Today the Real Estate Sector ETF (XLRE) 20-day EMA crossed up through the 50-day EMA (Silver Cross), generating an IT Trend Model BUY Signal. This event is within the context of a six-month trading range. Price needs to exceed the May top before a rising trend is established. Otherwise, it still appears that XLRE could be topping.
Long-term it appears that XLRE topped in 2022. The weekly PMO is flat and unresponsive right now which also highlights XLRE's vulnerability.
Also today the Regional Banking ETF (KRE) 20-day EMA crossed down through the 50-day EMA above the 200-day EMA, generating an IT Trend Model NEUTRAL Signal. This is the seventh signal change in about five months, during which time KRE has been in a narrow trading range. There is no evidence that the sideways movement has been resolved.
KRE is currently consolidating within the context of a rising trend. We do note that the weekly PMO has given us a recent Crossover SELL Signal.
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 broke out to a new all-time high today as mega-caps held sway. This did get the PMO to turn back up before a Crossover SELL Signal. This is a PMO "surge" above the signal line, above the zero line. The OBV broke to a new high, confirming this breakout.
The VIX is back above its moving average on our inverted scale and Stochastics are almost above 80. This is a sign of internal price strength.
Here is the latest recording from 6/3:
S&P 500 New 52-Week Highs/Lows: New Highs did expand, but not to the degree we would've liked on a strong rally. We also saw some expansion in New Lows. The High-Low Differential has not yet bottomed.
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) hit positive territory today suggesting we will see even more upside. Participation did not expand past our 50% bullish threshold. We would've expected to see more expansion. This likely speaks to this rally being more centered on mega-caps.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
The ITVM turned back up today, but we still don't have confirmation from the ITBM which continued to fall. Still, this helps confirm already rising short-term indicators. More PMO BUY Signals came in today. We now have one-third of the index holding PMO Crossover 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 NEUTRAL in the short term.
The market bias is BEARISH in the intermediate and long terms.
%Stocks > 50EMA are back above our bullish 50% threshold, but %Stocks > 20EMA are still below so we are listing the short term as NEUTRAL. The Silver and Golden Cross Indexes are rising again, but remain below their moving averages so the IT and LT Biases are still 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: The market hit new all-time highs on a very strong rally. It was primarily led by mega-caps as participation didn't really expand. We need the broader market to begin participating to lengthen this rally. STOs are rising along with the ITVM and we even saw the PMO surge above the signal line. We expect more upside will follow, but we do know that the jobs reports will be released tomorrow and Friday. The rally seems sturdy enough to handle mediocre economic data. If they read positive, the market will likely race higher.
Erin is 50% long, 5% short.
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BITCOIN
Bitcoin is about to break out of its current declining trendline drawn from the March high. The RSI is positive and the PMO is now rising again. Stochastics are bullishly rising toward 80. It is primed for a breakout, but we know overhead resistance has been tough to break from. We wouldn't be surprised if we saw some more sideways movement first.
BITCOIN ETFs
INTEREST RATES
Long-term yields have broken rising trends and appear ready to head down to support. We see this support level as extremely strong likely to hold for some time.
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 continued to slide lower after breaking the rising bottoms trendline. The 200-day EMA is now here for support, but given the negative RSI, diving PMO and Stochastics, we expect the decline to continue.
BONDS (TLT)
IT Trend Model: SELL as of 3/20/2024
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: Yesterday's comments still apply:
"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 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 continues to cling to support, but given the declining trend channel and Stochastics reading below 20, we are looking for a breakdown. The PMO is still falling.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Despite a rising Dollar, Gold did manage a rally. It is still traveling in a tight trading range, but the double top is still in effect. It won't be busted until we get Gold back to a new all-time high. Stochastics have tipped upward so a rally isn't out of the question, but with the PMO still pointed lower so we will look for more sideways movement for now.
The correlation is easing between Gold and the Dollar as it moves toward zero so both Gold and the Dollar so they could go down in unison. Something to be aware of.
GOLD MINERS (GDX): Gold Miners rallied today but it did nothing to disrupt the steep declining trend. The PMO continues lower and we didn't see any positive movement in participation readings. We also note that the Silver Cross Index has dropped below its signal line for a "Bearish Shift" in the intermediate term. We still see this group as vulnerable.
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 Oil paused the decline with a nice rally off support. We still see weakness in all of the indicators but today's rally did soften their bearishness. There is still a bearish bias on the chart so we aren't ready to get bullish yet.
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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