Today the Nasdaq 100 ETF (QQQ) 20-day EMA crossed down through the 50-day EMA (Dark Cross), generating an IT Trend Model NEUTRAL Signal. We are starting to see participation gaining, but readings are still below our 50% bullish threshold. Both the Silver Cross Index and Golden Cross Index are below their signal lines so in spite of the rally, the Bias remains BEARISH in the intermediate and long-term timeframes. This rally is encouraging but likely shouldn't be trusted yet.
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: To clarify, the red arch notation is not there to represent an area of resistance, only to emphasize the bearish rounded top. That hasn't been dispensed with yet. Yesterday's upside exhaustion climax did play out as expected, but it was only a small decline so it may not be done yet. The PMO is below the zero line and still declining.
The VIX increased slightly today but remains right around its moving average. Stochastics are rising but remain in negative territory.
Here is the latest recording from 4/22:
S&P 500 New 52-Week Highs/Lows: New Highs inched lower, but we note that the High-Low Differential has begun rising again.
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 DOWN and the condition is OVERBOUGHT.
We are listing the Swenlin Trading Oscillators (STOs) as overbought now. Participation halted, barely moving up.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERSOLD.
The ITBM and ITVM continue to rise. We did see more PMO BUY Signals, but we still are well below our bullish 50% threshold.
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, but the picture is improving as we now have %Stocks > 50EMA reading on our bullish 50% threshold. 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: It wasn't much of a decline and most of our indicators are doing what we want, rising. However, as a heads up, META reported decent earnings after the close and is now down over 16%. This does not bode well for the market tomorrow in spite of our indicators looking bullish. It will be interesting to see what happens after the close tomorrow when MSFT and GOOGL report (both are down in after hours trading with GOOGL down over 3%). We would prepare for more downside as follow through on yesterday's upside exhaustion climax. Mega-caps do tend to steer market direction so we would exercise caution going into trading tomorrow. Keep those stops close.
Erin is 20% long, 0% short.
Calendar: Earnings spotlight this week: Thu - MSFT, GOOGL
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BITCOIN
Bitcoin has topped before reaching overhead resistance and the declining tops trendline. The PMO has topped beneath the signal line and is headed below the zero line. We thought it would eke out more upside, but this premature top and PMO suggest downside is more likely.
BITCOIN ETFs
INTEREST RATES
Yields were higher on the day, we are still looking for the 2023 tops to be 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
Yesterday's comments still apply:
"$TNX is still struggling against resistance. Stochastics suggest this struggle will continue. The PMO is still rising so we do believe a breakout will eventually occur at this level."
BONDS (TLT)
IT Trend Model: SELL as of 3/20/2024
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: TLT was not able to break the declining trend before heading lower again. The RSI is very negative and Stochastics have topped deep in negative territory. We would look for more downside.
We do see support nearing at about 87.00. It isn't likely to hold.
DOLLAR (UUP)
IT Trend Model: BUY as of 1/23/2024
LT Trend Model: BUY as of 5/25/2023
UUP Daily Chart: The island formation is still a problem for the Dollar. There is a high likelihood that we will see a gap down move. It is acting a bit toppy and the PMO has topped in overbought territory. Stochastics are also declining, but for now are bullishly holding above 80.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold is losing its prior rising trend as it drifts out of the rising trend channel. It was a strong rally and it seems time for it to cool further given the PMO Crossover SELL Signal and diving Stochastics. This support level is also looking shaky.
The correlation between Gold and the Dollar is highly positive so they are currently traveling in concert. Based on the correlation they could both move together which is strange given the normal correlation is very negative. The Dollar looks weak and consequently so does Gold.
GOLD MINERS (GDX) Golden and Silver Cross Indexes: GDX still looks toppy, but so far it is holding onto support. The PMO does tell us to expect a breakdown here. %Stocks > 50/200EMAs are still trending lower. Be very careful with this trade.
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 is recapturing the rising trend after a brief foray below it. While the PMO isn't rising, Stochastics are and the RSI is positive. We like the Crude Oil trade right now on this reversal off the 50-day EMA.
The minimum downside target of the bearish double top has been reached and price is moving higher now. We'd like to see overhead resistance broken.
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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