Regarding our unfavorable comments on Apple yesterday: Never mind. Apparently it took a day for investors to marinate over the AI news. Apple is now very overbought, but this breakout from the longer-term trading range is bullish. The PMO which had turned down yesterday surged higher with price. We do note that there is now a negative divergence with the OBV that does throw a little shade Apple's way.
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 stayed above support and did close at a new all-time high. The PMO is rising and the RSI is positive and not yet overbought so we could see price inch a bit higher.
Stochastics are above 80 indicating internal price strength. The ever increasing relative strength line between the SPY and RSP is rising strongly. This is evidence that mega-caps are holding the index together.
Here is the latest recording from 6/10:
S&P 500 New 52-Week Highs/Lows: The High-Low Differential turned up today, but we are still not seeing the amount of New Highs we should given we are at all-time highs. The broad market is not participating.
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.
The Swenlin Trading Oscillator for Breadth (STO-B) continued lower in negative territory. The Swenlin Trading Oscillator for Volume (STO-V) also moved down, but hasn't quite reached negative territory yet. The direction is more important than the location for now. Notice that participation and %PMOs Rising both shrunk on today's rally. Again these are incredibly low readings given we are at an all-time high. Hence the strong negative divergences.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
The ITBM hit negative territory today and the ITVM dropped. We note that %PMO Xover BUY Signals turned back down and dropped beneath the signal line. Negative divergences remain in play.
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 now have only 50% of stocks holding a Silver Cross. That means that half of the index is likely experiencing a correction. We have less than 50% above the 20/50-day EMAs so we have a ST Bias that is BEARISH. The Silver Cross Index is in decline and will continue to decline if we don't see more stocks above their 50-day EMA. It is below its signal line so the IT Bias is BEARISH. The Golden Cross Index is also falling and given less stocks are above their 200-day EMAs, it should continue to fall toward that percentage of 63%. It is below its signal line so the LT Bias is also BEARISH. Participation should not be thinning as we keep reaching all-time highs.
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: As we suspected, the market didn't make any big moves today. Investors are holding their breath in anticipation of the CPI reports that will be released tomorrow as well as the Fed announcement. Volatility could be injected particularly if the CPI reports come in hot. Everyone is certain the Fed will keep rates the same so we think some of that is already baked in. Participation is incredibly thin given we are at all-time highs but the mega-caps continue to provide the glue. The PMO and Stochastics are positive and we did see the High-Low Differential turn back up so we wouldn't be surprised if the market managed to advance further. We would still advise caution particularly given tomorrow's inflation data.
Erin is 45% long, 0% short.
Calendar:
Wednesday - Fed interest rate announcement and CPI reports released.
Thursday - Initial Jobless Claims and PPI
Friday - Consumer Sentiment
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BITCOIN
The rising trend was broken with Bitcoin's fall today. It is still struggling with all-time highs. The indicators have gone south very quickly. The RSI is now negative and the PMO on a Crossover SELL Signal headed lower. Stochastics which reversed yesterday are back in decline. We may need another trip toward the bottom of this trading range before we get an upside breakout.
BITCOIN ETFs
INTEREST RATES
Longer-term yields all declined today, but we still see a possible upside reversal from here given the Fed won't be cutting rates anytime soon. However, declining trends are all in effect currently.
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 topped before testing the top of the bullish falling wedge pattern. Stochastics were unperturbed and the PMO is still angling upward so we do expect it to begin rising again shortly.
BONDS (TLT)
IT Trend Model: SELL as of 3/20/2024
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: Bonds reversed on support and along the declining tops trendline. The RSI is positive and the PMO is rising, but Stochastics suggest we shouldn't get too bullish 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 formed another bearish filled black candlestick. Yesterday's wasn't a problem and we have a feeling this one won't be either. The RSI is positive and the PMO just saw a new Crossover BUY Signal. Stochastics have popped above 80. We are still bullish on the Dollar.
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: In spite of a rising Dollar, Gold managed a rally anyway. It is holding above support, but given the bearish double top we are still expecting to see Gold break down. Indicators are in agreement.
Interestingly we are seeing discounts on PHYS fading which means investors aren't quite so bearish on Gold. They are not exceedingly low so it isn't likely time to look for an upside reversal on sentiment. We'll be watching for discounts to get down to where they were back in November. Then we can look for a lasting rally.
GOLD MINERS (GDX): The Silver Cross Index is now starting to see damage as it moves beneath its signal line offering up a bearish bias in the intermediate term. We do note the reading is incredibly high so there is still some strength out there, but given the decimation of participation under the hood, more damage is likely ahead. We would expect to see support at 32.00 tested.
CRUDE OIL (USO)
IT Trend Model: NEUTRAL as of 5/20/2024
LT Trend Model: BUY as of 2/27/2024
USO Daily Chart: Yesterday's comments still apply:
"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."
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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