In the chart below you see a five-minute candlestick chart of NVIDIA (NVDA) with the $SPX overlapped in the dark blue line. If there was any doubt that NVDA is leading the market, this chart should convince you. It appears the market was more reactive to NVDA versus the other way around. We aren't sure what caused the big reversal today, but it certainly gave the market a rough ride. Note that the 5-minute PMO has turned down suggesting we could see the late bullish double bottom pattern busted.
Something you might want to note is that the PMO on the daily chart for NVDA turned down. Another issue is today's bearish engulfing candlestick that suggests we will see downside follow through. It isn't necessarily a sell signal, it is an attention flag that tells us to watch the chart more closely for other breakdowns.
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
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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 rose to new all-time highs, but sputtered to finish the day. It formed a bearish engulfing candlestick that does suggest we will see more downside tomorrow.
The VIX popped lower on our inverted scale as investors appear to be more nervous about the market than they have been. The PMO is still on the rise and Stochastics are above 80 so the rising trend could continue.
Here is the latest recording from June 17th:
S&P 500 New 52-Week Highs/Lows: SPX New Highs contracted today, even though the S&P 500 hit intraday all-time highs. Remember, new highs and lows are based on the highest or lowest price intraday, not the close. The High-Low Differential is starting to look toppy again.
Climax* Analysis: There were no climax readings today; however, volume expanded to 117% of the average daily volume. We interpret this to be conviction that more selling is coming.
*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) were mixed with the STO-V falling while the STO-B continued to rise. We did see a nice expansion in participation considering it was a down day. We also saw an increase in rising PMOs.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
The ITBM and ITVM switched seats today with the ITBM rising (it fell Tuesday) and the ITVM declining (it rose Tuesday). It is good to see them attempting to turn back up, but we have a feeling this is too little too late right now. We did see more PMO BUY Signals despite the decline.
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.
We could list the ST Bias as BULLISH now given percentages on %Stocks > 20/50EMAs are above our bullish threshold of 50%, but given today's mixed messages, we are going to leave it as BEARISH for now. The Silver Cross Index could begin moving higher now that it is reading lower that %Stocks > 20/50EMAs, but it remains below its signal line so the IT Bias is BEARISH. We still have a fairly healthy amount of Golden Crosses, but given the Golden Cross Index is below its signal line, the LT Bias is also 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: Today was full of mixed messages and we read that as more bearish than bullish. NVDA struggled and so did the market. It may be time for overbought conditions to be relieved. We still have the PMO rising, but the mixed STOs and ITBM/ITVM suggest we might be nearing a top. We did see some improvement under the hood as far as participation, but percentages are still very low considering we are near all-time highs. Certainly today's bearish engulfing candlestick and bearish total volume tell us to expect a decline tomorrow. Maybe this is the catalyst to lower prices or we'll see buyers buy the 'dip' (such as it is) on NVDA.
Erin is 48% long, 0% short.
Calendar:
This week is options expiration. It is an end-of-quarter expiration, so we should expect low volatility on Thursday and Friday, and very high SPX Total Volume on Friday. We note that today was rather volatile, and that SPX Total Volume was higher than usual.
Friday - PMI Reports and Existing Home Sales
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BITCOIN
We see a short-term bearish double top on Bitcoin that could portend lower prices. It is currently clinging to support, but the PMO is nearing the zero line on a Crossover SELL Signal so we suspect this level will be lost. Stochastics look particularly bearish well below 20.
BITCOIN ETFs
INTEREST RATES
Yields ticked higher today, but are nowhere close to damaging declining trends so we expect the decline will resume.
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
While we do note a bullish falling wedge in the short term, there is an overarching bearish double top that we think is likely to take the yield toward 3.8%. We'll monitor the falling wedge, but we should be prepared for more downside especially given the declining PMO and negative RSI. Stochastics have ticked up, but they remain very weak below 20.
BONDS (TLT)
IT Trend Model: SELL as of 3/20/2024
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: We saw a decline on TLT today but it formed a bullish hollow red candlestick. We also think the yield charts look bearish and that will help TLT advance. Stochastics did top but remain above 80 for now. The PMO is on the rise and the RSI is positive so we do expect more upside here.
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 and closed near a new 52-week high. We expect the Dollar to continue to advance as the world becomes more unstable and other currencies lose ground. The technicals also speak to more rally. The RSI is positive and not overbought. The PMO is rising above the zero line and Stochastics just moved back above 80. All are bullish signs.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Despite a good rally for the Dollar, Gold showed relative strength with an even bigger rally. We could be seeing the beginning of a new short-term rally for Gold (the Silver chart looks interesting too). We are still monitoring the bearish double top, but we could see a rally to those tops. The pattern would only be busted if price moved above those two tops.
The PMO turned up today and Stochastics just reached positive territory above 50. The RSI also made it to positive territory above 50. This looks pretty good for Gold right now.
GOLD MINERS (GDX): Gold Miners took advantage of the rally in Gold to make a big leap forward. The declining trend is still intact, but with Gold looking more bullish, we do see some upside potential. Participation shot up with this rally. This is a good place for a reversal given price is so close to support. The PMO is still in decline though so we are cautiously optimistic on Gold Miners.
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 is on the move and looks ready to test overhead resistance at the April top. The PMO just moved above the zero line and we already have favorable Stochastics and RSI. There is a Silver Cross of the 20/50-day EMAs on tap for tomorrow. That would give us an IT Trend Model BUY Signal.
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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