Today the Utilities Sector 20-day EMA crossed up through the 50-day EMA (Silver Cross), generating a new IT Trend Model BUY Signal. Price is stuck under the 200-day EMA, but this signal does seem to suggest it will overcome. Participation is edging backwards, but still remains high enough to sustain Utilities rally out of the October low. Stochastics are above 80 and the PMO looks healthy. One knock on Utilities is that they really aren't outperforming right now.
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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: The market saw an inside candlestick that shouts indecision. We saw a higher low, but not a higher high. The PMO is rising strongly, but the RSI is technically overbought. Any consolidation will correct the RSI.
Investors are getting more complacent based on the VIX continuing to rise on our inverted scale. With the holiday week we imagine it will maintain or possibly move further toward the upper Bollinger Band. Stochastics are about as strong as they can be suggesting plenty of internal strength.
Here is the latest recording from 11/13 (No trading room on 11/20):
S&P 500 New 52-Week Highs/Lows: New Highs expanded slightly which is positive on a down day, however, the negative divergence with price remains. The 10-DMA of the High-Low Differential is accelerating higher which is another sign of internal strength.
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 OVERBOUGHT.
The Swenlin Trading Oscillators (STOs) turned down today which is bearish for the short term. The negative divergences are now set in stone as we officially have tops on the STOs. Participation remains strong with 82% above their 20-day EMAs and 87% holding rising momentum.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is SOMEWHAT OVERBOUGHT.
IT indicators continue to rise, but they are getting overbought. We could be getting close to an inflection point on this short-term rally.
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.
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. The Silver Cross Index is rising strongly above its signal line.
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: We still see visible internal strength within the market, but today the STOs turned down suggesting we will see at a minimum consolidation. IT indicators are getting overbought suggesting we could finally see the end to this rally. For now, they are all rising so we will assume any weakness will be short-term in nature. We expect a rather quiet holiday week ahead that will likely see sideways movement not a big pullback (although STOs and negative divergences have us alert for one). With weakness likely to seep in, we wouldn't be interested in adding to our portfolios.
Erin is 70% long, 0% short.
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BITCOIN
Bitcoin doesn't appear ready to overcome resistance as we originally had thought. The PMO is accelerating lower. The RSI remains positive alongside Stochastics, but the PMO is a problem.
INTEREST RATES
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 is holding at gap support, but given the negative indicators, we think that is temporary. We've already talked about the large bearish head and shoulders pattern here. We see more relief ahead with yields likely to continue lower.
BONDS (TLT)
IT Trend Model: SELL as of 5/16/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: With yields in decline, we expect a breakout ahead for TLT. It's taking its time, but given the positive RSI and rising PMO in positive territory, it should breakout.
DOLLAR (UUP)
IT Trend Model: BUY as of 8/3/2023
LT Trend Model: BUY as of 5/25/2023
UUP Daily Chart: Yesterday's comments still apply:
"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."
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: The Dollar was up and so was Gold. The inverse correlation is not holding true and that is represented by the correlation currently being close to zero. This means that we can't count on the standard, "Dollar up, Gold down" or "Dollar down, Gold up" scenarios. The Dollar looks weak so we'd like the inverse correlation to return.
GOLD Daily Chart: Price hit overhead resistance at the October top. The indicators are bullish with the PMO giving us a Crossover BUY Signal today. We expect a breakout and a move toward all-time highs.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners popped today likely on higher Gold prices since the market was no help in its decline. We now have even healthier participation so we are looking for a breakout. Maybe third time is a charm as it pushes against the 200-day EMA for a third time. We like GDX's odds for success 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: Yesterday's comments still apply:
"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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