It was mentioned on X recently that the McClellan Oscillator had hit historic lows. It doesn't generally see deeply negative readings. This is a very oversold condition. Previously when readings hit this level it did eventually lead into important market bottoms. However, notice that the Summation Index was also deeply oversold the two previous times. Currently it is nowhere near oversold territory.
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: Price turned up today after six consecutive trading days of lower prices. It was time to see a pause. The PMO hit negative territory today. While we did see a nearly 1% gain on the day, volume was a little light.
Investors felt a rush of relief as the VIX popped higher on our inverted scale. Stochastics are still below 20 which is weak, but they have turned up.
Here is the latest recording from 4/22:
S&P 500 New 52-Week Highs/Lows: New Highs are inching upward as New Lows pare back. We are not enamored of the High-Low Differential as it is falling and nearing the zero line.
Climax* Analysis: Today there were unanimous climax readings on the four relevant indicators, giving us an upside initiation climax. SPX Total Volume did not expand to confirm.
*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 NEUTRAL.
Swenlin Trading Oscillators (STOs) have reversed strongly, pulling them out of oversold territory already. Participation is expanding as we need with more stocks above their 20-day EMA and more stocks showing rising momentum. Readings are still below our 50% bullish threshold, but we like the improvement we are seeing for the short term.
Intermediate-Term Market Indicators: The intermediate-term market trend is DOWN and the condition is OVERSOLD.
Both the ITBM and ITVM turned up and rose very slightly. Still this is a confirmation of already rising short-term indicators. %PMO Xover BUY Signals has turned up in very oversold territory.
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 BEARISH in all three timeframes.
We are still listing the short-term bias as BEARISH. We don't have readings above our bullish 50% threshold on %Stocks > 20/50EMAs. However, we do note that condition is improving. The Silver Cross Index is below its signal line so the IT Bias is BEARISH. The Golden Cross Index is below its signal line as well, giving us a LT Bias of BEARISH.
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 saw a nice relief rally today. We were already seeing positive moves from some of our indicators last Friday. Today intermediate-term indicators confirmed already rising STOs. Participation is expanding. We also saw a mild upside initiation climax. The stage is set for a small rally. Magnificent Seven stocks are straining so we don't believe we'll start another bull run at this point, but earnings could shift their outlook. Think consolidation versus a strong advance. We're certainly open to more rally, but think we should keep expectations tempered. Stops should be evaluated and updated.
Erin is 30% long, 5% short.
Calendar: Earnings spotlight this week: Tue - TSLA; Wed - META; Thu - MSFT, GOOGL
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BITCOIN
Bitcoin is rallying off support. It hasn't improved the PMO much, but it did get the RSI back into positive territory. Stochastics are rising so we would expect a little more upside out of Bitcoin.
BITCOIN ETFs
INTEREST RATES
Yields started the week slightly lower for the most part. Rising trends are clearly intact. We expect to see 2023 highs tested.
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
After hitting gap resistance, $TNX has been moving mostly sideways. Stochastics tipped upward and the PMO is already rising so we do expect resistance to be overcome.
BONDS (TLT)
IT Trend Model: SELL as of 3/20/2024
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: TLT accelerated its downtrend this month as the 20-year yield began its march higher. The RSI is very negative and the PMO is in decline so we are expecting lower prices to continue.
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 was up very slightly today forming a bearish filled black candlestick. Right now we have a price island. This leaves us alert to a possible reverse island chart pattern. The pattern would imply a gap down ahead. Stochastics look very bullish right now so we don't expect a big decline at this time.
The RSI is overbought so a decline would alleviate that condition. However, more sideways movement could also help clear that condition.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold took it on the chin today. We had been expecting a test of the bottom of the rising trend channel, but we didn't expect it to happen in one day. We do note that support is here horizontally, at the 20-day EMA and at the rising bottoms trendline. This should hold, but the overbought topping PMO does have us alert to a possible failure.
Stochastics also have us holding our breath at support.
GOLD MINERS (GDX) Golden and Silver Cross Indexes: Gold Miners dropped out of the rising trend channel and appear ready to correct again. Like Gold it is sitting on strong support, but notice how participation was slashed with today's decline. The PMO has triggered a Crossover SELL Signal. Be prepared for a likely breakdown.
CRUDE OIL (USO)
IT Trend Model: BUY as of 2/12/2024
LT Trend Model: BUY as of 2/27/2024
USO Daily Chart: Crude Oil lost its rising trend, but it did close on support and on the rising bottoms trendline. Stochastics have tipped back up, but the PMO is still declining. While we could see an upside reversal, we are apt to see more decline.
Support looks strong at 76.00.
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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