lead into higher prices, but that isn't enough to hang our hat on. The RSI is negative and the PMO just moved below the zero line. Stochastics are topping in negative territory. While this is a good place for a rally to start, the indicators just don't support it.
USO/$WTIC Weekly Chart: We are starting to see the formation of a large double top on the weekly chart. Price looks ready to go down to the confirmation line. The weekly PMO isn't particularly negative, but we note this is the zone where it turned down last time. The weekly chart is not inspiring and with a daily chart that is weak, we would probably stay away from this trade and keep Energy (XLE) at a distance.
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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