Today the Health Care ETF (XLV) 20-day EMA crossed up through the 50-day EMA (Silver Cross), generating an IT Trend Model BUY Signal. The sector pulled back but is beginning to breakout once again. Price is holding above the 200-day EMA. The RSI, PMO and Stochastics are all very favorable. Participation is robust and not that overbought. While this sector looks very bullish, it isn't outperforming the SPY yet. We are bullish on XLV, but overhead resistance is near at the October high. It could see another pullback at that point, but the internals are very strong so we wouldn't look for a corrective move, more likely a pause or slight pullback.
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: Mega- and large-cap stocks are beginning to underperform based on relative strength to equal-weight RSP. This suggests the rally is broad but also fragile as mega-caps tend to lead the market. Their failed leadership could mean the market would follow them down. The PMO is overbought now as is the RSI. We've been looking for a decline to unwind our indicators but market internals seem to be winning out. Proof of strength is today's rally coming off yesterday's upside exhaustion climax.
The VIX continues to hover in overbought territory on our inverted scale. The upper Bollinger Band is about to meet it. A puncture might mean a downside pivot ahead. Stochastics remain strong. We still see internal strength.
Here is the recording from 11/27:
SPY Weekly Chart: The 2023 high has now been exceeded. Next up is the all-time high. We have a new weekly PMO Crossover BUY Signal so we aren't looking for the return of the bear.
SPY Monthly Chart: To clarify, the monthly PMO turned up as of the last trading day of November. This is bullish for the long term and tells us to expect a breakout above all-time highs. It also assuages any fears that the bear will return in the near term.
New 52-Week Highs/Lows: New Highs popped on today's rally so we no longer have any negative divergences visible. These readers are very high and overbought, but we've seen higher and given the strength of the rally, we could see more than we have in the past. Still we need to be watchful now that they have popped into overbought territory. The 10-DMA of the High-Low Differential had turned down this week, but it has reversed higher. It is also getting overbought.
Climax Analysis: Yesterday we had a marginal upside exhaustion climax with strong volume to back it up. The expectation was for prices to pull back, but that was not to be. Today we have unanimous climax readings on the relevant indicators and strong volume, giving us another upside exhaustion climax. Again we will look for prices to weaken next week.
*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) continued to rise today. Overall they are twitchy and they still sport a negative divergence with price. Both %Stocks > 20EMA and %PMOs Rising are overbought. However, they continue to expand and display strong participation within the index.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is EXTREMELY OVERBOUGHT.
The ITBM and ITVM are at overbought extremes. While they could rise higher, they need to unwind soon. The best way to get that is a decline. We have the same number of rising PMOs and Crossover BUY Signals so we aren't likely to see an expansion in %PMO Xover BUY Signals. That indicator didn't drop beneath its signal line, but it is very close.
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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.
XLE holds the lowest IT Bias. This is primarily due to the high reading on the Golden Cross Index and the decimation of the Silver Cross Index on the decline. The sector didn't see improvements to either the GCI or SCI, but we do see possibilities brewing in this area of the market.
KRE holds the highest IT Bias. This group has been clicking and the readings of the GCI and SCI prove it. Until the GCI starts to catch up to the SCI, we'll continue to see KRE at the top of the IT Bias table.
This table is sorted by SCI values. This gives a clear picture of strongest to weakest index/sector in terms of intermediate-term participation.
Every sector/group/index we cover saw improvements to the SCI with the exception of IYT and XLE. This is due to the strong rally out of the October low. KRE holds the top spot and saw improvement this week as well. XLE has work to do.
This table is sorted by GCI values. This gives a clear picture of strongest to weakest index/sector in terms of long-term participation.
XLE still holds the top spot on the GCI table, but it saw deterioration. It could continue to hold that top spot if the sector gets moving to the upside again soon.
Utilities (XLU) hold the lowest GCI reading and saw no improvement. It did gain quite a bit on its SCI so we believe that it should lift from the bottom of the table soon.
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 participation readings across the board and all percentages are above our bullish 50% threshold. These numbers could keep the rally cooking, but ultimately it is due for a decline. The SCI is above its signal line which gives us a bullish bias in the intermediate term. The GCI is also above its signal line so we have a long-term bullish 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: On our bias table above, only Energy (XLE) is showing a bearish bias in both the intermediate and long terms. The plethora of green tells us there is plenty of internal strength. The problem is that the rally has gotten overextended. The RSI tells us price is overbought. Indicators are overbought almost across the board. The rally has been overdone and given today's upside exhaustion climax that follows yesterday's, it seems likely that we will finally see some price weakness. We don't favor adding to portfolios right now given we are likely to see a downturn. We'd be careful. Stops are a must if you aren't ready to part with any positions yet. We need to protect ourselves from a possible correction should a decline catch hold.
Erin is 70% long, 0% short.
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BITCOIN
Bitcoin continues to angle higher, but it has formed a bearish rising wedge that suggests a breakdown, not a breakout. The PMO isn't looking that healthy, but it is traveling lower primarily because the rising trend is steady, not necessarily due to weakness. Stochastics are above 80 and the RSI is positive so at this point we expect it to continue to angle upward within the wedge.
This chart is to show where some of the support/resistance lines come from. It's time to start looking at the next level of overhead resistance at the mid-2022 top. If the wedge is correct, we will see a downturn before we get to that resistance level.
INTEREST RATES
Yields are falling fast as investors consider an FOMC pause followed by possible rate cuts. We think it is too early to think about rate cuts, but certainly a pause seems in order. We expect rates will fall further.
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
Another level of support was broken by $TNX. New support is available at the 200-day EMA at about 4.1%, but given this steep declining trend and negative indicators, we expect it will fall further and not hold support. We've been looking at 4% as the downside target, but as bearish as the chart is, we wouldn't be surprised if it drops below 4%.
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 7.29 to 7.22.
BONDS (TLT)
IT Trend Model: BUY as of 11/28/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: Bonds are enjoying the drop in yields and TLT is no exception. The indicators remain very strong and not overbought yet so we are looking for TLT to push past the 200-day EMA and make its way up to 97.
97.00 seems a good upside target bases on horizontal resistance ahead.
TLT Weekly Chart: We are about to get a breakout from the bullish falling wedge on the weekly chart. It should continue higher from here based on the pattern and the bullish daily charts. The weekly PMO just triggered a Crossover BUY Signal and the weekly RSI just entered positive territory. The outlook is very good on TLT.
TLT Monthly Chart: The monthly PMO has decelerated but isn't on the rise just yet. TLT reversed on long-term support. The declining trend is still technically intact, but as noted previously, look for a breakout. The next level of strong resistance on the monthly chart is at 100.00 so we could see price push past shorter-term resistance at 97.
DOLLAR (UUP)
IT Trend Model: NEUTRAL as of 11/27/2023
LT Trend Model: BUY as of 5/25/2023
UUP Daily Chart: The Dollar formed a bearish engulfing candlestick that implies it will decline on Monday. The Dollar has been rounding off for a few months. Stochastics interestingly rose above 20, but other than that the indicators are bearish. Support did hold at the 200-day EMA, but we see more downside for the Dollar for now.
UUP Weekly Chart: The recent decline has pulled the PMO downward and now it is in the process of triggering a Crossover SELL Signal. The weekly RSI is holding in positive territory, but we don't see that lasting. This chart is very bearish.
UUP Monthly Chart: The monthly PMO is also bearish as it has topped in overbought territory. The monthly RSI is still positive mainly due to the strong rally this year, but we suspect based on the PMO that it will move negative. The picture is bearish across all timeframes.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GOLD Daily Chart: Gold made a new all-time high today, but just marginally. Nevertheless, gold's performance has really picked up, and it looks as if a decisive breakout is likely. We do have the problem of an overbought RSI and PMO, but given Stochastics are strong and we have a deep puncture of the lower Bollinger Band on $GVZ that both suggest higher prices will continue.
Gold is showing excellent strength against the Dollar. The inverse correlation is back as well which is good given the negative outlook on the Dollar.
GOLD Weekly Chart: This is the fourth test of overhead resistance and today it was broken at the all-time highs. The weekly PMO is accelerating upward on a Crossover BUY Signal and the weekly RSI is positive so we should continue to see Gold perform well.
GOLD Monthly Chart: The handle may've concluded now with this breakout. The pattern implies much higher prices. The monthly PMO is on a thin Crossover BUY Signal, but we expect it to put some margin between it and its signal line as Gold should continue to rally.
GOLD MINERS Golden and Silver Cross Indexes: Strong Gold prices and a strong rally have elevated GDX quickly and we don't think it is done rising. The indicators are strong although the RSI is now overbought. We also have overbought conditions on %Stocks indicators, but remember these conditions can persist in a bull market and certainly GDX is in one. Look for GDX to breakout at the July top.
CRUDE OIL (USO)
IT Trend Model: NEUTRAL as of 11/7/2023
LT Trend Model: BUY as of 8/3/2023
USO Daily Chart: Crude Oil doesn't know what to do. Demand doesn't seem to be making a difference with the holidays nor are likely production cuts being discussed by OPEC+. The PMO is indecisive and the RSI is negative. We wouldn't write off Crude just yet, Stochastics are in a rising trend. A drop below the November low would have us move into the bearish camp. For now we are cautiously optimistic that this will be the reversal area for Oil.
USO/$WTIC Weekly Chart: The weekly chart isn't particularly encouraging. Price could drop down to test the rising trend. The weekly PMO is falling on a Crossover SELL Signal. While this makes sense as a reversal point, technicals aren't behind it yet.
WTIC Monthly Chart: The monthly PMO looks more bearish than the weekly. The monthly RSI has dipped into negative territory. There is still a bearish bias on Crude Oil which is why we are only somewhat optimistic about a reversal here. Technicals currently aren't calling for a longer-term rally and downside pressure could prevail. We wouldn't go all in on Energy and Crude Oil yet.
Good Luck & Good Trading!
Erin Swenlin and Carl Swenlin
Technical Analysis is a windsock, not a crystal ball. --Carl Swenlin
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