Today's action was similar to Friday's. The market tried to continue Friday's rally, but failed early in the day. Then prices dropped steadily into midday, where buyers moved in, pushing prices higher. There was a surge in the last five minutes, but volume was nowhere near what we saw Friday. The market kept a small gain, but it is not clear what will happen next. The 5-minute PMO saw a steep move higher to finish the day so we could see more follow through tomorrow morning.
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: While we did see a surge to finish the day, it wasn't enough to push price past the open so we ended up with a bearish filled black candlestick. For the record, the PMO is still in decline.
We see some internal weakness as Stochastics are in negative territory and the VIX is below its moving average on the inverted scale.
Here is the latest recording from 6/3:
S&P 500 New 52-Week Highs/Lows: New Highs saw a nice expansion on today's rally but we still see the High-Low Differential continuing to decline.
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 DOWN and the condition is NEUTRAL.
Swenlin Trading Oscillators (STOs) did manage to move up slightly--nothing like we saw on Friday's big swing upward. While we did rally, participation thinned and we saw fewer rising PMOs.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
The ITBM and ITVM continued to make their way lower. We aren't getting much movement on %PMO Xover BUY Signals but at least they aren't in 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 NEUTRAL in the short term.
The market bias is BEARISH in the intermediate and long terms.
We opted to change the short-term bias is "Neutral" given they are reading very close to our bullish 50% threshold. The Silver Cross Index continues to make its way lower, but it is getting close to a stopping point as the SCI reading is getting very close to %Stocks > 50-day EMA. However, if a decline gets going, that floor could move much lower. 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: We saw another buying spree going into the closing minutes of trading, but it wasn't accompanied by large volume so we shouldn't read too much into it. Given we didn't see very good follow through on Friday's upside initiation climax, we are less bullish than we were on Friday. We sense that the market will be experiencing more chop and churn particularly with jobs reports being delivered later this week. The short-term bias has moved into "neutral" which also speaks to indecision. The market is precarious with internals mixed and momentum still headed lower. Prepare for choppy trading to continue.
Erin is 30% long, 5% short.
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BITCOIN
Bitcoin began to rally this weekend and thus turned the PMO back up. Stochastics have also ticked upward. While this is bullish, we still think Bitcoin is in for more sideways trading as it prepares for a possible upside breakout from this wide trading range.
BITCOIN ETFs
INTEREST RATES
Yields have begun to drop in the short term and are already beginning to compromise rising trends. Lower rates in general are good for the market so some relief may be on the way for Bond funds.
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
The rising trend is still holding up on $TNX, but it is about to be tested. The decline of the past three days has caused the PMO to top and the RSI to move into negative territory. Stochastics are dropping vertically. The rising trend is highly vulnerable.
BONDS (TLT)
IT Trend Model: SELL as of 3/20/2024
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: We hadn't expected a surge in Bonds, but with the 20-year yield falling preciptously it has opened the door for TLT. The intermediate-term declining trend was broken suggesting higher prices. The 200-day EMA is arriving as near-term overhead resistance but given the reversal of the PMO and Stochastics, we see more upside ahead.
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 broke its rising trend, but ultimately it is holding above support. That level is vulnerable given today's very bearish candlestick. Price closed beneath the 50-day EMA. The 50-day EMA has also held price together. Indicators are leaning bearish so we will too.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold halted its decline and has been happy to move sideways since then as it holds above support. We do have a bearish double top to contend with and the PMO is still headed lower suggesting to us that we'll see a breakdown here.
At the same time discounts are beginning to pare back suggesting investors aren't as bearish on Gold. The correlation with the Dollar is now negative so a weak Dollar as it was today will help Gold along. The problem is that both look ready to break down.
GOLD MINERS (GDX): Gold Miners look toppy, but a rally today in Gold helped to push the group higher. Participation is actually pretty good, but we are still seeing a soft reading on %Stocks > 20-day EMA. The PMO is also in decline. The rising trend is holding but we feel it is very vulnerable to a breakdown.
CRUDE OIL (USO)
IT Trend Model: NEUTRAL as of 5/20/2024
LT Trend Model: BUY as of 2/27/2024
USO Daily Chart: In spite of production cuts being left the same by OPEC+, Crude Oil tumbled today breaking down below strong support at the prior lows and 200-day EMA. We could see a snapback tomorrow given the deep decline, but ultimately the PMO has tipped over and Stochastics are falling so we expect the declining trend to hold.
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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