If you're wondering where the end-of-day rally came from, you are not alone. We found no news that would account for it, but when we look at the chart, we think it was probably short-covering. We will theorize that the shorts were piling on early in the day, then the market began to recover around 12:30 PM ET. The market was back to even at about 4:00 PM ET, then in the last 20 minutes the shorts gave it up and started covering. Another thing, the Mag 7 was under pressure early on in the day and most of the week, and we propose that the "buy-the-dippers" went to work.
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: The market spent most of the morning in negative territory which is why we see a long 'tail' on today's bullish hammer candlestick. The PMO decelerated but is still in decline.
The VIX punctured the lower Bollinger Band yesterday implying that we could see an upside reversal. Our sense was that we would see more punctures. Not so. It reversed and is now reading above its moving average on the inverted scale. While the VIX may be showing bullish behavior, Stochastics are still in decline and have reached negative territory.
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SPY Weekly Chart: Today's comeback wasn't enough to prevent a weekly decline. The weekly PMO whipsawed back into a Crossover SELL Signal.
SPY Monthly Chart: The SPY finished up over 5% this month. We have a parabolic rise in price. As we often say, parabolic patterns beg for a correction. The market seems safe in the long term for now given the rising monthly PMO.
New 52-Week Highs/Lows: New Highs expanded to lend some credence to this rally. It didn't upend the High-Low Differential, it remains in decline.
Climax Analysis: There were strong, unanimous climax readings on the four relevant indicators today, and SPX Volume was humongous, giving us an upside initiation climax with strong conviction behind it. We will be expecting upside follow through next week.
*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 NEUTRAL.
Maybe we should've taken yesterday's upside reversal of the Swenlin Trading Oscillators (STOs) more seriously, but admittedly IT indicators didn't confirm their reversal yesterday. Now we look on them with new light. Part of the reason is the very strong reaction in participation and rising PMOs. Both indicators are now reading above our 50% bullish threshold.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
Both the ITBM and ITVM barely fell so while they technically didn't confirm rising STOs, they aren't really that negative. %PMO Xover BUY Signals ticked upward as we have 52% of stocks with rising PMOs now.
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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.
The strongest IT Bias goes to Utilities (XLU), but we do note that they are losing percentage points on both the Silver Cross Index (SCI) and Golden Cross Index (GCI). Readings still very robust.
Energy (XLE) holds the weakest IT Bias. It continues to see the SCI bleed off, but it is holding its ground on the GCI.
This table is sorted by SCI values. This gives a clear picture of strongest to weakest index/sector in terms of intermediate-term participation.
Gold Miners (GDX) hold the highest SCI percentage. While they have shown quite a bit of strength, we are starting to think they have about finished their rally. The SCI and GCI suggest they are somewhat safe for now.
This table is sorted by GCI values. This gives a clear picture of strongest to weakest index/sector in terms of long-term participation.
XLE holds the highest GCI value. It had a strong foundation going into its latest decline. Now it is under pressure because the SCI is so weak. This is why we have such a negative IT Bias.
Biotechnology (IBB) holds the weakest GCI value and it is getting worse. It has a very low SCI value as well. Probably best to avoid this industry group.
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 term.
The market bias is BEARISH in the intermediate and long terms.
We had to switch the short-term bias back to bullish given that percentages of stocks above key moving averages are all above our 50% bullish threshold. Today's rally nearly saw the Silver Cross Index (SCI) and Golden Cross Index (GCI) rise. They remain below their moving averages so the bias must remain BEARISH in the intermediate and long terms. We still note those negative divergences that led into the recent declining trend.
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's significant rally to finish off trading changed the face of participation. Participation had been waning pushing us into a short-term bearish bias. Today those percentages moved above 50% bullish thresholds. We have rising STOs. We saw a very strong upside initiation climax. This speaks well for the short term going into next week, but we wouldn't read much past that. We are still in a period of unfavorable seasonality. We had to pivot in the short term and we will in the intermediate term if warranted, but given the ITBM and ITVM are still declining, we don't want to get that bullish. Hedges will likely be vulnerable next week.
Erin is 30% long, 5% short.
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BITCOIN
Bitcoin Daily Chart: Bitcoin is still bouncing around sideways but holding above its 50-day EMA and still holding onto its short-term rising trend. However, the PMO is declining toward a SELL signal and Stochastics are diving lower. We would look for a breakdown of the rising trend.
Bitcoin Weekly Chart: Bitcoin corrected its parabolic rise but is starting another vertical rally. The weekly PMO triggered a Crossover SELL Signal so this steep rising trend is vulnerable.
BITCOIN ETFs
Today:
This Week:
INTEREST RATES
Interest rates moved lower on the day but in most cases are still holding short-term rising trends. We think this decline is temporary and rates will begin to climb again soon.
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
We've got a new declining trend on $TNX, but it is still holding its rising trend in the intermediate term. The PMO is now crossover above its signal line, but Stochastics have dipped lower. We suspect we'll see some sideways movement or indecision given the two indicators are reading against each other.
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 6.94 to 7.03.
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: TLT is making a comeback but we don't expect this to last. More than likely the declining trend in the intermediate term will hold up. Stochastics did tip upward, but the PMO doesn't inspire confidence right now.
TLT Weekly Chart: We do see a bullish falling wedge on the weekly chart, but price looks ready to test the bottom of the pattern. The weekly PMO turning up so it isn't out of the realm of possibility that we could see another test of the top of the pattern.
TLT Monthly Chart: The monthly PMO is very close to a Crossover BUY Signal, but we would caution getting too bullish. The monthly PMO is well beneath the zero line and price is vulnerable to a breakdown based on the negative RSI.
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 at a decision point. Will we get the breakout or will we see the intermediate-term rising bottoms trendline compromised? Indicators are very little help, but given rising Stochastics, we vote for a breakout.
Even should we see a decline, support looks fairly sturdy at 28.50.
UUP Weekly Chart: There is a decidedly bearish bias on the weekly chart. We have a bearish rising wedge and a topping weekly PMO. While we may see some short-term strength, intermediate term is suggesting a weak Dollar soon.
UUP Monthly Chart: The monthly chart is bullish. We have a strong rising trend and a monthly PMO that is advancing higher.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Today saw a bearish engulfing candlestick on Gold. It looks ready to break down. The PMO is in decline, the RSI is negative and Stochastics have dipped below 20. We can also see that it is losing relative strength against the Dollar overall. The double top formation also suggests we will see this support level broken.
Discounts show bearish sentiment, but not to the degree we need to see to look for a reversal based on sentiment.
GLD Weekly Chart: We wrote about Silver having a textbook double top. The Gold weekly chart also shows a textbook double top. The weekly PMO has topped and the RSI is moving lower with price. The resolution of the pattern would put price back down to its breakout point around 195.
$GOLD Monthly Chart: The long-term picture is still bullish on the monthly chart based on the rising monthly PMO. Unfortunately we do see a parabolic price formation and those beg for correction. A drop to the breakout point and strong support would be the likely conclusion of a parabolic breakdown.
GOLD MINERS: Gold Miners look very toppy right now. You could make a case for a head and shoulders top right now. The PMO is in decline and Stochastics are tumbling lower. We still have fairly good participation with 96%+ holding a 20-day EMA above the 50-day EMA. What bothers us is the loss of the 20-day EMA by members. They are showing weakness and with Gold looking vulnerable, we think Gold Miners are too.
CRUDE OIL (USO)
IT Trend Model: NEUTRAL as of 5/20/2024
LT Trend Model: BUY as of 2/27/2024
USO Daily Chart: We have been waiting for an upside breakout on Crude Oil for some time but instead we are getting choppy sideways trading. The PMO is close to a Crossover BUY Signal, but it looks less than enthusiastic. Stochastics are dropping again and the RSI is negative. We are looking for more sideways movement given mixed indicators.
USO/$WTIC Weekly Chart: The weekly chart is looking bearish given the new weekly PMO Crossover SELL Signal. Price is still holding above the 43-week EMA, but it does look vulnerable to a drop to test the rising bottoms trendline.
WTIC Monthly Chart: The monthly PMO is still in decline and there is a long-term declining trend. Price is currently sitting atop the 2018 high which looks fairly sturdy.
Good Luck & Good Trading!
Erin Swenlin and Carl Swenlin
Technical Analysis is a windsock, not a crystal ball. --Carl Swenlin
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