This is a three-year chart of the S&P 500 Advance-Decline Lines. The S&P 500 is an homogeneous index of similar (large-cap) stocks, and the A-D Lines usually confirm what the price index is doing, but they aren't now. Ignore the three years and look at the thumbnail chart. Notice how the price index is going up vertically, but the A-D Lines are not following suit. The best we can say is that the A-D Volume Line is only going sideways. But the worst is that the A-D Line is trending downward. We have to wonder how much longer this can continue. We think the answer, if you are short, is, "Longer than you can stay solvent."
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: The rally marches on. Total volume was pretty good considering that Wednesday is a holiday. We had thought we might see holiday trading volume. The PMO continues to move higher.
Volatility has been low, hence the shrinking Bollinger Bands. Stochastics remain above 80 signaling internal price strength. The relative strength line has really taken off as mega-caps have the index in a stranglehold.
Here is the latest recording from June 17th:
S&P 500 New 52-Week Highs/Lows: New High popped, but the High-Low Differential has topped. We still think we don't have enough New Highs given we are at all-time highs.
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.
The Swenlin Trading Oscillators (STOs) were mixed today with the STO-B headed back up but the STO-V still headed lower. We did see a very slight expansion in stocks above their 20-day EMA but it remains below our bullish 50% threshold. Less than half of the index have rising PMOs.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
Both the ITBM and ITVM are moving lower in spite of the incredible rising trend in the market. Only 38% of the index have PMO BUY Signals. Another crazy number given the rally.
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.
Participation remains very thin, particularly given the march to new all-time highs. Given the small amount of stocks above their 20/50-day EMAs, we have to list the ST Bias as BEARISH. Less than half of the index hold Silver Crosses based on the Silver Cross Index. This means that over half of the index are likely experiencing corrections. It is below its signal line so the IT Bias is BEARISH. We have a sturdier foundation based on the value of the Golden Cross Index, but it is in decline and is below its signal line so the LT Bias remains 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: Cap-weighting of the indexes has really skewed the trend of the market. The broad market is clearly not participating in this rally to new all-time highs, but the index marches ever higher. Market conditions are weak, but that hasn't affected the trend. The PMO is rising and Stochastics are camped out above 80. The STO-B did turn back up today so we could see more follow through on today's rally to all-time highs. Erin has been limiting her exposure based on poor internals and prefers not to get extended when stock selection is limited.
Erin is 45% long, 0% short.
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BITCOIN
Bitcoin has found near-term support, but the PMO is declining toward the zero line and the RSI is in negative territory. Stochastics did tip upward, but we suspect we will see a break down from this level. Strong support is near at the bottom of the trading range.
BITCOIN ETFs
INTEREST RATES
Yields rose today but remain in declining trends. We believe they have lower to go.
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
$TNX popped higher today, putting it back within the bullish falling wedge. The PMO is in decline so we see a bearish bias to the chart. An advance isn't out of the question. It could move higher and not compromise the declining trend, but overall yields do look weak so we are looking for more decline.
BONDS (TLT)
IT Trend Model: SELL as of 3/20/2024
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: The 20-year yield rose today and that put downside pressure on TLT. It formed a bullish hollow red candlestick. The declining trend is intact on the 20-year yield and that tells us to expect more rally out of TLT. The indicators are in agreement.
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 broke out Friday, but today fell back below prior resistance. The indicators have not been compromised. In fact, Stochastics rose above 80 today. We are expecting the Dollar to continue its move higher.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold has been holding its own and remains above support. The bearish double top still throws shade on the chart suggesting that this level of support (the confirmation line of the pattern) will be broken. The PMO continues lower and the RSI is below 50. Stochastics have topped in negative territory. We should expect a breakdown here.
GOLD MINERS (GDX): This group is very weak and is getting weaker. The Silver Cross Index has begun to dive lower as participation of stocks above their 20/50-day EMAs has sunk. The PMO is diving lower and even Stochastics have topped in negative territory. Support is arriving, but we doubt it will hold.
CRUDE OIL (USO)
IT Trend Model: NEUTRAL as of 5/20/2024
LT Trend Model: BUY as of 2/27/2024
USO Daily Chart: USO has now reached overhead resistance. We like this rally that broke the declining trend and we expect to see follow through given the rising PMO. Stochastics just popped above 80, also confirming the rally we saw today.
In the bigger picture, we do see a large double top formation, but a move above those tops would bust this bearish pattern. That isn't out of the question.
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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