The market didn't do much today. It was stuck in a very narrow trading range that from bottom to top only measured around 0.2%. The market did manage a breakout to finish the day, but it did end with a close back within the trading range. Mega-caps primarily were down or mostly unchanged on the day and that was clearly felt across the market as a whole based on this trading range.
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: The RSI is now in overbought territory which does suggest we could see a pause or mild decline to clear that condition. The PMO is rising and is on a Crossover BUY Signal.
Stochastics are still very positive and rising so there is internal price strength available. We will be watching the relative strength line between the SPY and RSP very closely. Currently mega-caps are leading the charge based on the rising relative strength line.
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S&P 500 New 52-Week Highs/Lows: The 10-DMA of the High-Low Differential is still rising. More New Lows were logged on the day and fewer New Highs. The negative divergence is no longer visible in the near term.
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) both moved down today which is not a good look. Participation shrunk slight on %Stocks > 20EMA. We did see a slight expansion in %PMOs Rising, but it still remains below our bullish 50% threshold.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
It's hard to tell, but both the ITBM and ITVM moved lower today. This confirms the now declining STOs. There was a small increase in %PMO Xover BUY Signals, but it also remains below its bullish 50% threshold. We should have far more PMO Crossover BUY Signals given the strength of the rally to this point. It tells us that the broad market is not as healthy as it may seem.
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 short-term market bias is BULLISH.
The intermediate-term market bias is BEARISH.
The long-term market bias is BULLISH.
The Golden Cross Index is accelerating higher and it is above its signal line so we have a Bullish LT Bias. The Silver Cross Index is declining and is below its signal line giving us a Bearish IT Bias. Given we still have over 50% of stocks holding above key moving averages, there is a Bullish ST 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: The Magnificent 7 took it easy today and the market felt the repercussions with a muted trading day. Of primary concern is the decline in our primary indicators (STOs/ITBM/ITVM). It only took a day of pause to get them to turn back down. The rest of the charts are still showing good participation (minus %PMO indicators) and Stochastics are still very positive. We believe there is more upside available, but when the big guys begin to pullback, the market should too based on the broader market not holding enough rising momentum. The market is overbought so expanding your exposure should be done very carefully with stops if at all. Positions should be considered very short-term right now and will require traders to be alert and agile.
Erin is 45% long, 0% short. Erin divested pre-earnings on most of her positions. Her plan is to slowly build back to 75% exposure if the market cooperates. If the market begins to show signs of distress, she'll opt to stay with low exposure or push it back down.
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BITCOIN
Another strong day of rally for Bitcoin. Bitcoin ETFs were nearly all up above 3%. We weren't expecting a straight up rally, but the PMO is beginning to accelerate higher and the RSI is not yet overbought. We would look for the prior high to be tested soon.
BITCOIN ETFs
INTEREST RATES
Yields were up on the day. Rates should continue higher in the near term.
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 bounced off support and the 20-day EMA today. Overhead resistance looks fairly sturdy, but given the positive indicators we are looking for that level to be overcome. The PMO is nearing the zero line and the RSI is positive and not at all overbought. Stochastics managed to get above 80 today suggesting more upside ahead.
BONDS (TLT)
IT Trend Model: BUY as of 11/28/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: Interestingly Stochastics are beginning to decelerate and bottom. While that is a bullish indication, we do expect TLT to lose support shortly given the negative RSI and falling PMO.
DOLLAR (UUP)
IT Trend Model: BUY as of 1/23/2024
LT Trend Model: BUY as of 5/25/2023
UUP Daily Chart: The Dollar continues to hold its rising trend and given the rising PMO, we believe it will continue to. Admittedly today's filled black candlestick is bearish and tells us to expect a decline tomorrow. Stochastics are in agreement as they have dropped below 80. However, the PMO and RSI are positive enough to look for the rising trend to hold up despite a decline.
Overhead resistance will arrive at the 2023 high around 28.40.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: The Gold chart is about as 'middle of the road' as you can get. Every indicator is either flat or mostly indecisive. Stochastics are bottoming and that hints at support continuing to hold up. We don't see anything to tell us to expect a rally right now.
Gold is still decoupled from the Dollar based on the near zero correlation between the two. This will allow Gold an opportunity to travel in the same direction as the Dollar. This could help or hinder, but given we are somewhat bullish on the Dollar, we hope it will help.
GOLD MINERS Golden and Silver Cross Indexes: Support is currently holding but it is very vulnerable given the negative RSI and declining PMO. Participation is anemic and needs to see more improvement before we look for a lasting rally. An advance off this level would go a long way as it would set up a bullish double bottom.
CRUDE OIL (USO)
IT Trend Model: SELL as of 2/1/2024
LT Trend Model: SELL as of 12/18/2023
USO Daily Chart: Crude Oil rallied strongly today, pushing price above all three key moving averages. The RSI is rising and is not overbought yet. The PMO has reversed higher, essentially surging or bottoming above the signal line. Overhead resistance is nearing, but rising Stochastics also suggest a breakout ahead 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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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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