This week the Swenlin Trading Oscillators (STOs) have been all over the place, twitching back and forth. They simply aren't revealing much except for serious negative divergences. They tell us to be cautious on the way up. The Price Momentum Oscillator (PMO) is signaling "pure strength" as it is flat well above the zero line. It tells us we should be bullish. What is the ultimate answer? Cautious optimism. Caution = stops, optimism = relentless rally.
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: Today's rally set fresh all-time highs on the breakout above very short-term resistance. The market is undeterred with the exception of a few hiccups along the way. The PMO which switched to a Crossover BUY Signal yesterday is rising above the signal line, well above the zero line, suggesting "pure strength".
The VIX is back above its moving average on the inverted scale and Stochastics are oscillating above 80. Both suggest internal price strength. Total Volume calmed down after yesterday's spike. What we thought was a possible blowoff just launched price even higher today.
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SPY Weekly Chart: As noted a new all-time high was set this week. Price continues along a very steep rising trend. Those are hard to maintain, but given the relentless nature of this rally, we wouldn't be surprised if it did continue. It's another indication the rally needs to cool. The overbought weekly RSI implies the same.
SPY Monthly Chart: The monthly chart shows a parabolic advance. These generally end badly. This is yet another reason to exercise caution. The monthly PMO is rising well above the zero line so "pure strength" is still visible.
New 52-Week Highs/Lows: New Highs expanded. There are no negative divergences on this very short-term indicator chart. The intermediate-term 10-DMA of the High-Low Differential shows internal strength as it rises, but it has become very overbought. Admittedly the last two times this indicator topped it resulted in consolidation, not a deep decline.
Climax Analysis: There were no climax readings today. Yesterday we were concerned that the high SPX Total Volume looked "blow-offy," but no weakness materialized.
*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.
As noted in the opening, these indicators have been very twitchy and unhelpful in determining short-term price movements. Currently they are traveling in different directions which is even more unhelpful. The negative divergences are the primary concern with STOs. Participation did NOT increase with today nearly 1% rally. We actually saw a few stock lose the 20-day EMA as support. Rising momentum did increase, but given the strength of the rally and based on the current level of price being so high, we should have more than 63% with rising PMOs.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
The ITBM and ITVM are continuing their advance which bodes well in the intermediate term. It suggest that any decline will likely be a problem in the short term not the intermediate term...at least for now. %PMO Xover BUY Signals is continuing to rise but holds a deep negative divergence with price. The ITBM and ITVM also have negative divergences.
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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.
Biotechs (IBB) are beginning to make a move higher and internally it is showing as IBB holds the highest IT Bias.
Regional Banks (KRE) are struggling. KRE saw a slashing of Silver Crosses and a decline in Golden Crosses. This is a group to avoid.
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) hold the highest SCI value but we do detect some deterioration. With KRE showing significant declines in the SCI and GCI, XLF isn't likely to hold up well.
Gold Miners (GDX) have a very low SCI reading and no improvement was detected. The chart however is looking up, we'll discuss this in the section on Gold Miners.
This table is sorted by GCI values. This gives a clear picture of strongest to weakest index/sector in terms of long-term participation.
Semiconductors (SMH) continues to flash strength as they hold the highest GCI value.
Gold Miners are also the lowest on the GCI table as well. As noted, they have an interesting chart right now.
Transports (IYT) interestingly saw the highest addition to its GCI. We will want to monitor this chart closely.
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 ST Bias is BULLISH.
The IT Bias is BEARISH, but improving.
The LT Bias is BULLISH.
We have all of the participation indicators reading over our bullish 50% threshold so the ST Bias is BULLISH. The SCI did rise this week and is very near a positive crossover its signal line. That would scrap the Bearish IT Bias in favor of a Bullish IT Bias. While this is possible given we have more stocks above their 20/50EMAs as compared to Silver Crosses. However, the margin is slim between them and could prevent a positive crossover. The GCI is above its signal line so the LT 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: The market internals are strong enough to keep this rally going. The PMO is flashing 'pure strength' and participation percentages are all above our bullish 50% threshold. We should expect more upside. However, caution should be applied given negative divergences and mixed messages from the STOs. The market is in the midst of a long-term parabolic move and riding a very steep rising trend on the weekly chart. Both beg for a pullback at the very least. This is why stops are very important right now. New positions should be added with extreme caution and a stop. We want to take advantage of more upside but must protect ourselves with stops. Even a loose stop is better than no stop.
Erin is 75% long, 0% short.
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BITCOIN
Bitcoin shot to the moon this week. It is now consolidating the move. This has helped propel Bitcoin ETFs higher on the rally. We see more upside ahead for Bitcoin after a period of consolidation. A pause would help alleviate the very overbought RSI. As we often say though, Bitcoin isn't afraid of overbought territory. It can maintain that condition almost indefinitely.
This chart is to show where some of the support/resistance lines come from. All-time highs are the next stop.
BITCOIN ETFs
Today:
This Week:
INTEREST RATES
Interest rates are beginning to decline and roll over. It does appear they are ready to drop further after today's follow-through decline.
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 lost support and dropped beneath the 50-day EMA. The RSI has moved below net neutral (50) and the PMO has topped. Stochastics are traveling vertically lower. We expect more decline out of the 10-year yield.
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 6.90 to 6.94.
BONDS (TLT)
IT Trend Model: SELL as of 2/20/2024
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: Bonds rallied this week as yields rolled over. We expect to see a further rise in TLT as the indicators are shaping up and the 20-year yield is in decline. The RSI just moved above net neutral (50) and the PMO had a new Crossover BUY Signal today. Stochastics have reached above 80.
This rally has set up a nice double bottom pattern. The pattern will not be confirmed until the February top has been overcome. We didn't think this was likely, but yields are looking very bearish and the indicators have firmed up on the chart.
TLT Weekly Chart: We have a breakout from a bullish falling wedge, but price has been in a declining trend since. We do like that the weekly PMO is turning back up and the weekly RSI has moved above net neutral (50). The weekly PMO is in agreement with the daily chart that there is a rally continuation possible.
TLT Monthly Chart: The monthly PMO is about to trigger a Crossover BUY Signal so all three timeframes are looking more bullish. We aren't looking for a prolonged rally at this point, but see that the bias is bullish.
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 is holding support along the 20-day EMA, but it is also stuck beneath overhead resistance. The PMO is flat but isn't that far above the zero line. We see weakness as it is below its signal line. Stochastics decelerated. We see more consolidation ahead for the Dollar.
UUP Weekly Chart: UUP finished unchanged this week. The weekly PMO is moving sideways but ultimately is above its signal line. This does look like the formation of a bull flag. However, it could also be the beginning of a bearish double top. Given the dichotomy between patterns, we would look for consolidation.
UUP Monthly Chart: The monthly PMO is rising but is very overbought. It also is indecisive and could turn down quite easily next month if UUP continues to slide on a monthly basis.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold finally saw the rally we have been looking for. The Dollar wasn't down that much so this rally is buyers coming in. Notice that discounts have pared back suggesting investors are getting less bearish on the metal.
New all-time highs are arriving and we suspect Gold has further to go in conjunction with Bitcoin. We have a strongly rising relative strength line against the Dollar as Gold shows more internal strength. Stochastics also suggest internal strength as they are above 80.
GLD Weekly Chart: The weekly PMO has turned back up on GLD which suggests we will see higher prices ahead.
$GOLD Monthly Chart: The monthly PMO is flat and well above the zero line suggesting pure strength. We may finally be seeing the breakout move insinuated by the cup with handle pattern.
GOLD MINERS Golden and Silver Cross Indexes: The rally in Gold this week helped propel GDX higher. We now have a bullish double bottom pattern. The upside target of the pattern would take price to the 200-day EMA. We saw an extreme improvement in participation. The Silver Cross Index and Golden Cross Index are lower, but with this new goosing of participation it should get them moving to the upside fairly quickly.
CRUDE OIL (USO)
IT Trend Model: BUY as of 2/12/2024
LT Trend Model: BUY as of 2/27/2024
USO Daily Chart: We saw the development of a nice cup-shaped base and the rising PMO and suggested we might get a breakout this week. We got it finally. Stochastics are still in decline so this rally may continue to take its time moving higher. We are looking for another run at overhead resistance.
USO/$WTIC Weekly Chart: USO has formed a bullish symmetrical triangle on the weekly chart that implies an upside breakout ahead. The weekly PMO is in agreement as it rises on a new Crossover BUY Signal.
WTIC Monthly Chart: The monthly chart isn't as bullish as the daily and weekly charts. There is a weekly PMO decline in motion. We did see it decelerate its decline and we see a possible double bottom that could imply more upside.
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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