Today the Gold Miners (GDX) 20-day EMA crossed down through the 50-day EMA (Dark Cross) above the 200-day EMA, generating an IT Trend Model NEUTRAL Signal. Also, GDX has dropped below a rising trend line drawn from the October low, demonstrating additional technical damage. The PMO has dropped below the zero line and participation has been bleeding off. Stochastics are falling below 20 suggesting internal price weakness.
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: We saw a downside exhaustion climax yesterday alongside a VIX puncture of the lower Bollinger Band on our inverted scale. Both indicating a rally today and we got it.
The VIX remains below its moving average on the inverted scale. Stochastics did pause their decline on the rally, but they don't look that encouraging right now. We see major outperformance by large-caps versus the equal-weight counterpart RSP. This could keep things elevated on the SPX, OEX and NDX.
This week's episode is not available on YouTube, but you can access it using the recording and download link below. Recordings will be taken down after two weeks:
Recording & Download Link HERE.
Passcode: January#8
S&P 500 New 52-Week Highs/Lows: New Highs gained again today, but the negative divergence remains in place. We are seeing a deceleration in the 10-DMA of the High-Low Differential, but no bottom yet.
Climax* Analysis: Yesterday we thought it appropriate to look for a bounce today off the downside exhaustion climax, and that's what we got. There were no climactic internals to confirm today's advance, so let's not be too enthusiastic about a continued advance.
*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 OVERSOLD.
Swenlin Trading Oscillators (STOs) were lower despite today's strong rally. We did see a few more rising PMOs which was needed, but we still have less than quarter of stocks with rising momentum. It will be hard to maintain a rally without momentum to help out.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
All of our intermediate-term indicators fell today. The rally had no effect.
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 BEARISH in the short term.
The market bias is BEARISH in the intermediate term.
The market bias is BULLISH in the long term.
We did see a small uptick in %Stocks > 20/50EMAs, but not enough to erase what we see as a bearish short-term bias. The SCI is below its signal line so we must list the intermediate-term bias as BEARISH. The GCI now dropping from near-term overbought territory, however, it remains above its moving average so the long-term bias is 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.
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CONCLUSION: We expected a bounce today, but we didn't have high hopes past today. We still don't. In spite of a strong rally, short-term indicators continued to fall. While we did see a slight improvement in rising momentum within the index, we should've seen more improvement on a rally of this magnitude. Internals are still very weak and IT indicators continue to decline. The short-term bias has switched to Bearish adding to the already bearish Silver Cross Index IT Bearish Bias. Mega-caps could keep the market afloat based on rising relative strength against equal-weight RSP, but ultimately we believe they will succumb to the bearish internals of the broader market.
Erin is 65% long, 0% short.
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BITCOIN
Yesterday's comments still apply:
"Indicators were beginning to firm up yesterday, but they've taken a turn for the worse. Support at 40,000 will likely be reached and will be vulnerable to further decline."
BITCOIN ETFs
INTEREST RATES
(Editor's Note: See Carl's article today on interest rates.)
We believe that rates long-term rates have hit a significant bottom and we expect them to continue to rise from here.
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 marching higher and we do not believe the advance has ended. The indicators are very strong with a positive, rising and not overbought RSI, rising PMO on a Crossover BUY Signal and Stochastics rising above 80.
BONDS (TLT)
IT Trend Model: BUY as of 11/28/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: We are bullish on yields and bearish on Bond funds. TLT is headed much lower given the declining and negative RSI and falling PMO. Stochastics look terrible as they decline below 20. The next line of support doesn't arrive until 91.50.
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 is inching higher and we don't think it is done rallying. The RSI is positive and the PMO is nearly back above the zero line. Stochastics look particularly strong. We should get an IT Trend Model BUY Signal soon as the 20-day EMA is about to cross above the 50-day EMA.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold showed significant strength today as it rallied strongly despite a rising Dollar. Price did hit horizontal support, but the rising bottoms trendline hasn't been recaptured. The PMO is declining and Stochastics have dropped below 20. We could see some sideways movement from here, but indicators do favor a breakdown.
Discounts remain elevated to levels where we previously have seen rally bottoms, but it hasn't made a difference yet.
GOLD MINERS Golden and Silver Cross Indexes: GDX managed a small rally today, but the damage has been done with today's IT Trend Model Neutral signal adding to its troubles. As noted in the opening, participation is lacking. The Silver Cross Index is not at all oversold yet and we expect the Golden Cross Index is about to cross below its moving average soon which would add a Bearish long-term Bias to the already Bearish Bias in the intermediate term (Silver Cross Index is below its moving average). We don't believe it is time to look for a reversal.
CRUDE OIL (USO)
IT Trend Model: NEUTRAL as of 11/7/2023
LT Trend Model: SELL as of 12/18/2023
USO Daily Chart: The PMO is now rising again, the RSI is positive and Stochastics are rising in positive territory. This is the best it has looked in some time suggesting we could actually see an upside breakout above resistance at the 200-day EMA and 71.00. We are cautiously bullish.
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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