Today the S&P 400 Mid-Cap (MID) and S&P 600 Small-Cap (IJR) Indexes 20-day EMAs crossed up through their 50-day EMAs, generating new IT Trend Model BUY Signals.
MDY is angling higher after its breakaway gap. Participation is robust and not too overbought suggesting it could rise even higher should the rest of the index begin participating in the rally. The RSI and PMO are not overbought so more upside can be absorbed.
IJR has a ceiling on price right now. Participation is very good, but we note that the Silver Cross Index itself has had a Bearish Shift across its signal line. The outlook isn't as favorable for small-caps right now.
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: The market was mostly unchanged today fulfilling our expectations of a quiet, not volatile week of trading. Overhead resistance is arriving soon. It would make sense to see price congregate beneath that level.
The VIX is very overbought right now. It isn't likely it will reach the upper Bollinger Band as those readings would be incredibly overbought. Market participants are feeling very comfortable with market conditions. Stochastics are sticking to the top of their range suggesting plenty of internal strength.
SPY Weekly Chart: The long-term declining tops trendline is now being tested. Both the weekly RSI and weekly PMO are rising and are far from overbought. This rally does look vertical and those rallies are destined to fail. It doesn't mean the bottom will drop out, it means that a less steep rising trend will likely be established and would be easier to maintain.
New 52-Week Highs/Lows: New Highs pared back considerably, but lack of trading volume could be the reason. The 10-DMA of the High-Low Differential is seeking overbought territory, but could still accommodate more upside right now.
Climax Analysis: There was one climax reading on the four relevant indicators, so we do not have a climax day.
*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.
Swenlin Trading Oscillators (STOs) reversed upward today which would suggest more upside, but we are reminded they are overbought. We have plenty of rising momentum to keep the market moving higher. %Stocks > 20EMA is overbought, but not extremely so. There is still a negative divergence with STOs so we don't want to read too much into their reversal in overbought territory today.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT.
IT indicators are very healthy as they accelerate higher. The big problem is they are overbought like STOs. While we know overbought conditions can persist in a bull market move, these indicators don't generally hold those conditions for long. %PMO BUY Signals are also running hot.
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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.
At first glance we see no red numbers except for the IT Bias for Energy (XLE). The reason for this is after an incredible run that brought the GCI to stellar heights, the sector began to quickly fail bringing the SCI back to earth. This caused the disparity. We do note that the SCI did not improve for Energy so more work needs to be done there.
Regional Banks (KRE) has been on a tear. It is a group on the move. Its IT Bias is so high because unlike Energy it was beat down to the ground and is now on the mend. This is why the GCI is so low and the SCI so high.
This table is sorted by SCI values. This gives a clear picture of strongest to weakest index/sector in terms of intermediate-term participation.
KRE holds the top spot and continues to see improvement.
The biggest gain was accomplished by Gold Miners (GDX). They have been mostly volatile, but internal strength is building based on this significant increase in the SCI.
Biotechs (IBB) holds the lowest SCI reading, but unlike Energy, it is picking some participation back up in the intermediate term.
This table is sorted by GCI values. This gives a clear picture of strongest to weakest index/sector in terms of long-term participation.
While XLE didn't gain points on the SCI, it appears some of the stocks on the border line moved back into Golden Crosses. We still see XLE as a neutral sector.
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.
Participation is strong and well above our 50% bullish threshold for %Stocks > 20/50EMA which adds to the short-term bullish bias. The Silver Cross Index is rising almost vertically above its signal line suggesting quite a bit of internal strength and pushing the IT Bias to Bullish. The Golden Cross Index had a Bullish Shift across its signal line this week giving us a new Bullish LT Bias.
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: Market internals are strong and impressive suggesting price won't perilously drop on us. The market has only declined once in the past eight trading days. That's hardly a pause. STOs have reversed upward suggesting we could go longer without a decline. Big 'however', indicators are overbought across the board and negative divergences are persisting on STOs. While overbought conditions will pepper charts in bull markets for some time, we are waiting for the market to finally exhale. As we said, internals are strong so we don't expect any whiplash, but we think it a good idea to keep those stops in play.
Erin is 70% long, 0% short.
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BITCOIN
Bitcoin popped briefly above resistance but is settling in below 38,000 as of this writing. The PMO is in decline still, but Stochastics just moved back above 80 and the RSI is positive. We would look for another breakout at 38,000 as the PMO does look somewhat indecisive.
This chart is to show where some of the support/resistance lines come from.
INTEREST RATES
Yields were higher on the day, but we still believe they are weak overall.
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 support but given the declining PMO and negative RSI, we are looking for a breakdown. We been discussing the large head and shoulders pattern which is bearish. Its minimum downside target would take price all the way down to 4%. We don't think that is out of the question. It would certainly excite the market further.
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 7.44 to 7.29.
BONDS (TLT)
IT Trend Model: SELL as of 5/16/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: Not surprisingly, TLT stutter stepped at overhead resistance. The PMO is decelerating and Stochastics did top, but there is a new Silver Cross Buy Signal in the making right now. We favor an upside breakout.
TLT Weekly Chart: The large bullish falling wedge on the weekly chart suggests Bonds are ready to breakout. They could certainly travel back to the bottom of the wedge, but the rising weekly PMO has us looking for a breakout this time around.
DOLLAR (UUP)
IT Trend Model: NEUTRAL as of 7/13/2023
LT Trend Model: BUY as of 5/25/2023
UUP Daily Chart: There is a Dark Cross setting up as the 20-day EMA closes in on the 50-day EMA. The PMO is declining and the RSI is negative. We see a bearish bias on this chart with the Dollar rounding off. We expect current support to be broken.
UUP Weekly Chart: The weekly chart agrees with our assessment of the daily chart. Price nearly hit overhead resistance and was turned away before testing it. That is especially bearish and a deep decline ensued. The weekly PMO is in decline also suggesting more downside.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GOLD Daily Chart: We have a rising trend on Gold and it is nearing overhead resistance. The PMO isn't all that helpful as it is very flat. It is on a BUY Signal so we'll take that. Stochastics just moved above 80 so we see internal strength. It is also seeing a rising relative strength line against the Dollar.
Discounts aren't very high so investors are more bullish on Gold than they were back in October. They aren't overly exuberant about the metal as we don't see premiums yet. A little bullish sentiment should work in Gold's favor. We believe price will break out here.
GOLD Weekly Chart: The weekly PMO crossed above its signal line triggering a Crossover BUY Signal. The weekly RSI is positive so the outlook is good for Gold in the intermediate and short terms.
GOLD MINERS Golden and Silver Cross Indexes: We like Gold's outlook and we like Gold Miners as well. Participation is convincing and improving. Stochastics are back above 80 and the PMO is rising on a BUY Signal. The internals tell us to expect a breakout.
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 continues to act fishy. We've been bearish given the double top formation. Now it is bouncing around indecisively. Stochastics have shifted lower and the PMO is flat with a negative RSI. At this point, we don't see anything that would shift our bearish stance. Meetings are in the works for OPEC+ so we'll know more soon. Demand should increase with holiday travel, but so far it hasn't manifested in a breakout rally.
USO/$WTIC Weekly Chart: USO is very close to testing the long-term rising trend. We have a feeling it will need to touch it before it reverses higher. The weekly PMO is worrisome so we shouldn't assume a reversal will occur. Technicals overall suggest more downside in the near term for Crude.
Good Luck & Good Trading!
Erin Swenlin and Carl Swenlin
Technical Analysis is a windsock, not a crystal ball. --Carl Swenlin
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