On Monday Amazon (AMZN) will replace Walgreens (WBA) in the Dow Jones Industrial Average. Below are monthly charts of these two stocks, and clearly Walgreens has lost a lot of luster, and Amazon is an apt replacement.
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Also on Monday, Walmart (WMT) will split 3:1. Splits are generally viewed as a way to facilitate distribution of the stock. As WMT keeps making all-time highs with a P/E of 31, that is something to keep in mind.
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.
Watch the latest episode of DecisionPoint on our YouTube channel here!
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 came across as toppy today generating a bearish filled black candlestick. The PMO however saw a Crossover BUY Signal well above the zero line suggesting internal strength available.
Investors relaxed a little today as the VIX moved above its moving average on the inverted scale. Stochastics are bullish as they moved above 80 today.
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SPY Weekly Chart: The weekly chart tells us that the market is indeed overbought in the intermediate term. The weekly PMO still looks healthy as it moves higher suggesting we could get even more rally. You'll note that since the October low, we've only had two down weeks. The market needs to exhale again.
New 52-Week Highs/Lows: New Highs expanded bullishly on the day. We like the rise in the 10-DMA of the High-Low Differential. We will want to monitor it now that it is back in overbought territory.
Climax Analysis: There were no climax readings today nor any day this week. We were surprised yesterday's big gap up move didn't move the needle on our breadth indicators.
*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) continue their indecision with today marking a downside reversal. Another sign that the market may be topping out soon. We did see more expansion in participation and we now have a healthy 71% of the index with rising momentum. These readings are not robust enough to clear negative divergences yet.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
The ITBM and ITVM on the other hand both continued to rise unlike the STOs. This bodes well in the intermediate term and suggests any decline we get will be short-term in nature. We now have over 50% of the index holding PMO Crossover BUY Signal which is encouraging.
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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.
Regional Banks (KRE) hold the lowest IT Bias. This is primarily due to the losses on the SCI combined with a strong GCI foundation. It is coming across as weakening in the intermediate term.
Strength can be found in Biotechnology (IBB) which holds the highest IT Bias. This is due to the improvement in both the SCI and GCI. We are seeing strength coming through on the SCI which is much higher than the GCI.
This table is sorted by SCI values. This gives a clear picture of strongest to weakest index/sector in terms of intermediate-term participation.
Financials (XLF) lost some ground on the SCI this week but still holds the highest value. We would however be careful with this sector if it continues to lose ground on the SCI.
Gold Miners are suffering and hold the lowest SCI and GCI values. On the bright side we didn't see any deterioration to the SCI and GCI this week.
This table is sorted by GCI values. This gives a clear picture of strongest to weakest index/sector in terms of long-term participation.
XLF and Semiconductors (SMH) are leading the charge on the GCI. Best would be the gain to the GCI by SMH.
Communication Services (XLC) saw the highest gain on the GCI, but that was underscored by the big decline on the SCI suggesting this sector is on its way down, not on its way up.
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, but improving in the intermediate term.
The market bias is BULLISH in the long term.
We have all of the percentages on the bias chart reading above our 50% bullish threshold so we have to look at the ST Bias as BULLISH. The SCI is below its signal line so we have an IT Bias that is BEARISH. However, we are seeing improvement as it melted up today. We have a higher percentage above their 20/50EMAs than the SCI so it could move higher. The GCI is above its signal line and is not as high as the percentage of stocks above their 50/200-day EMAs so it could rise further as well.
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 had two warning shots today. First is the bearish filled black candlestick and second is the decline in the STOs. This is bad for the short term, but intermediate-term, we do have positive signs. Participation is expanding and is at bullish levels well above 50%. The ITBM/ITVM are still rising. This tells us to be cautious in the short term where we could finally see a decline or consolidation, but understand that a decline could be limited to just the short term. However, we wouldn't get too comfortable, the market is still vulnerable in the intermediate term as the SCI is below its signal line giving us a bearish IT Bias and negative divergences plague indicators. We believe that setting stops on your positions is prudent. It will protect against a short-term decline, but will also allow the opportunity to take advantage of a rally that won't quit. Stay vigilant.
Erin is 70% long, 0% short.
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BITCOIN
Bitcoin is looking toppy as it slowly rolls down from the consolidation zone. It looks weaker than it has in a long time. The PMO has topped and is headed toward a Crossover SELL Signal. Stochastics just dipped below 80. One good thing is that this bit of decline has moved the RSI out of overbought territory. We would look for a test of support at the 20-day EMA and January high.
This chart is to show where some of the support/resistance lines come from.
BITCOIN ETFs
Today:
This Week:
The ETFs have all formed bull flags so a rebound might be seen at support identified in our first chart.
INTEREST RATES
Yields were lower on the day, but spent most of the week on the rise. Rising trends are still intact so we are expecting rates to climb 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
It isn't surprising that $TNX decline here as it had just tapped on overhead resistance. The RSI is positive and the PMO is still rising so at this point we are looking for a breakout. We do want to observe the PMO closely as it did decelerate on today's decline.
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 6.77 to 6.90.
BONDS (TLT)
IT Trend Model: SELL as of 2/20/2024
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: TLT rallied strongly today as the 20-year yield moved lower. The rising trend on the 20-year yield looks weak so we could see a small continuation to the upside for TLT. Stochastics are on the rise again, but we'd like to see the PMO turn up before we look for a meaningful rally higher.
This could be setting up a double bottom, but given our bullish outlook on yields, we don't see that as being confirmed with a break above the February high. That is too bullish.
TLT Weekly Chart: The weekly PMO is beginning to top beneath the zero line suggesting quite a bit of internal weakness. The declining trend is intact and suggests more downside ahead for TLT.
DOLLAR (UUP)
IT Trend Model: BUY as of 1/23/2024
LT Trend Model: BUY as of 5/25/2023
UUP Daily Chart: Today the PMO is triggering a Crossover SELL Signal. While the rising trend is still intact, the decline of both the PMO and Stochastics have us moving bearish on the Dollar. This could result in more consolidation rather than a big decline given the positive RSI.
We've identified support at the January highs and we think it will be tested soon.
UUP Weekly Chart: If the Dollar does decline here, it will set up a large double top formation. However, for now we can't get overly bearish given the new weekly PMO Crossover BUY Signal. Think short-term weakness underscored by intermediate-term strength. This fits our consolidation or mild decline scenario.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: With the Dollar showing weakness, Gold is inching its way higher. We expect this to continue. The PMO is about to give us a Crossover BUY Signal, Stochastics are rising and the RSI just moved above net neutral (50).
Notice the relative strength of Gold to the Dollar. The inverse correlation is becoming stronger. Both of these will definitely work to Gold's advantage given the weakness appearing on the Dollar.
GLD Weekly Chart: Unfortunately today the weekly PMO triggered a Crossover SELL Signal and price does look rather toppy on the weekly chart. However, in the short term based on the daily chart, things are improving. We note that the discount level is in oversold territory and could signal a possible rally ahead for Gold.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners rebounded today, but didn't lose its declining trend. Participation is weak at best so while the PMO did turn back up with Stochastics, we would be cautious about entering positions here.
CRUDE OIL (USO)
IT Trend Model: BUY as of 2/12/2024
LT Trend Model: SELL as of 12/18/2023
USO Daily Chart: Crude broke out mildly yesterday but wasn't able to come up with follow through. The PMO did top on today's decline, but there are positives on the chart that keep us hopeful that we will get the breakout. The RSI and Stochastics are still very bullishly configured and we have a nearing "golden cross" of the 50/200-day EMAs. We may need some more consolidation before the breakout based on the PMO.
Overhead resistance is strong on the one-year daily chart so we shouldn't be surprised that Crude Oil is struggling to push through.
USO/$WTIC Weekly Chart: The long-term picture is bullish for USO. We have a symmetrical triangle which is a continuation pattern. That means the prior trend should be continued. Price is currently rising off the bottom of the pattern. We should expect a breakout. The weekly PMO is in agreement as it nears a Crossover BUY Signal.
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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