Today the Nasdaq Composite Index (ONEQ) and S&P 100 (OEF) Indexes 20-day EMAs crossed up through the 50-day EMAs (Silver Cross), generating IT Trend Model BUY Signals.
The Nasdaq is a broader index than the S&P 100 and we see that it is coming up against overhead resistance. The rally has been strong out of the October low, but we still do not see more than half of the index with price above their 20/50-day EMAs. Stochastics do look strong and the PMO is rising in positive territory, but in order to preserve this rally, participation will need to broaden.
OEF has already broken overhead resistance and definitely looks like it will continue to rally. Participation is stronger compared to ONEQ and that suggests this rally could be sustained whereas ONEQ is vulnerable given we don't have as much participation.
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: NEUTRAL as of 9/22/2023
LT Trend Model: BUY as of 3/29/2023
SPY Daily Chart: This morning we were headed to a breakout above the intermediate-term declining tops trendline, but by afternoon it closed beneath. Given the rising relative strength line of the SPY v. equal-weight RSP, large and mega-cap stocks are leading the charge higher.
The VIX is steady above its moving average on the inverted scale and Stochastics are firmly planted above 80 suggesting internal strength in the very short term.
Here is the latest recording from 11/13:
S&P 500 New 52-Week Highs/Lows: We still saw a number of New Highs on today's decline (indicative of higher prices in the morning). New Lows contracted on the decline which is good news. Also good news is the strongly rising 10-DMA of the High-Low Differential.
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 UP and the condition is NEUTRAL.
Swenlin Trading Oscillators (STOs) continue to flash short-term weakness as they continue to decline. Participation is thinning but remains above the 50% bullish threshold for stocks above their 20-day EMA. We are seeing deterioration in the number of PMOs Rising, but fortunately we have a healthy 77% rising.
Intermediate-Term Market Indicators: The intermediate-term market trend is DOWN and the condition is NEUTRAL.
We're happy to report that IT indicators are rising with %PMO Crossover BUY Signals holding their same reading.
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 short-term market bias is NEUTRAL.
The intermediate-term market bias is BULLISH.
The long-term market bias is BEARISH.
We are leaving the short-term bias as neutral because we still don't have a reading above 50% on %Stocks > 50EMA. The IT Bias is bullish given the Silver Cross Index is rising and is above its signal line. The long-term bias is bearish, but it is improving as the Golden Cross Index is beginning to flatten and rise toward a crossover its signal line. When the crossover occurs, the long-term bias will shift to Bullish.
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: We believe that mega-cap stocks are leading this charge. We would like to see broader participation. Considering the voracity of the rally out of the October lows, we should have a bullish short-term bias. But we don't. There are two ways to look at this. The bullish view is there is room for improvement, an opportunity for those not participating to join in. The bearish view is that we don't have enough participation to keep the rally going. We tend to err on the bearish side at DecisionPoint. The market is overdue for a pullback, STOs are still declining and mega-caps won't exclusively move higher from here. It is best to play defense by keeping your stops in place. Portfolio expansion is more risky at this time based on weak participation.
Erin is 55% long, 0% short.
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Bitcoin is pausing and likely is ready for another digestion phase. Of course, last time digestion still meant a rising trend. The RSI and PMO are very overbought and Stochastics have finally begun to drop with more determination so we expect sideways consolidation.
Interest rates mostly held steady today. Nearly all are in declining trends, but we sense they are going move sideways in the near term as they ready for another run higher.
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 formed a bearish shooting star candlestick today. Today's OHLC bar shows a long wick. This typically occurs before a decline. The rising trend is holding up despite the tumbling PMO and negative RSI. Stochastics are now turning back up. We've been looking for a test of gap support around 4.4%. We still do, but likely it will come as rates move sideways and drift out of the rising trend rather than a steep decline like we saw earlier this month.
IT Trend Model: SELL as of 5/16/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: TLT has been offered an opportunity to rally by the 20-year yield as it is in a declining trend. We expect the yield to continue to drift sideways and that will mean a drift sideways for TLT. We don't see much upside potential despite the rising PMO and positive RSI. Stochastics are suggesting TLT is vulnerable to the downside right now.
IT Trend Model: BUY as of 8/3/2023
LT Trend Model: BUY as of 5/25/2023
UUP Daily Chart: The Dollar is in neutral. Stochastics have been suggesting a possible breakout ahead, but the PMO is putting a damper on it. This is a flag formation that does call for an upside breakout, we just don't have any upside momentum to get it there. We would look for more sideways movement out of the Dollar.
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: The Dollar was down slightly, but Gold had a healthy rally. Today we have a bullish engulfing candlestick. This would be an interesting area for a reversal. We favor a reversal closer to the June and August lows based on the very negative PMO. Stochastics give us a glimmer of hope, but for now look for some more downside on Gold.
GOLD Daily Chart: Support at 1900 is where we believe Gold is headed. Discounts are beginning to expand meaning investors' bearishness is expanding. We will need to see much higher discounts before we look for a meaningful rally.
GOLD MINERS Golden and Silver Cross Indexes: We see a complex reverse head and shoulders on the Gold Miners. That is bullish pattern that does suggest an eventual upside breakout. In order for the pattern to hold up, we need to see an upside reversal before support is tested at the October low. Unfortunately, participation has shrunk considerably and we see a bearish bias on the Silver Cross Index. The PMO just entered negative territory. This is an excellent area for an upside reversal, but indicators suggest it won't hold. If you are still holding your Gold Miners, you've now opened yourself up to higher downside risk based on this negative chart.
CRUDE OIL (USO)
IT Trend Model: NEUTRAL as of 11/7/2023
LT Trend Model: BUY as of 8/3/2023
USO Daily Chart: Crude Oil is reversing off support at 70. We've been very bearish on Crude Oil lately, but the chart is starting to show promise. We'll know more when we see whether overhead resistance holds at the October low, but the PMO is rising again, as are Stochastics. As demand gets higher toward the holidays, we think the rally in Crude that everyone has been waiting for is about to arrive.
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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