We'll discuss the "Bearish Shift" on the Golden Cross Index in the Bias section of the report.
Today after the close NVIDIA Corp. (NVDA) announced an earnings beat, a dividend hike, and a 10:1 stock split effective June 7. At time of publication the stock was up as much as +7.2% in after hours trading, and it is trading above previous all-time highs.
We can't display after hours trading on the daily chart, but price will have obviously broken well above the top of the last three month's trading range.
NVDA did correct after its near vertical rally and bounced off the 17-week EMA. It has begun another vertical rally. That will also need a correction in the future. The weekly PMO is very close to a Crossover SELL Signal, but more rally will likely see it reverse soon.
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/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: Yesterday's bullish engulfing candlestick did not result in higher prices. The decline did take the RSI out of overbought territory. Total Volume was very low again, maybe "go away in May" has some standing here. The PMO continues to make its way higher.
The VIX declined on our inverted scale, but remains very overbought. Stochastics look very bullish despite the flattening out of price.
Here is the latest recording from Monday, 5/20:
S&P 500 New 52-Week Highs/Lows: We see that a negative divergence has presented itself on New Highs. We also notice that New Lows are beginning to expand. Worse, the High-Low Differential has topped.
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 NEUTRAL.
Swenlin Trading Oscillators (STOs) pulled back a great deal on today's decline. The big problem is the thinning participation and loss of rising PMOs.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT.
Both the ITBM and ITVM have topped and are headed lower. This finally confirms the declining STOs. We saw a top on %PMO Xover BUY Signals.
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 BULLISH in the short and intermediate terms.
The market bias is BEARISH in the long term.
Today the Golden Cross Index dropped beneath its 20-day EMA which gives us a new BEARISH Bias in the long term. This doesn't mean a bear market is on the way, it means that we could begin to experience weakness in that time frame which would imply problems ahead for the bullish biases in the short and intermediate terms.
The short-term bias is still bullish given %Stocks > 20/50EMAs are above our bullish 50% threshold, but that is deteriorating. The Silver Cross Index is in decline and could see a Bearish Shift soon itself. For now it is above its signal line so the IT Bias remains BULLISH.
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: We're now seeing the market's soft underbelly. Participation has been falling precipitously in the short term. New Highs have a negative divergence and STOs are in decline. We also now have our IT indicators in decline and the High-Low Differential has topped. The market is primed for a decline. However, with NVDA's earnings being received so well, a rally could be inevitable tomorrow given NVDA's sway on the indexes. Ultimately the market is highly vulnerable to a decline right now. We would avoid adding new positions in preparation. Cut the dead wood in your portfolio and consider tightening some stops.
Erin is 40% long, 0% short.
**************************************************************************************
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 is still digesting this week's rally. It is coming as price is reaching strong overhead resistance at all-time highs. The decline hasn't compromised the indicators so at this point we are looking for another rally.
BITCOIN ETFs
INTEREST RATES
Yields were mixed today. Longer-term yields declined while the others inched higher. Declining trends are still intact but they are very close to being broken.
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 declining trend has not been broken yet, but it is getting close. Stochastics have reversed higher so we will be on the lookout for a possible breakout. The PMO is still in decline but appears to be decelerating.
BONDS (TLT)
IT Trend Model: SELL as of 3/20/2024
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: Stochastics began dropping yesterday, but they have reversed higher. The 20-year yield hasn't broken its declining trend yet so there is opportunity for TLT to move higher. Unfortunately yields are looking less bearish overall. TLT hasn't broken above the 200-day EMA yet, but the rising trend is mostly intact. The PMO hit positive territory so it is set up for more upside. Yields are starting to look a little more bullish in the short term so we think upside for TLT will be very limited.
Price is now sitting on fairly strong support.
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 rallying and keeping the rising trend channel from being compromised. Price is back above the 20-day EMA and the RSI hit positive territory. Stochastics are also rising suggesting we will see follow through. The PMO isn't on board yet so we don't want to get too bullish on the Dollar.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: It was a terrible day for Gold. It pushed the PMO lower toward a Crossover SELL Signal. Stochastics have topped. Given the voracity of the decline and the possible double top that could be setting up, we have to expect Gold will begin making its way lower. It performed terribly against the Dollar so the relative strength line dipped lower.
The negative correlation is strong so a Dollar rally will hurt Gold. The Dollar looks ready to rally further. That will continue to put a damper on Gold.
GOLD MINERS (GDX): Gold Miners crashed today on the big decline in Gold. With Gold looking bearish we expect this industry group will underperform. It may be time to take profits off the table. Notice the damage done to %Stocks > 20EMA.
CRUDE OIL (USO)
IT Trend Model: NEUTRAL as of 5/20/2024
LT Trend Model: BUY as of 2/27/2024
USO Daily Chart: The Crude Oil trade may be going south on us. So far the rising trend is holding up, but today's drop in Stochastics have us looking toward a breakdown not a breakout. The PMO has topped and is moving lower beneath the zero line and signal line.
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)