Today the S&P 600 Small-Cap Index ETF (IJR) 20-day EMA crossed down through the 50-day EMA (Dark Cross) above the 200-day EMA, generating an IT Trend Model NEUTRAL Signal. Failing an upside reversal, current participation is pulling the Silver Cross Index down toward 19%.
The weekly chart shows next support at about 101. Weekly PMO is falling below the signal line. Support is about to be reached, but given the poor indicators and participation, we would expect that level to be broken.
Also today, the Retail Sector ETF (XRT) 20-day EMA crossed down through the 50-day EMA (Dark Cross) above the 200-day EMA, generating an IT Trend Model NEUTRAL Signal. Poor participation is pulling the Silver Cross Index down from 42% toward about 19%. The PMO is falling below the zero line and Stochastics are well below 20.
The weekly chart shows next support at about 67. The weekly PMO has topped.
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 traded almost exclusively below support today. The PMO is flashing pure weakness as it dives toward the zero line.
The VIX did see a lower reading today which put it back within our Bollinger Bands on the inverted scale. Stochastics are extremely weak reading below 6.0. We still see these indicators as suggesting internal weakness.
Here is the latest recording from April 15th:
S&P 500 New 52-Week Highs/Lows: New Lows are still negligible even after the steady decline. This speaks to the strength of the prior rally, but we do expect them to begin expanding further should the drop in price continue.
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 OVERSOLD.
We had to check closely, but the Swenlin Trading Oscillators (STOs) inched slightly higher today. They are extremely oversold so this should be expected. We did see slight expansion in %Stocks > 20EMA and %PMOs Rising.
Intermediate-Term Market Indicators: The intermediate-term market trend is DOWN and the condition is NEUTRAL.
The ITBM and ITVM did not confirm rising STOs as they both continued to decline. We still have a paltry amount of PMO BUY Signals within the index.
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.
Even with some improvement in %Stocks > 20/50EMAs, they are still well below our bullish 50% threshold so the ST Bias remains BEARISH. The Silver Cross Index is tumbling lower and is well below its signal line so the IT Bias is BEARISH. The Golden Cross Index halted today, but it is below its signal line so the LT Bias is also 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: Our downside exhaustion climaxes did not play out with higher prices as they should have. When bullish conditions are met with bearish conclusions, it is especially bearish. However, we are beginning to wonder if this current decline is getting overdone. Certainly the STOs suggest this could be the case as they reversed higher today. We aren't expecting a new rising trend, but we could see some churn or consolidation that would pause this decline. Hedges should be managed carefully and stops should be honored.
Erin is 40% long, 5% short.
Calendar: Tomorrow is the last trading day before options expiration. It is not an end-of-quarter expiration, so SPX Total Volume should not be noticeably affected. We expect volatility to be low.
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BITCOIN
Bitcoin held onto support today, but it is highly vulnerable given the declining PMO. Stochastics did tick upward, but not enough for us to look for a big rebound here.
BITCOIN ETFs
INTEREST RATES
Rates were back on the rise again today. We suspect they will challenge the 2023 highs.
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 tipped upward keeping the steep short-term rising trend intact. The indicators are bullish so we expect the yield will continue higher toward the 2023 top.
BONDS (TLT)
IT Trend Model: SELL as of 3/20/2024
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: The 20-year yield was up and so consequently TLT was lower on the day. The accelerated declining trend remains in effect. Stochastics have turned up but they are in extremely weak territory below 20 so we wouldn't look to that to break the declining trend. The PMO continues to fall.
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 forming an island and that could spell trouble if this turns into a reverse island pattern. Price does look slightly toppy here and the RSI is overbought. At this point the PMO and Stochastics are positive so we would look for more churn.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold was up slightly but set a lower high. Indicators are mostly positive, but we see Gold has vulnerable to test the bottom of the rising trend channel. Since indicators are positive, Gold could simply move sideways to get contact with that rising bottoms trendline.
Discounts have really pared back telling us that investors are more bullish on Gold. This could continue to push price higher.
GOLD MINERS (GDX) Golden and Silver Cross Indexes: Gold Miners are holding within a rising trend channel and currently they are bouncing off the bottom. The PMO is a problem, but given robust participation and strong Silver/Golden Cross Indexes, we have a feeling it will bottom above the signal 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: Crude Oil is now testing the intermediate-term rising bottoms trendline. The PMO is declining and the RSI just moved into negative territory. Stochastics are moving vertically toward 20 suggesting this trend will be broken. The next level of strong support arrives at 76.00.
The double top formation seems to have won the day. On the bright side, the minimum downside target isn't far away. The 50-day EMA could also act as a strong support level.
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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