After spending weeks in decline, the Golden Cross Index turned back up today. It is already in overbought territory and based on current participation readings of stocks above their 50/200-day EMAs are reading about the same as the Golden Cross Index so we don't know that it will be able to rise much further from here. It does remain above its signal line so the Long-Term Bias is considered BULLISH.
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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 set another all-time high today on the rally, but we do note the formation of a bearish filled black candlestick. These formations typically lead to downside the following day. The PMO is rising again and is already nearing a Crossover BUY Signal.
The VIX has moved above its moving average on the inverted scale and Stochastics hopped back above 80 so there is internal price strength visible.
Here is the latest recording from 1/22:
S&P 500 New 52-Week Highs/Lows: New Highs popped considerably and are erasing the negative divergence, that was shaping up from the December high. The 10-DMA of the High-Low Differential is rising strongly now suggesting we could see more upside follow through.
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) are confirming the rally as they continue to rise out of somewhat oversold readings. We are seeing more momentum coming back into the market as we now have 41% of stocks showing rising PMOs. This is much better than the 17% we had last week.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
The ITBM and ITVM are still decline, but the ITBM nearly saw a higher reading today. They are in mostly neutral territory, far away from oversold readings. We are seeing a slight pick up in PMO BUY Signals that should see an increase tomorrow now that we have more stocks with rising PMOs.
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 the short term.
The market bias is BEARISH in the intermediate term.
The market bias is BULLISH in the long term.
We have more than 50% of stocks above key moving averages which gives us a bullish short-term bias. The Silver Cross Index is falling and is below its signal line so the bias is bearish in the intermediate term. The Golden Cross Index is above its signal line giving us a bullish long-term bias. We would note that the GCI is not nearly as elevated as it was 2021 and this does suggest there is far more work to do within the index.
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: The market internals are improving again. We have more stocks with rising PMOs and new BUY Signals are starting to arrive. We still don't have 50% of stocks with rising momentum so we aren't completely out of the woods as momentum can turn on a dime. But we like what we are seeing with rising short-term indicators and popping New Highs. We would say that we are cautiously bullish given strong sector rotation into growth areas and rising STOs. While we think there is more upside to be had, be careful adding to your portfolios and at this point, think short-term. You will need to be nimble.
Erin is 65% long, 0% short.
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BITCOIN
Bitcoin has lost support and we don't think it is done with the decline. The RSI is negative and falling and the PMO is about to drop beneath the zero line. New Bitcoin ETF holders are not happy and likely won't be for a bit longer. Stochastics are below 20 and falling. Lower prices ahead.
BITCOIN ETFs
INTEREST RATES
Yields were down on the day, but rising trends are still intact and suggest they will rise again soon.
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 had a bad day, but the rising trend out of the December low is intact. The PMO is very favorable and is flashing strength right now as it travels up to the zero line. We don't like Stochastics topping, but they do remain above 80. We believe rates will continue higher.
BONDS (TLT)
IT Trend Model: BUY as of 11/28/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: TLT formed a bearish filled black candlestick suggesting tomorrow will be a down day. The 20-year yield holds a nice rising trend so any rally will likely be short lived. While we may be seeing some positives like the PMO decelerating and Stochastics rising, we are bearish on Bond funds in general.
DOLLAR (UUP)
IT Trend Model: NEUTRAL as of 11/27/2023
LT Trend Model: BUY as of 5/25/2023
UUP Daily Chart: We are about to see a silver cross of the 20/50-day EMAs. Price is struggling at the December high, but given the PMO is rising above the zero line, the RSI is positive and Stochastics are above 80, we should look for UUP to breakout here.
Overhead resistance seems to be the problem right now.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold continues to hold it together and now Stochastics are beginning to rise again. We do still favor a Dollar rally and that will definitely put some downside pressure on Gold.
Discounts remain elevated, but it isn't helping to get Gold back on a rising trend. It means that investors are bearish, but apparently not bearish enough to look for an upside reversal.
GOLD MINERS Golden and Silver Cross Indexes: The market may be rallying, but it isn't enough to overcome the malaise of Gold. GDX will do much better when both are rising. Participation is scant, but so far the Golden Cross Index is holding above its signal line. The Silver Cross Index looks terrible and honestly with participation so thin it will likely continue its way lower. We think it is too early to look for an upside 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: Despite a rising PMO, Crude Oil has done nothing. Clearly the last PMO BUY Signal was indicating diminishing weakness not new strength. Price remains below the 200-day EMA. Stochastics did just push above 80 so this is about as good a time as any to finally see a breakout. As soon as it does, it'll be time to swoop in on a depressed Energy sector.
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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