The Consumer Price Index of +3.5% was released before the market opened, and that sent the market lower at the open. It traded in a lower range, and it closed about midway that 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
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: In spite of today's selloff, SPY remains within a narrow 2.5% trading range, and it is still very close to all-time highs.
Here is the latest recording:
S&P 500 New 52-Week Highs/Lows: New Highs contracted again, and the trend of New Highs continues down. New Lows expanded, but is not significant.
Climax* Analysis: There were unanimous climax readings on the four relevant indicators giving us a climax day. Since the climax last Thursday was a downside exhaustion climax, we are going to call today's a downside initiation climax, which implies more downside to follow.
*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 DOWN and the condition is OVERSOLD.
All these indicators moved down today.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
The ITBM and ITVM are falling and accelerating again. Perhaps those negative divergences is going to finally deliver more downside.
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 Silver Cross Index (SCI) is below its 10-day EMA, so even though the SCI is at a bullish 80%, its bias has shifted to bearish. Participation implies that the SCI will likely drop to 60%.
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: Today's selloff was substantial, but we couldn't help feeling that the market wasn't ready to let go with a swoon. The ITBM/ITVM negative divergences still represent a significant negative for the market. The downside initiation climax implies lower prices ahead, but we don't have to commit to anything specific until we see how the market opens tomorrow.
Erin is 75% long, 0% short.
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BITCOIN
Bitcoin is having trouble breaking out of the triangle formation.
BITCOIN ETFs
INTEREST RATES
Yields are rising within the range set during the last 18 months or so. We are currently expecting that range to hold for several months, or until the Fed does something. Today's CPI news pushed yields higher.
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
The bearish rising wedge implied that $TNX will eventually start down and move out of the wedge, but today it broke out through the top of the wedge. This is very bullish.
BONDS (TLT)
IT Trend Model: SELL as of 3/20/2024
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: TLT broke down through the support line that held it for six days.
DOLLAR (UUP)
IT Trend Model: BUY as of 1/23/2024
LT Trend Model: BUY as of 5/25/2023
UUP Daily Chart: Here's another bearish rising wedge that is trying to resolve opposite thsn expected.
UUP has reached the overhead resistance line drawn across the 2022 high.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: GLD reached the top of its rising trend channel and it broke downward today. Worst case expectation is that it will reach the bottom of the channel.
GOLD Daily Chart: The parabolic arc was violated today. The worst case we expect would be a pullback to the nearest support line, just below 205.
GOLD MINERS Golden and Silver Cross Indexes: Participation for Gold Miners is excellent, with all indexes being in the 90s. The current pullback should be contained by the double bottom confirmation line.
CRUDE OIL (USO)
IT Trend Model: BUY as of 2/12/2024
LT Trend Model: BUY as of 2/27/2024
USO Daily Chart: USO corrected farther than yesterday, but it looks as if a rally has begun off today's low.
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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