Today the Dow Jones Industrial Average ETF (DIA) 20-day EMA crossed down through the 50-day EMA (Dark Cross) above the 200-day EMA, generating an IT Trend Model NEUTRAL Signal.
Support is being challenged, and the weekly PMO just dropped beneath its signal line giving us IT Bearish PMO Crossover SELL Signal.
Another signal change occurred on Technology as the 20-day EMA crossed down through the 50-day EMA (Dark Cross) above the 200-day EMA, generating an IT Trend Model NEUTRAL Signal. Near-term support was lost today. Participation is barely there and the Silver Cross Index is in free fall. The PMO has dropped beneath the zero line.
The decline looks particularly hairy on the weekly chart. Support won't arrive until about 180. The weekly PMO is on a new Crossover SELL Signal.
Also today the Dow Jones Transportation Average ETF (IYT) 20-day EMA crossed down through the 50-day EMA (Dark Cross) above the 200-day EMA, generating an IT Trend Model NEUTRAL Signal. Participation is light and the Silver Cross Index looks particularly bearish. The PMO is now beneath the zero line signaling pure weakness.
A support line has failed and the weekly PMO is falling below the signal line triggering an IT Bearish weekly PMO Crossover SELL Signal.
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/SPX SECTOR/INDUSTRY GROUP INDEXES
Change Today: 
Change for the Week:
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: Today was the last trading day before options expiration. We normally expect low volatility on the last two days, but Israel's attack on Iran stirred things up a bit. Last night, when the attack was launched, stock markets tanked, gold rallied, and curiously, Bitcoin tanked. By today's open the attack was over, and things returned to an approximation of normal.
We had another puncture of the lower Bollinger Band on the VIX's inverted scale. This could lead to an uptick, but so far those punctures haven't amounted in any upside movement. The PMO is nearing the zero line and Stochastics are in the basement suggesting internal price weakness.
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SPY Weekly Chart: Price penetrated and closed beneath the 17-week EMA. The weekly PMO nearly triggered a Crossover SELL Signal. The weekly chart is very bearish.
New 52-Week Highs/Lows: New Highs managed to expand somewhat on the decline but readings are still very low. The High-Low Differential has nearly reached the zero line in its descent. New Lows are nowhere near oversold, but we've seen small upside reversals at this level.
Climax Analysis: There were no climax readings today. Three prior downside exhaustion climaxes in a row failed to execute with a rally. Bearish conclusions to bullish conditions can be considered especially bearish.
*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.
Swenlin Trading Oscillators (STOs) continued to rise today and strongly. Considering the decline, we did see an expansion in rising PMOs. We would say this is a positive divergence.
Intermediate-Term Market Indicators: The intermediate-term market trend is DOWN and the condition is OVERSOLD.
The ITBM and ITVM can be considered somewhat oversold now. They are still in decline so we don't have confirmation of our rising short-term indicators.
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PARTICIPATION: The following tables summarize participation for the major market indexes and sectors. The 1-Week Change columns inject a dynamic aspect to the presentation. There are three groups: Major Market Indexes, Miscellaneous Industry Groups, and the 11 S&P 500 Sectors.
Utilities (XLU) which was Erin's Sector to Watch in DP Diamonds today holds the highest IT Bias. It is beginning to rally again despite losing Silver Cross Index percentage points.
Transports (IYT) hold the lowest IT Bias. The Golden Cross Index gained the most and given the IT Bias is determined by subtracting the Silver Cross Index value from the Golden Cross Index value and given we saw gains on the Golden Cross Index that Bias is more bearish than all others.
This table is sorted by SCI values. This gives a clear picture of strongest to weakest index/sector in terms of intermediate-term participation.
Energy (XLE) holds the top spot for SCI value with 100% of stocks having a 20-day EMA above the 50-day EMA. This is incredible strength so we do expect an upside reversal for XLE.
Notice that all but three saw double digit losses to the SCI. This is indicative of a clearly weak market that is getting weaker internally.
This table is sorted by GCI values. This gives a clear picture of strongest to weakest index/sector in terms of long-term participation.
Financials (XLF) has a very good long-term foundation given it holds the top GCI value.
The Nasdaq (ONEQ) is the weakest as the technology sector feels most of the pain right now.
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 did see some improvement to %Stocks > 20/50EMAs which could be considered a short-term positive divergence, but given the readings are below our 50% bullish threshold, we are listing the ST Bias as BEARISH. The Silver Cross Index is in free fall and is well below its signal line so the IT Bias remains BEARISH. The Golden Cross Index isn't declining that quickly, but currently 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: The market continued its slide despite options expiration. However, we are seeing some positive divergences appearing in the short term with STOs and New Highs as well as increased participation readings coming on declines. We may see a pause ahead, but given IT indicators are still bearish, we aren't looking for a new rising trend, more likely we will experience churn as internals are ultimately still weak at best. Hedges should be managed carefully as well as short positions since we may experience consolidation or brief advances. As we mentioned yesterday stops should be honored until we see a new rising trend.
Erin is 35% long, 5% short.
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BITCOIN
Bitcoin Daily Chart: Halving is beginning for Bitcoin. This will cut in half the amount miners get when they mine a new Bitcoin. Thoughts are that it will add scarcity to Bitcoin which in turn would lead it higher. However, this rounded top does not inspire confidence, neither does the falling PMO. Stochastics did tip upward so support could continue to hold.
Bitcoin Weekly Chart: The parabolic rise has now been broken and that would suggest a decline ahead down toward prior support just below 50,000. Given halving, we aren't looking for a decline of that magnitude. We just would say it is vulnerable to more decline at this point. The weekly PMO is indecisive and flat currently.
BITCOIN ETFs
Today:
This Week:
INTEREST RATES
Rates were up on the week but backed off slightly today. We are expecting yields to challenge 2023 highs. Bond funds will continue to be under pressure.
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 rising trend has steepened after the breakout from the bearish rising wedge. The PMO is still headed higher and Stochastics, while they have topped, remain above 80 signaling internal strength.
MORTGAGE INTEREST RATES (30-Yr)**
**We watch the 30-Year Fixed Mortgage Interest Rate, because, for the most part, people buy homes based upon the maximum monthly payment they can afford. As rates rise, a fixed monthly payment will carry a smaller mortgage amount, which shuts many buyers out of the market, and potential sellers will experience pressure to lower prices (to no effect so far).
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This week the 30-Year Fixed Rate changed from 6.88 to 7.10.
Here is a 50-year chart for better perspective.
BONDS (TLT)
IT Trend Model: SELL as of 3/20/2024
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: As rates accelerated their rise, Bonds have accelerated their declining trend. The PMO is still in decline, we suspect this declining tops trendline will continue to stymy price.
We have a more accelerated declining trend on the 1-year chart that was broken and with Stochastics rising maybe we will see a little more upside.
TLT Weekly Chart: We do have a bullish falling wedge on the weekly chart, but more importantly we have a new weekly PMO Crossover SELL Signal. Price appears ready to test the bottom of the wedge.
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 didn't do much this week as it just moved sideways overall. Other than the overbought RSI, the indicators look healthy enough to hold things together for now.
UUP Weekly Chart: After breaking out last week, the Dollar did hold its own this week finishing slightly higher. The weekly PMO is rising on a Crossover BUY Signal, but the weekly RSI is now overbought. It could use a pause or decline but with the breakout, we could see it rise further.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold hasn't been paying much attention to the Dollar. It has been rising strongly within a rising trend channel. Based on relative strength it is also holding its own as we don't see any weakness pervading. We've been expecting it to test the bottom of the rising trend channel, but it doesn't seem ready for a decline. At this point we suspect the bottom of the channel will be tested on sideways consolidation rather than a decline.
Gold is positively correlated to the Dollar which is very unusual. This condition doesn't usually persist as it is now. The Dollar looks good in the intermediate term based on its weekly chart so that should work in Gold's favor for now. We will have a better idea at how tied Gold is to the Dollar when the Dollar begins to weaken. All things being equal, Gold should rise as much as the Dollar falls and vice versa.
GLD Weekly Chart: The weekly chart looks excellent, but we do note that the weekly RSI is very overbought. This condition can persist and we expect it to as the weekly PMO is rising strongly and isn't overbought.
GOLD MINERS (GDX): Gold Miners are back on the move after testing the bottom of the steeply rising trend channel. While this rising trend is steep, it hasn't been a problem and we expect that it will hold up longer with Gold looking very bullish. Participation has been spectacular and remains strong so we should see them move even higher.
CRUDE OIL (USO)
IT Trend Model: BUY as of 2/12/2024
LT Trend Model: BUY as of 2/27/2024
USO Daily Chart: The short-term rising trendline was compromised this week, but the intermediate-term rising trendline is holding up. The PMO is declining out of overbought territory, but we read it as diminishing strength, not internal weakness.
The double top has fulfilled its downside target, but Stochastics still look very weak. We do expect USO to reverse higher, but this may indicate we have a little more short-term decline to absorb.
USO/$WTIC Weekly Chart: This recent top came at strong overhead resistance on the weekly chart which could explain near-term weakness. The weekly RSI is positive and the weekly PMO is still on the rise so we think this weakness is only a short-term problem.
Good Luck & Good Trading!
Erin Swenlin and Carl Swenlin
Technical Analysis is a windsock, not a crystal ball. --Carl Swenlin
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