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We were wondering if there would be any stunning new products or developments announced at the Apple Developers Conference. Nothing earth shattering was forthcoming, so disappointment was reflected in AAPL price movement today. We think the main problem is that AAPL had nothing big to offer on the subject of AI. On the one-year chart we can see a broad triple top within a one-year trading range.
On the weekly chart there is a very long-term rising wedge formation, which is more likely to break down than up.
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 managed a positive close leaving it just above prior all-time highs. The PMO is still on the rise after narrowly missing a Crossover SELL Signal.
We have a bearish rising wedge formation on the 1-year chart that implies we will see a breakdown. Stochastics topped in a possible warning, but ultimately they are above 80 and showing strength. The negative OBV divergence is also setting us up for a decline. Mega-caps are clearly in charge when you review the rising relative strength of the SPY versus equal-weight RSP.
Here is the latest recording from 6/10:
S&P 500 New 52-Week Highs/Lows: New Highs are rather paltry considering how close we are at all-time highs. The High-Low Differential is in decline, but did decelerate slightly. Nothing to get excited about.
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) both continued their decline today. So far the STO-V has avoided negative territory, but that is likely to change soon if internals don't improve. Participation has stagnated, again another big issue given we are at all-time highs. Less than half of the index hold rising momentum.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
The ITBM and ITVM are inching their way lower but have so far avoided negative territory. %PMO Xover BUY Signals had a positive crossover their signal line today, but given only 1% more hold rising PMOs, we should see it hold steady or even turn lower.
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.
Considering we are at all-time highs, participation should be more robust. The short-term bias is still negative given we have less than 50% of stocks above their 20/50-day EMAs. The Silver Cross Index is reading extremely low based on price elevation. Both the Silver Cross Index and Golden Cross Index are below their signal lines so the IT and 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: We don't expect any significant movement in the market until Wednesday when the Fed speaks and market indecision may continue until Thursday when the PPI report is released. The market internals are not showing improvement despite the market making new all-time highs. Breadth is thin and negative divergences are being displayed on nearly every indicator we follow. Interestingly, this doesn't seem to be affecting the market's direction. This is primarily due to cap-weighting. Mega-caps are leading the indexes higher while beneath the surface the broader market is struggling. The market is overdue for a pullback but a quick review of the Magnificent Seven shows mostly bullish chart configurations so we could see the index continue to inch higher despite problems under the hood. Keep your stops in play.
Erin is 45% long, 0% short.
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BITCOIN
Bitcoin is struggling with overhead resistance right now. The PMO is flat along with price and is not at all enlightening. Stochastics do look somewhat promising as they have reversed higher in positive territory so we would look for Bitcoin to continue to knock on the door at all-time highs.
BITCOIN ETFs
INTEREST RATES
Rates were mixed. Longer-term yields saw an uptick while shorter-term yields saw a downward tick. The Fed will likely keep rates the same this week which could lead to more upside near-term.
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 closed higher and should see some follow through given the PMO has turned up and Stochastics are rising again. We do see a bullish falling wedge on the chart as well that implies an upside breakout ahead.
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 losing ground now that interest rates are back on the rise. TLT has fallen fast and is now sitting on support. The PMO has topped along with Stochastics and the RSI is nearing negative territory. These are all signs of weakness.
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 rallied today but did form a bearish filled black candlestick that implies a down day tomorrow. The rally looks solid with the PMO nearing a Crossover BUY Signal. Stochastics are also rising strongly so while tomorrow could see a decline, overall the Dollar is strengthening.
Overhead resistance is nearing, but bullish indicators suggest we will see a breakout.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: The Dollar was up but Gold was up more. The inverse correlation did not hold true today as Gold saw rising relative strength. We are still monitoring the bearish double top and given the Dollar looks healthy, Gold should see downside pressure. The PMO is in decline and so are Stochastics. Support is holding now, but it is vulnerable.
GOLD MINERS (GDX): Gold Miners took some of Friday's sting away with a rally, but the declining trend is in full force. A rising Dollar won't be helpful. Participation based on the Silver Cross Index is strong, but we can see %Stocks > 20/50-day EMAs has tumbled. This puts the Silver Cross Index on notice. Price is likely to test the next level of support.
CRUDE OIL (USO)
IT Trend Model: NEUTRAL as of 5/20/2024
LT Trend Model: BUY as of 2/27/2024
USO Daily Chart: Crude is about to test the intermediate-term declining tops trendline. The PMO is slowly turning back up and Stochastics are rising again. With a likely uptick in demand arriving with summer and continued production cuts by OPEC+, we could see USO continue to the upside.
The rally was impressive today. This thrust higher does imply follow through, but Crude can be prickly.
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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