Today the 20-day EMA crossed up through the 50-day EMA (Silver Cross) on the NYSE Composite Index ($NYA), the Industrial Sector (XLI), and the Real Estate Sector (XLRE), generating new IT Trend Model BUY Signals. Also, the Finance Sector (XLF) 50-day EMA crossed up through the 200-day EMA (Golden Cross), generating a new LT Trend Model BUY Signal.
We see an interesting reverse head and shoulders on the NYSE. Overhead resistance is nearing but based on the chart pattern, we should see a breakout there. We wouldn't be surprised if it opted to consolidate under resistance first.
Currently XLI is showing robust participation, but we do note that %Stocks > 20EMA is very overbought. However, in a strong bull market move, overbought conditions can persist as they did back in June and July.
We have another reverse head and shoulders pattern. XLRE confirmed the formation with the breakaway gap last week. Price is struggling at the 200-day EMA and may continue to do so a bit longer given participation is shrinking not improving.
XLF is rising after confirming a bull flag chart pattern. Price is angling higher rather than consolidating. Today it broke above the September top. It has nearly taken back all of the losses back during the bank crisis. Participation is overbought, but we suspect that will continue given the strongly rising Silver Cross Index.
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
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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: Rather than consolidate beneath resistance, price broke out. It is nearing all-time highs. The RSI is overbought and needs the rally to cool down to make its way back down. The PMO is rising and isn't overbought just yet so higher prices could certainly continue.
The VIX is staying overbought on our inverted scale. We don't expect it to challenge the upper Bollinger Band at this point, but given investor exuberance it could make its way toward it. Stochastics couldn't look much more bullish so we see the market as internally strong.
Here is the latest recording from 11/13 (No trading room on 11/20):
S&P 500 New 52-Week Highs/Lows: While New Highs did expand today, we still have a stark negative divergence. The 10-DMA of the High-Low Differential did turn back up, more evidence of internal strength.
Climax* Analysis: There was only one climax reading on the four relevant indicators today, so we don't have a climax day. It's a holiday week, so SPX Total Volume contracted well below the one-year daily average.
*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.
The Swenlin Trading Oscillators (STOs) also sport negative divergences with price, but they are at least rising. They could get more overbought as well. We have more internal strength visible as we have over 84% above their 20-day EMA and a full 89% showing rising momentum. This can keep the market afloat.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is SOMEWHAT OVERBOUGHT.
We like that IT indicators are rising. They have more room to accommodate more rally. We have almost 90% of stocks holding PMO BUY Signals, this also speaks to internal strength.
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.
Big news today is the Golden Cross Index had a "Bullish Shift" across its signal line moving our long-term bias to Bullish. We have strong readings above our 50% bullish threshold on all of the participation indicators with the exception of the Golden Cross Index; but it is rising on a new Bullish Shift.
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.
CONCLUSION: The market is disinterested in a pullback or even consolidation. Two keywords to take away from today's Alert are "Internal Strength". Take a close look at the table above. It has moved from mostly red to mostly green. With the Golden Cross Index's Bullish Shift today, we now have all three timeframes reading a bullish bias. However, right now, we have a slew of negative divergences so we don't want to get to cavalier with our portfolios. While hard stops aren't required right now, they are a good idea as we don't know when the market will back off. Our hunch is the holiday week will prevent a bad decline and likely see consolidation or a melt up. We "usually" don't see volatile market action during holiday trading, but again we would stay protected with stops.
Erin is 70% long, 0% short.
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Bitcoin is marching higher on a good weekend rally. The PMO still looks 'iffy' right now and it is overbought, but with a positive and not overbought RSI, and rising Stochastics, we could see a breakout above new resistance at 38,000.
Yields continue to pullback in general. Bond funds still look attractive.
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 continues to hold gap support. However, the PMO just hit negative territory. The RSI is negative and Stochastics are about as weak as you can get. We have to look for a breakdown here.
IT Trend Model: SELL as of 5/16/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: Today TLT formed a bullish engulfing candlestick suggesting it will travel higher again tomorrow. Overhead resistance is arriving, but the PMO and Stochastics are very strong. The rally has been slow going so the RSI is not overbought yet. We are looking for more upside.
IT Trend Model: BUY as of 8/3/2023
LT Trend Model: BUY as of 5/25/2023
UUP Daily Chart: The Dollar is rounding down. Support is about to be reached at the last August top, but we don't think it will hold. The PMO just hit negative territory and both Stochastics and the RSI are very weak. Expect a test of the 200-day EMA.
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Despite a falling Dollar, Gold showed weakness with a decline. This is occurring right on overhead resistance so we don't see it as the beginning of a big decline. Today's candlestick is a bullish hollow red so an upside reversal off either the 20-day EMA or late August top should occur.
GOLD Daily Chart: Stochastics are rising strongly and they tend to be a leading not lagging indicator. We think Gold will find its way back to all-time highs, it will just stutter step along the way.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners rallied, but set a lower low and a lower high. It looks ready to test support again at 27.00. However, internals are better with a Bullish Shift across the signal line on the Silver Cross Index and a decent amount of stocks above their 20/50-day EMAs. Stochastics turned back up and we have a new PMO Crossover BUY Signal. Price just doesn't look as positive as the indicators so while we wouldn't sell Gold Miners, we wouldn't be apt to add one right now.
CRUDE OIL (USO)
IT Trend Model: NEUTRAL as of 11/7/2023
LT Trend Model: BUY as of 8/3/2023
USO Daily Chart: The holidays are upon us and demand is likely picking up. The PMO has flattened and Stochastics are rising again. The RSI is weak, but at least rising. Overhead resistance still could prove stout, so we wouldn't go all in on this trade. We'd like to see the declining tops trendline crossed in a decisive way. A "decisive" move is considered to be 3%+.
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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