Today the S&P 600 Smal-Cap ETF (IJR) 20-day EMA crossed down through the 50-day EMA (Dark Cross) above the 200-day EMA, generating an IT Trend Model NEUTRAL Signal. It appears that IJR is in a whipsaw mode, and the signal is not too convincing at this time. We are monitoring a large bearish triple top formation.
The weekly chart shows that IJR is in a long-term trading range, and, unlike the large-cap indexes, is not making all-time highs. The weekly PMO is in decline below its signal line which is also a different look from large-cap indexes.
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: A fresh all-time high was set today as the rally marched onward. The RSI is very overbought meaning price is very overbought. Not a surprise. The PMO continues to move higher suggesting follow through is likely.
Stochastics, which are already well above 80, are rising again. Mega-caps are clearly holding sway based on the relative strength line against equal-weight RSP.
Here is the latest recording from June 17th:
S&P 500 New 52-Week Highs/Lows: New High expanded to levels we haven't seen since late May. The High-Low Differential is rising again and is trending upward.
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) were both up on the day with the STO-V hitting positive territory. We saw a small expansion in participation. It is still below our 50% bullish threshold. Rising momentum is picking up within the index; we now have over 50% PMOs Rising.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
The ITBM and ITVM were mixed today with the ITVM rising and the ITBM falling. They do seem ready to move upward. %PMO Xover BUY Signals moved above 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.
We saw some positive movement in participation. We note that the Silver Cross Index is still declining, but it could halt soon given %Stocks > 50EMA are reading at about the same percentage. Still this is not a healthy level for any of these participation readings given we are at new all-time highs. Less than 50% have price above their 20/50EMAs so the ST Bias is BEARISH. Both the Silver Cross Index and Golden Cross Index are below their signal lines so the IT and LT Bias are 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: Both the STOs moved higher today and we did see an improvement in New Highs. The ITVM reversed higher today and the ITBM looks ready to. We may not have the best participation under the hood, but the PMO is rising and Stochastics are above 80. The Silver Cross Index may stall soon. We expect we will see more follow through, particularly if the broader market decides to wake up. Given the improvement on PMOs rising, we could start to see better participation. We still believe the market is vulnerable as it is entirely too overbought and ultimately participation isn't that great.
Erin is 48% long, 0% short.
Calendar:
(1) The market will be closed tomorrow, Wednesday June 19, for the Juneteenth holiday.
(2) 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.
Thursday - Initial Jobless Claims and Housing Starts
Friday - PMI Reports and Existing Home Sales
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BITCOIN
Bitcoin dipped below support but ultimately closed above it. It looks like more downside ahead for Bitcoin given the negative RSI and falling PMO.
BITCOIN ETFs
INTEREST RATES
Yields tipped over today and we suspect they will continue lower toward support.
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 has steepened its declining trend. It appears ready to lose this level of support given the declining PMO that is below the zero line. Stochastics are very weak as they are reading 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: Bond funds are enjoying quite a rally as yields have moved into declining trends. We expect this condition to persist. TLT is up against overhead resistance but given the rising PMO and Stochastics above 80, we do expect a breakout there.
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 on a short-term decline. The Dollar is stuck inside a trading range right now, but given the positive configuration of the indicators, it should break out.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Like the Dollar, Gold is in its own trading range. It is vulnerable to a breakdown though given the large double top formation. Yet price will not confirm the pattern with a breakdown below support. Stochastics are beginning to rise. Given the mixed messages between Stochastics and the PMO we would look for more sideways consolidation.
GOLD MINERS (GDX): Gold Miners rallied today but remain in a steep declining trend. We did see some improvement to participation, but we don't see it as enough to look for a new rising trend. The Silver Cross Index did stall its decline today but given participation of stocks above their 20/50EMAs is well below it, it should resume its decline momentarily.
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 broke out today as the rally is on going into the high demand summer months. We expect this to continue based on demand, but also based on the indicators. The PMO is on the rise and should get above the zero line soon. Stochastics are now above 80. All of this bodes well for Crude Oil.
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 given this strong rally.
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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