Today the Real Estate Sector ETF (XLRE) 20-day EMA crossed down through the 50-day EMA (Dark Cross) above the 200-day EMA, generating an IT Trend Model NEUTRAL Signal. Notice that there is an OBV reverse divergence between the recent top versus the March top. What it means is that there was a lot of volume behind the the recent price advance, but it was unable to get price above the March top. The future isn't bright given the low participation and topping PMO.
The weekly PMO has topped beneath the signal line so while price is holding above support, it is very vulnerable to decline below it.
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: Okay, here are the problems with this chart: (1) there is an OBV negative divergence; (2) a PMO negative divergence; and (3) very thin volume for most of this month.
Investors weren't impressed with today's rally based on the heightened VIX reading. It is now reading below its moving average on our inverted scale which implies weakness is seeping in. Stochastics topped last week and continued lower on today's rally. Evidence of more weakness.
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S&P 500 New 52-Week Highs/Lows: New Highs were lower on today's rally. The negative divergence is still a problem and we also have a negative divergence on the High-Low Differential. It continues lower.
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) are moving even lower. In spite of a rally today, we lost stocks above their 20-day EMAs and we saw a deterioration in the number of rising PMOs.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
We are listing the ITBM and ITVM as "neutral", but they are still somewhat overbought. %PMO Xover BUY Signals dropped beneath our bullish 50% threshold.
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.
Today the Silver Cross Index dropped beneath its signal line giving us a BEARISH intermediate-term bias. We have strong negative divergences on all of these indicators. We have less than 50% of stocks above their 20/50-day EMAs. The Golden Cross Index is also below its signal line so we have a BEARISH long-term bias as well.
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 SPY and tech-heavy Nasdaq closed higher thanks to a great day by NVIDIA (NVDA). What is notable is that both the Dow and NYSE suffered losses today and not just small ones. They were down -0.55% and -0.57% respectively. Market internals continue to weaken so while price has managed to consolidate sideways, it is due primarily to the XXL-caps in the index. The index could continue to hold on longer, but that doesn't help your portfolio given the breakdown in momentum and participation. Negative divergences are all over our indicator charts and the IT Bias just moved bearish. You might want to tighten stops.
Erin is 35% long, 5% short.
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BITCOIN
Bitcoin is consolidating sideways and it has moved the indicators into a more neutral position. The PMO is beginning to top and Stochastics have topped too so we see a bearish bias on the chart, but we could see more sideways movement given flat indicators.
BITCOIN ETFs
INTEREST RATES
Yields are back on the rise as the Fed pushes back possible rate cuts into the end of the year.
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
After breaking through the short-term declining trend, $TNX is back on track to test the prior top. The PMO has turned back up and Stochastics moved above 80 today.
BONDS (TLT)
IT Trend Model: SELL as of 3/20/2024
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: TLT has been suffering as interest rates particularly the 20-year yield push higher. Lower prices are highly likely given the topping PMO and diving Stochastics.
The decline came right on the declining tops trendline.
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 ended last week on a negative note and that continued today. We did see a hollow red candlestick and those are actually positive. The indicators don't look all that positive, so this rising trend is vulnerable.
Support is very near should price continue to move lower.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold is surging again, but the bearish double top has us cautious. The PMO hasn't turned up yet and neither have Stochastics so it may be too early to celebrate a new leg up. At the same time we are seeing it outperform the Dollar right now. The Dollar looks somewhat weak.
Discounts are expanding and that can be good for Gold, but they aren't reading at extremes. Instead it is telling us that overall investors are getting more bearish. That is an obstacle for this rally.
GOLD MINERS (GDX): The rally in Gold did wonders for the Gold Miners. It even has healed participation which was beginning to wane for stocks above their 20-day EMAs. We still see this group as vulnerable. Gold did rally, but it still has problems. The market is likely to stumble soon and that will apply downward pressure.
CRUDE OIL (USO)
IT Trend Model: NEUTRAL as of 5/20/2024
LT Trend Model: BUY as of 2/27/2024
USO Daily Chart: Stochastics turned up on today's breakout rally. They had us getting less optimistic about a breakout, but we did get the breakout. Seasonally speaking, June tends to be a good month for USO. The RSI is positive again and the PMO has turned back up. We are expecting upside follow through. Watch the Energy sector. Rising Crude prices will likely lift the boats in that sector.
We have what looks like a triple bottom on the 200-day EMA. This bullish chart pattern also suggests higher prices for USO.
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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