Today the Energy Sector ETF (XLE) 20-day EMA crossed down through the 50-day EMA above the 200-day EMA, generating an IT Trend Model NEUTRAL Signal. We have been monitoring the large flag formation, but the flag is beginning to get too long. With the Crude Oil trade going south, we believe this sector will continue to struggle. Note the PMO top beneath the signal line and poor participation. The Silver Cross Index continues to trend lower.
XLE is still in a very long-term up trend. It is not the most organized trend we have ever seen, but it is persistent. This week's drop is taking price below strong support.
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 market spent much of the day lower, but it did manage to eke out a gain to finish the day. We have a very short-term rising trend that could hold up a bit longer. The PMO continued lower and nearly saw a Crossover SELL Signal.
Stochastics have turned up which does bode well for the short term.
Here is the latest recording from 6/3:
S&P 500 New 52-Week Highs/Lows: New Highs pared back on the rally. The big problem is the declining High-Low Differential.
Climax* Analysis: There were no climax readings today. While there has not been any follow through from Friday's upside initiation climax, the last two days of churn, digesting Friday's surge, are also acceptable post climax actions. There could still be more price advance ahead.
*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.
Swenlin Trading Oscillators (STOs) continued to rise, but we do note losses in %Stocks > 20EMA and %PMOs Rising.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
The ITBM and ITVM are making their way lower, but still are in positive territory. Ultimately we do think that these will move into negative territory before reversing higher. Notice that %PMO Xover BUY Signals has topped beneath the signal line.
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.
Given %Stocks > 20/50EMAs are reading below our 50% bullish threshold, we have moved the ST Bias to BEARISH. The Silver Cross Index continues to lose ground. It is below its signal line so the IT Bias is also BEARISH. The Golden Cross Index has turned back up, but we think this won't last given we have fewer stocks above their 200-day EMA. It is below its signal line 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: Interest rates have begun to fall and this could be lifting the market, as well as mega-cap stocks that seem to be the trading vehicles of choice. We haven't gotten as much out of Friday's upside initiation climax so we do see the possibility of higher prices holding up this very short-term rising trend. STOs are rising which also looks good for the short term. Intermediate term there are still problems. We have a nearing PMO Crossover SELL Signal and all IT indicators are moving lower. We see some upside potential going into the jobs reports on Thursday and Friday.
Erin is 30% long, 5% short.
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BITCOIN
Yesterday's comments still apply:
"Bitcoin began to rally this weekend and thus turned the PMO back up. Stochastics have also ticked upward. While this is bullish, we still think Bitcoin is in for more sideways trading as it prepares for a possible upside breakout from this wide trading range."
BITCOIN ETFs
INTEREST RATES
Yields have mostly lost rising trends in the longer term and we think they will remain soft.
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 lost its rising trend today and based on the poor indicators, we are expecting them to continue lower. Support is currently being held at the prior low, but we don't think it will hold up.
BONDS (TLT)
IT Trend Model: SELL as of 3/20/2024
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: Bonds are enjoying a new found rally on the weakening 20-year yield. The declining trend was broken and price is now above the 200-day EMA. The RSI is positive and not overbought. The PMO is rising above the zero line and Stochastics are nearly above 80. We should look for higher prices.
This is a pretty impressive breakout on the 1-year chart.
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 now traveling in a declining trend channel. Price is so far holding above horizontal support, but given the negative RSI and falling PMO (and Stochastics), we should look for a breakdown and a continuation of the declining trend channel.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold was down on the day, but is holding above the 50-day EMA. The bearish double top is preventing us from getting bullish on the Dollar. The falling PMO is also a good reason to be bearish. However, the Dollar does look weak and that could help Gold hold it together.
The correlation is easing between Gold and the Dollar as it moves toward zero so both Gold and the Dollar could go down in unison.
GOLD MINERS (GDX): We noted yesterday that Gold Miners looked ready to break down. They did with gusto today. This decimated participation of stocks above their 20/50-day EMAs. Stochastics are now below 20, flashing weakness and the PMO is in decline. It is time for this group to give back more profits.
CRUDE OIL (USO)
IT Trend Model: NEUTRAL as of 5/20/2024
LT Trend Model: BUY as of 2/27/2024
USO Daily Chart: The Crude Oil trade has gone completely south. We see nothing on the chart to suggest a reversal is at hand. We would look for price to continue down toward support at 66.00.
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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