We will discuss the Crude Oil signal change in its section.
Today the Real Estate ETF (XLRE) 20-day EMA crossed up through the 50-day EMA (Silver Cross), generating an IT Trend Model BUY Signal. XLRE has seen quite a resurgence since its deep decline in March and April. We do note what looks like some exhaustive behavior. Notice how price is declining again and could be setting up a reverse island that would resolve with a gap down. Also, you can see that participation is already thinning. The chart isn't all bad. The RSI is positive and the PMO rising above the zero line. Stochastics also look positive, but we would use caution right now.
The weekly PMO has turned up. Price is about to test some extremely strong overhead resistance 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: The market eked out a small gain today. We are seeing some churn and we suspect that will continue.
Investors are still quite complacent as evidenced by the extremely overbought reading. Stochastics are very positive as they have camped out above 80. These very short-term indicators suggest we do have some internal price strength.
Here is the latest recording from Monday, 5/20:
S&P 500 New 52-Week Highs/Lows: New Highs are starting to angle lower and we are seeing the High-Low Differential decelerating somewhat.
Climax* Analysis: There were no climax readings today. SPX Total Volume today was only 75% of the one-year daily average, which is evidence of fading confidence.
*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.
We are still listing the Swenlin Trading Oscillators (STOs) as overbought. Both currently show negative divergences with price and they are both continuing to decline. Cracks are arriving in the short-term timeframe.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT.
We believe both the IT Breadth Momentum (ITBM) and IT Volume Momentum (ITVM) are overbought near-term. %PMO Xover BUY Signals at at a healthy 76%, but looking at the chart above we see we only have 65% with rising PMOs. This means this indicator is likely to make its way lower soon. It already looks toppy.
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 all three timeframes.
We have more than 50% of stocks with price above their 20/50-day EMAs, but we do notice both those indicators topped on today's rally. While the ST Bias is currently bullish, we do see a little deterioration. Percentages are still high enough to keep the Silver Cross Index elevated. It is above its moving average so the IT Bias is BULLISH. The Golden Cross Index is rising and is above its moving average so the LT Bias is BULLISH. We should note that %Stocks > 200EMA is lower than the Golden Cross Index so it is vulnerable to decline and a loss of its LT Bullish Bias.
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 saw a rally today but it came on very low Total Volume. We are seeing New Highs paring back somewhat and STOs are in decline while holding negative divergences. We sense that the conviction behind this rally is fading. We noticed topping in many of our indicators today. The rally is still currently on so we don't want to get fully bearish. We still have enough participation to keep the market elevated, but these cracks tell us to proceed with some caution. We don't believe it is time to put your portfolio on sale. Set those stops and let the market force your hand.
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 rallied strongly today and is ready to test all-time highs again. This breakout looks solid as it is reinforced by bullish indicators. Stochastics look particularly bullish as they take up residence above 80.
BITCOIN ETFs
INTEREST RATES
Rates are pressing higher in the short term now and could recapture prior rising trends. It's not time to count yields out. In the grand scheme we expect this trading range to hold up for many months, possibly years.
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
Yields are beginning to recover from their prior decline. Stochastics do suggest we could see more upside. The PMO is also showing signs of deceleration. There is still a short-term declining trend. We will be watching closely to see if that trend is broken.
BONDS (TLT)
IT Trend Model: SELL as of 3/20/2024
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: Bonds funds are beginning to sink and it came right along the intermediate-term declining tops trendline. The declining trend on the 20-year yield has not been broken yet so we could get a little more upside out of Bonds. The indicators haven't failed completely as the PMO is still technically rising.
Price is now sitting on fairly strong support, but it is very close to breaking down.
DOLLAR (UUP)
IT Trend Model: BUY as of 1/23/2024
LT Trend Model: BUY as of 5/25/2023
UUP Daily Chart: Short-term the Dollar is in a declining trend, however, it is still moving within a longer-term rising trend channel. We seen a slight rally off the bottom of the channel that could portend the end of the short-term decline. Stochastics have tipped upward, but the RSI remains negative and the PMO is declining. The Dollar isn't out of the woods yet.
Price is sitting atop of support zone so this is a good place to look for a rally.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold continues to march higher and expect more of the same. The RSI isn't overbought yet so it can accommodate more upside before becoming overbought. Even if it does get overbought, we've seen that back in March and April it held those conditions for days without issue.
A rally in the Dollar would not be good for Gold as we do see the negative correlation is back. However, Gold is showing rising strength against the Dollar right now. That will help.
GOLD MINERS (GDX): Gold Miners took advantage of the rally in Gold. They are looking extremely strong and based on both the Golden and Silver Cross Indexes, the foundation is strong. The PMO is rising on a Crossover BUY Signal well above the zero line signaling pure strength.
CRUDE OIL (USO)
IT Trend Model: NEUTRAL as of 5/20/2024
LT Trend Model: BUY as of 2/27/2024
USO Daily Chart: Today the U.S. Oil Fund (USO) 20-day EMA crossed down through the 50-day EMA (Dark Cross) above the 200-day EMA, generating an IT Trend Model NEUTRAL Signal. This is not a decisive looking signal change because the closing price, 20EMA and 50EMA are within a quarter point of each other, and the signal could be reversed tomorrow. Given the rise in Stochastics, we are looking for price to break upward from the symmetrical triangle formation.
We notice a small double bottom in price near term. This would suggest we will see more upside.
USO/$WTIC Weekly Chart: Given the signal change we thought it a good idea to look at the weekly chart. Price is reversing off the 43-week EMA. The weekly PMO is in decline but it is decelerating. This looks like a bullish cup with handle pattern.
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)