Happy Veteran's Day! I would like to applaud and thank all those who have served or are serving our country. My family has a rich tradition of service that I'm very proud to be a part of as an eight-year veteran of the US Air Force. Carl also served in the USAF as a pilot for 20 years. One of my favorite positions was when I worked in acquisition for the Strategic Defense Initiative (SDI Programs or "Star Wars") at Los Angeles AFB. I put a picture of my father and I at the bottom of the blog. Other members of my family that have served include three uncles, a great uncle, 2 grandfathers and my husband who served 22 years in the Navy. This is your day... or I suppose "our" day.
The SPY finished the day up slightly +0.03%, but the Industrials were down -0.44%. The reason for the decline on the Dow was mainly attributed to Disney (DIS) which was down over 7% today.
I've heard many asking if it is now time to buy DIS. I don't think so. DIS had been in a trading range all summer but began to trend lower after it topped in September. Earnings were not positive which is reflected in today's massive decline. The daily chart is hyper bearish with the RSI tumbling and sitting in negative territory. The PMO topped aggressively along with Stochastics. There is no visible support on the 8-month daily chart.
The weekly chart suggests DIS is not done declining given the negative weekly RSI and declining weekly PMO. There are a few positives that tell us DIS could be watch list material. Weekly Stochastics are turning up in oversold territory and there are many levels of support available.
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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MAJOR MARKET INDEXES
SECTORS
Each S&P 500 Index component stock is assigned to one, and only one, of 11 major sectors. This is a snapshot of the Intermediate-Term (Silver Cross) and Long-Term (Golden Cross) Trend Model signal status for those sectors.
RRG® Chart: XLY is still traveling in the bearish southwest direction and could hit Weakening soon. Meanwhile XLB has reentered Leading. XLC, XLI and XLP are traveling with a bullish northeast heading. XLK is firmly planted in Leading. XLRE is probably the weakest of all on the RRG chart as it picks up speed traveling in the bearish southwest direction within the Lagging quadrant.
CLICK HERE for an animated version of the RRG chart.
CLICK HERE for Carl's annotated Sector charts.
THE MARKET (S&P 500)
IT Trend Model: BUY as of 10/18/2021
LT Trend Model: BUY as of 6/8/2020
SPY Daily Chart: The SPY hit the pause button today. The RSI is flat within positive territory, but the PMO has topped and is headed lower.
Total Volume contracted quite a bit, but given today is a holiday, we can't read too much into it. Stochastics have now moved below 80 and are continuing lower which is bearish. Price hit the top of the intermediate-term rising trend channel and appears headed down to test the bottom.
Free DP Trading Room (11/8) RECORDING LINK:
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Participation: The following chart uses different methodologies for objectively showing the depth and trend of participation for intermediate- and long-term time frames.
- The Silver Cross Index (SCI) shows the percentage of SPX stocks on IT Trend Model BUY signals (20-EMA > 50-EMA).
- The Golden Cross Index (GCI) shows the percentage of SPX stocks on LT Trend Model BUY signals (50-EMA > 200-EMA).
The SCI topped today but the GCI remained constant.
S&P 500 New 52-Week Highs/Lows: New Highs continue to contract and the 10-DMA of the High-Low Differential is continuing lower which is bearish.
Climax* Analysis: Today was not a climax day. The VIX saw an intraday high that kept it below the lower Bollinger Band on the inverted scale, but did close within the Bands. This is a bullish set up in the very short term.
*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 either initiation or exhaustion.
Short-Term Market Indicators: The short-term market trend is DOWN and the condition is NEUTRAL.
STOs are declining and we continue to see positive momentum among the SPX stocks deteriorating. Still, over 50% do have rising momentum which could help put the brakes on the decline.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT.
The ITBM/ITVM continue lower along with %PMO BUY signals within the SPX. Readings on the ITBM/ITVM are somewhat overbought.
Bias Assessment: We now have a short-term neutral to bearish bias given there are few stocks above their 20-EMA than the SCI (bearish) and about the same amount above the 50-EMA (neutral). The SCI reading is still above 65% giving us a bullish bias in the intermediate term and the GCI is sitting at a bullish 83%.
CONCLUSION: The SPY halted its two day decline, but didn't do so in spectacular fashion. Given declining STOs and a deterioration of the short-term bullish bias, we would expect to see the decline continue or see more consolidation. Consider carefully any moves that will increase your exposure to the market. I had positions close this week and am considering entry into two of today's "Diamonds in the Rough". I will be relying on my timing method using the 5-minute candlestick charts to see if any buy points arrive tomorrow or Monday.
I am 70% exposed to the market with 30% being in cash and readily available to trade.
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BITCOIN
Yesterday's comments still apply:
"Bitcoin pulled back after reaching new all-time highs. Support at the 20-EMA is intact and the RSI remains positive. Additionally, the PMO has decelerated but hasn't topped yet. Given the negative OBV divergence, this decline could continue, but support at $60,000 still looks sturdy." Additionally, the short-term rising trend is still intact.
INTEREST RATES
The Bond markets were closed today.
10-YEAR T-BOND YIELD
Bond markets were closed today.
DOLLAR (UUP)
IT Trend Model: BUY as of 6/22/2021
LT Trend Model: BUY as of 8/19/2021
UUP Daily Chart: UUP is now trading above the short-term bearish rising wedge. I find bullish resolutions to bearish chart patterns to be particularly bullish. The RSI is positive and Stochastics are now above 80 and continue to rise. The PMO is on a new crossover BUY signal.
While the short-term chart above is very bullish, we do see on the one-year daily chart that the intermediate-term rising wedge is still intact and price has hit the top. The outlook is very bullish, but I don't like this large bearish pattern.
GOLD
IT Trend Model: NEUTRAL as of 6/24/2021
LT Trend Model: BUY as of 10/28/2021
GLD Daily Chart: Currently the inverse correlation of Gold to the Dollar is gone. They have now uncoupled so it is perfectly reasonable to be bullish on both the Dollar and Gold. The only negative on GLD's chart would be the RSI entering overbought territory. However, it isn't THAT overbought.
(Full Disclosure: I own GLD as a "buy and hold" position.)
GOLD Daily Chart: $GOLD appears headed to test overhead resistance at $1920. Stochastics are slightly questionable, but as long as they continue to oscillate above 80, it's fine. Discounts are still high, but are in a declining trend so sentiment is improving among Gold buyers.
GOLD MINERS Golden and Silver Cross Indexes: The reverse head and shoulders was confirmed on GDX with today's breakout. The indicators are very positive with the only detractor being a now overbought RSI. Look for Gold Miners to continue their march higher. The minimum upside target of the reverse head and shoulder is around $39.
CRUDE OIL (USO)
IT Trend Model: BUY as of 9/3/2021
LT Trend Model: BUY as of 3/9/2021
USO Daily Chart: Carl wrote an excellent article on Crude Oil that I will direct you to HERE. I would add that I see a bullish flag formation. So while we are seeing Stochastics and the PMO falling, support will likely hold at the 50-EMA and November low.
BONDS (TLT)
IT Trend Model: BUY as of 11/8/2021
LT Trend Model: BUY as of 11/4/2021
TLT Daily Chart: The Bond market was closed today, but TLT still traded. It is caught in a bearish rising wedge. The PMO has decelerated, but the RSI remains in positive territory. Support is available, but rates do appear ready to rise again and that will be a problem for TLT.
Technical Analysis is a windsock, not a crystal ball.
--Erin Swenlin
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Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
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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DecisionPoint Sector Chart List
Price Momentum Oscillator (PMO)
Swenlin Trading Oscillators (STO-B and STO-V)
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