Of the market indexes, sectors and industry groups we follow, Semiconductors (SMH) finished at the top, up +2.35%. However, this follow through on yesterday's rally did nothing to really improve the "under the hood" picture. Certainly they could continue to rise from here given Stochastics have turned up, but notice that nothing happened with participation. The Silver Cross Index is reading below our 50% bullish threshold and none of the stocks moved above their 20-day EMA. The PMO is still headed lower. It's still early for the indicators. Before going all in on this industry group, you'll want to make sure participation is expanding.
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: We saw excellent follow through on yesterday's upside initiation climax. The PMO is trying to bottom, but we do note it is still beneath the zero line.
The VIX is now above its moving average on the inverted scale and Stochastics are rising again. Some internal strength is returning to the market.
Here is the latest recording from 4/22:
S&P 500 New 52-Week Highs/Lows: New Highs expanded as we would expect but, we still have a High-Low Differential that is falling and is near the zero line.
Climax* Analysis: Today there were three climax readings and one "almost" on the four relevant indicators, giving us an upside exhaustion climax. SPX Total Volume contracted again, confirming the exhaustion.
*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.
Both Swenlin Trading Oscillators (STOs) moved into positive territory today which does bode well moving forward. Participation is nearly above our bullish 50% threshold. Almost half of the stocks have rising PMOs.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERSOLD.
We still read the ITBM and ITVM as oversold. They are rising which confirms our rising short-term indicators. %PMO Xover BUY Signals crossed above the signal line.
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: Yesterday's upside initiation climax played out as we would expect with a nice rally. Unfortunately, today marked an upside exhaustion climax which portends lower prices tomorrow. Indicators are ripening and participation is beginning to expand again. IT indicators are confirming rising short-term indicators. Internals are improving enough that we could see more follow through to the upside, but we should remain cautious given today's exhaustion climax. Erin opted to let go of her hedge, but isn't expanding her portfolio yet.
Erin is 20% long, 0% short.
Calendar: Earnings spotlight this week: Wed - META; Thu - MSFT, GOOGL
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BITCOIN
Yesterday's comments still apply:
"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 were mixed today but remain in rising trends suggesting more upside ahead.
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 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 managed a rally and nearly broke the declining trend it is currently in. The 20-year yield has paused its advance affording TLT the opportunity to attempt a rally. Stochastics have turned up, but the PMO is still flat. There is a chance we could see more sideways movement. A strong advance doesn't seem realistic.
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 down as we would expect after a bearish filled black candlestick. We are seeing an island and thus UUP is vulnerable to a gap down on a reverse island formation. The RSI has now moved out of overbought territory, but the PMO has topped in overbought territory and Stochastics are in decline. The Dollar looks vulnerable.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold is about to lose its rising trend. Thankfully today saw a bullish hollow red candlestick. However, the backdrop for Gold isn't good. The RSI may be in positive territory, but the PMO triggered a Crossover SELL Signal in overbought territory. Stochastics are falling and are in negative territory. Horizontal support didn't hold.
Normally a weak Dollar would have us bullish on Gold, but the correlation between the two is positive, meaning they are traveling in concert. We still like Gold longer term, but it looks as though we will see a pullback or possible correction.
GOLD MINERS (GDX) Golden and Silver Cross Indexes: Gold Miners held support today but they still look very toppy. The new PMO Crossover SELL Signal doesn't inspire confidence. We're also seeing Gold looking weak and that should put downside pressure on Gold Miners. We did see improvement in participation of stocks above their 20-day EMA. However, we think GDX is very vulnerable to decline, particularly if the market has a bad day.
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 rallied strongly today which brought it back above the rising bottoms trendline. This does look like a good upside reversal. The PMO is already flattening out above the zero line. Stochastics have turned back up and the RSI is moving higher in positive territory. We doubted Crude yesterday, not so much today.
This reversal is coming right off the 50-day EMA.
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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