Micron Technologies (MU) announced earnings today, and they were not well received -- price declined by -7.12%. When we look at the chart, we see that from last week's all-time high to today's low is -17.5%, so there is something else going on. Maybe it has to do with the danger raised by a parabolic advance.
On the weekly chart the parabolic is quite pronounced, and, as we always say, parabolic advances beg for correction.
Looking at the Semiconductor industry group, it is apparent that there are a lot of chip makers with painfully steep price advances. Investors may be ready to rotate out of this overbought industry group.
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
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 mischaracterized the PMO yesterday. It isn't actually rising, it has stagnated and has been holding the same reading for three days now. So we don't actually have positive momentum right now despite three rally days.
Mega-caps continue to push the market higher as displayed by the relative strength line to equal-weight RSP which is rising. The VIX is getting overbought on our inverted scale again.
Here is the latest recording from 6/24:
S&P 500 New 52-Week Highs/Lows: New Highs again contracted on a market rally setting up a negative divergence with price. Big news is that the High-Low Differential has topped and is about to compromise its rising trend.
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.
Another rally day and the Swenlin Trading Oscillators (STOs) continued lower. Participation did expand, but very slightly and not enough to push indicators past our bullish 50% threshold.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
Both the ITBM and ITVM are moving lower still with the ITBM in negative territory. We note negative divergences on both and although it isn't annotated, we also have a negative divergence on %PMO 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 BEARISH in the short term.
The market bias is BULLISH in the intermediate term.
The market bias is BEARISH in the long term.
We still have %Stocks > 20/50EMAs reading below our 50% bullish threshold so the ST Bias is BEARISH. The Silver Cross Index is still rising, but that will be difficult to maintain given lower percentages of stocks above their 20/50-day EMAs. It is above its moving average so we have to read the IT Bias as BULLISH for the moment. The Golden Cross Index is at a good level, but it is below its moving average so the LT Bias is BEARISH.
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: Yet another day of rally for the market and most indicators did not improve. We did see a very slight expansion in participation, but it is still falling short of our bullish 50% thresholds. The STOs continue to decline in spite of the rally which suggests there is gravity that could pull the index lower. Additionally, the High-Low Differential topped and the PMO has stalled. The market is due for at least a pullback, but it is recalcitrant. We have to wonder how long the index can rise given weak internals and negative divergences. We have to advise caution as the broad market isn't stepping up yet. Stops should be placed and adhered to. The market remains in a rising trend so it is likely too early for hedges.
Erin is 45% long, 0% short.
CALENDAR
Friday: 8:30 am PCE Index
10:00 am Consumer Sentiment
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BITCOIN
Bitcoin is attempting to reverse the decline with a bounce off the 200-day EMA. Stochastics have started to rise so this trading range could hold up awhile longer.
BITCOIN ETFs
INTEREST RATES
Yields were down on the day after pushing out through consolidation zones in the very short term. Declining trends are intact so for now we won't get bullish on yields.
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 out of the bullish falling wedge, $TNX pulled back today toward the 200-day EMA. The PMO is already hesitating, but Stochastics are still on the rise. This is a good place for a reversal. The market will be watching PCE reports closely tomorrow to determine a read on inflation. A hot print will likely get rates rising again. For now we will stand cautiously bullish.
BONDS (TLT)
IT Trend Model: SELL as of 3/20/2024
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: TLT managed a rally as the 20-year yield pulled back. Yields are acting a bit bullish, but TLT still shows positive indicators. We expect that price will continue to consolidate sideways as yields find their feet.
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 fell but it did form a bullish hollow red candlestick that implies we will see a rally tomorrow. The indicators are solid so we expect more rally ahead.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold was given an opportunity to rise on a falling Dollar and it took advantage in a big way. We had been seeing underperformance against the Dollar but today it showed surprising strength. Indicators are very neutral and aren't revealing much. The large double top is still in play which throws a bearish bias on the chart. We still see the Dollar as positive, but if Gold can hold onto its relative strength it could continue to meander sideways or even improve.
Gold and the Dollar aren't that closely correlated for now so they could rise or fall in concert.
GOLD MINERS (GDX): Gold Miners managed a rally today on rising Gold prices and a market rally. The declining trend is about to be compromised, but we still don't think this group will hold up in the intermediate term. The PMO is flat and unresponsive so there isn't much to build on here.
CRUDE OIL (USO)
IT Trend Model: BUY as of 6/21/2024
LT Trend Model: BUY as of 2/27/2024
USO Daily Chart: USO broke out of the bullish flag formation today and appears ready to head higher again. The PMO accelerated higher today and Stochastics are camped out above 80 so there is internal strength. We should see more rally on USO which should begin moving the Energy sector in the right direction.
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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Bear Market Rulesctor Gets Dark Cross NEUTRAL Signak=l