It seemed early to expect an upside reversal on NVIDIA (NVDA), but in actuality, NVDA had already corrected into a bear market configuration with a nearly 22% drop from the all-time high. Now we are seeing a reversal off support that looks credible. The RSI just moved back into positive territory and the PMO has begun to rise again. It turned up while above the zero line suggesting new strength, not diminishing weakness. Stochastics are also rising and have moved into positive territory. NVDA looks interesting here.
(Full Disclosure: Erin owns NVDA.)
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.
Watch the latest episode of DecisionPoint on our YouTube channel here!
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: We haven't shaken the bearish rounded top, but we do have a short-term double bottom pattern that does suggest a possible challenge of all-time highs ahead. The PMO turned up today.
Stochastics continue to rise and we have the VIX above its moving average on the inverted scale. Both suggest there is some internal strength available.
Below is the latest free DecisionPoint Trading Room recording from 4/22. You'll find these recordings posted on Mondays to our DP YouTube Channel. Be sure and subscribe HERE.
SPY Weekly Chart: This week we got a weekly PMO Crossover SELL Signal on the weekly chart. It was a great week, but the declining trend is clearly intact. On the bright side we do not see a negative divergence on the weekly PMO as we did before the 2022 decline. This also looks very much like a bull flag which as a continuation pattern suggests this current declining trend will be broken.
New 52-Week Highs/Lows: New Highs are expanding, but so are New Lows. The High-Low Differential began rising again this week. It turned above the zero line which does bode well for a rally continuation.
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 UP and the condition is OVERBOUGHT.
Given today's strong rally it was very strange to see the Swenlin Trading Oscillators (STOs) top. At the same time, we didn't see much expansion if any to %Stocks > 20-day EMA or on %PMOs Rising. This wasn't a particularly broad rally.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
The ITBM and ITVM are still rising out of oversold territory. This makes us slightly less concerned about falling STOs. We are seeing an increase in the number of PMO BUY Signals, but we need a stronger foundation.
_______
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) have made a big comeback and this is evidenced by the strongest IT Bias.
Nearly all other issues show negative IT Biases with Technology (XLK) holding the worst. This is due to the disintegration of the Silver Cross Index while the long-term foundation remains strong as far as the Golden Cross Index.
This table is sorted by SCI values. This gives a clear picture of strongest to weakest index/sector in terms of intermediate-term participation.
Regional Banks (KRE) saw the biggest increase to the SCI, but if you look under the hood at percent stocks above key moving averages, you won't see good numbers. Be careful with this group.
Biotechs (IBB) are by far the biggest losers in SCI value. This group is still suffering.
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) hold the top spot on the GCI value, but notice that it lost a few points and the SCI is losing points. This is a sector showing new weakness.
Consumer Staples (XLP) showed the biggest gain in GCI value and it also saw a strong improvement to the SCI this week as well. This is a steady sector that should see more upside, though maybe not as much as some of the more growth-y areas of the market.
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.
At first glance, we note that participation did not expand on today's strong rally. This gives us pause. We keep waiting to change the ST Bias to bullish, but we need to see %Stocks > 20/50EMAs above our bullish 50% threshold. The IT Bias is BEARISH due to the Silver Cross Index (SCI) being below its signal line. It doesn't help that it continues to move lower. The LT Bias is BEARISH as the Golden Cross Index (GCI) is below its signal line. It will continue to move lower based on the fact that we have fewer stocks above their 50/200-day EMAs.
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.
**************************************************************************************
CONCLUSION: This was a very pointed rally. A rally that was driven primarily by mega-caps MSFT and GOOGL just as META took the market down on Thursday. This is evidenced by the lack of expansion in participation. A rally of this magnitude should've lifted all boats and it didn't. The STOs topped today adding a level of foreboding going into next week. The rally in mega-caps could seep into the broader market, but we need to exercise caution in the meantime. The rally looked good on the charts, we just don't see enough supporting evidence to expect a strong rally continuation. Portfolio expansion could be done carefully with stops. Keep your stops close, the FOMC announcement could shake investors.
Erin is 30% long, 0% short.
Calendar: Next week Tuesday is the FOMC meeting with the announcement on Wednesday. The consensus is that there will be no rate cut.
**************************************************************************************
Have you subscribed the DecisionPoint Diamonds yet? DP does the work for you by providing handpicked stocks/ETFs from exclusive DP scans! Add it with a discount! Contact support@decisionpoint.com for more information!
BITCOIN
Bitcoin Daily Chart: Bitcoin failed to reach overhead resistance before it topped. This adds a bearish bias to the chart. That negative bias is reinforced by negative RSI, falling PMO and falling Stochastics. We expect support to be tested, likely not successfully.
Bitcoin Weekly Chart: We're still in the midst of a parabolic breakdown. The weekly PMO has topped.
BITCOIN ETFs
Today:
This Week:
INTEREST RATES
Rates were higher to start the day but backed off on PCE reports meeting expectations regarding inflation, not showing an unexpected jump. We still believe rates will continue to rise to challenge 2023 tops.
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 continues even in the very short term. The PMO has flattened but is still rising. The RSI is positive and Stochastics are rising above 80. We expect an upside breakout here.
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).
--
This week the 30-Year Fixed Rate changed from 7.10 to 7.17.
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: We are detecting a possible double bottom formation developing in the short term. This would imply an upside breakout from the declining trend. However, right now the indicators aren't in line for a breakout. Stochastics are still falling and so is the PMO. Still, it is something to monitor.
TLT Weekly Chart: While we may see a bullish double bottom on the daily chart and even a bullish falling wedge on the weekly chart, the weekly PMO is far too negative to expect a breakout move. Price is at a strong level of support that may contribute to a short-term rise from TLT. The 20-year yield also looks bullish in its rising trend.
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 has formed a large island so we are keeping an eye out for a gap down move. The PMO is nearing a Crossover SELL Signal, but the RSI and Stochastics still look bullish. This dichotomy among the indicators could mean more consolidation ahead.
UUP Weekly Chart: The weekly chart is decidedly bullish across the board. The weekly RSI is overbought which could pose a problem soon, but the weekly PMO is rising as UUP broke out above 2022 highs. The IT Bias is bullish.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold is trying to reverse off support and the 20-day EMA. Considering the PMO decline and configuration, Gold hasn't been all that weak since the gap down. The RSI has also remained in positive territory. Gold is not showing any strength against the Dollar, but nor is it displaying weakness.
Stochastics are still in decline, but we like this level of support being held. We have an island formation and in this case that is a positive unlike the Dollar which gapped up, Gold gapped down. If the pattern executes, we would see a gap up for Gold. The PMO isn't on board with a gap up ahead, but as previously noted the RSI is positive.
GLD Weekly Chart: This week's decline took the weekly RSI out of highly overbought territory. The weekly PMO is still rising so the intermediate-term picture is bullish for Gold.
GOLD MINERS: Gold Miners are off to the races again with GDX rebounding off support. It closed at a near 52-week highs. The PMO has turned back up and participation couldn't get much stronger. Stochastics are rising strongly. We expect to see more upside out of Gold Miners.
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 was down on the day, but we did see a higher low and a higher high so the rising trend is holding up. The RSI is positive but the PMO is still moving lower. Stochastics are rising so the bias is bullish on the chart suggesting more upside ahead. The PMO is flattening and could reverse soon.
The prior double top executed and the minimum downside target was reached before it reversed higher.
USO/$WTIC Weekly Chart: Strong overhead resistance was met and price failed to overcome. However, the weekly PMO is on a Crossover BUY Signal and the weekly RSI is positive. We're looking for an eventual breakout.
Good Luck & Good Trading!
Erin Swenlin and Carl Swenlin
Technical Analysis is a windsock, not a crystal ball. --Carl Swenlin
(c) Copyright 2024 DecisionPoint.com
Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
DecisionPoint is not a registered investment advisor. Investment and trading decisions are solely your responsibility. DecisionPoint newsletters, blogs or website materials should NOT be interpreted as a recommendation or solicitation to buy or sell any security or to take any specific action.
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.
Helpful DecisionPoint Links:
DecisionPoint Alert Chart List
DecisionPoint Golden Cross/Silver Cross Index Chart List
DecisionPoint Sector Chart List
Price Momentum Oscillator (PMO)