The SPY continues to advance ever higher despite low participation. If you weren't sure that the mega-caps were leading this charge on the SPY, one look at the NYSE ($NYA) and you know this is the case.
We are not seeing advances to new all-time highs on the NYSE. Instead price has continued to angle lower as smaller-cap stocks suffer. You'll note that participation of stocks above the 20/50-day EMAs are well below our bullish 50% threshold and the Silver Cross Index continues to lose ground. The Golden Cross Index has joined in. Stochastics are topping in negative territory. This looks like a recipe for lower prices not a broad market rally.
We also have a very bearish double top on the weekly chart that also spells trouble. The weekly PMO is on a new Crossover SELL Signal. Without the mega-caps to hold things together as on the SPY, the picture is bleak.
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/SPX SECTOR/INDUSTRY GROUP INDEXES
Change Today: 
Change for the Week:
CLICK HERE for Carl's annotated Market Index, Sector, and Industry Group charts.
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: Price is now overbought based on the RSI. The PMO is still rising, but we do notice a tiny declining trend on this island formation. We now have to watch out for a reverse island which would imply a gap down move.
We did get a bullish breakout from the bearish rising wedge this week which is generally read as especially bullish. Stochastics are comfortably above 80. The VIX is moving below its moving average now so we are losing a touch of internal strength.
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SPY Weekly Chart: Price broke out of a longer-term bearish rising wedge. As noted earlier a bullish conclusion to a bearish chart pattern is especially bullish. The weekly PMO continued higher as price broke to a new all-time high.
New 52-Week Highs/Lows: Bad news. The High-Low Differential topped today. We are seeing a new expansion of New Lows while New Highs continue to pare back despite hitting new all-time highs this week.
Climax Analysis: There was only one climax reading today, insufficient to declare a climax day.
*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 Oscillators (STOs) continued to flash warning signals as they continued lower, but it never resulted in price deterioration. Despite the rally to new all-time highs this week, participation continued lower. We now only have 1/3rd of the index holding rising momentum.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
The ITBM hit negative territory this week with the ITVM not far behind as they continue to decline. We saw %PMO Xover BUY Signals top today. It has moved beneath the signal line again.
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PARTICIPATION:The following tables summarize participation for the major market indexes and sectors. The 1-Week Change columns inject a dynamic aspect to the presentation. There are three groups: Major Market Indexes, Miscellaneous Industry Groups, and the 11 S&P 500 Sectors.
Utilities (XLU) hold the highest IT Bias, but that is beginning to deteriorate as the Silver Cross Index loses ground. The sector has a strong foundation as evidenced by the Golden Cross Index, but XLU has begun to deteriorate.
The lowest IT Bias goes to Energy (XLE) which has been in an intermediate-term declining trend. The Crude trade has started looking up so we should start to see some action in this depressed sector. For now, it just continues to decline as both the Silver and Golden Cross Indexes lost ground this week.
This table is sorted by SCI values. This gives a clear picture of strongest to weakest index/sector in terms of intermediate-term participation.
Semiconductors (SMH) continue to outperform and this week gained more SCI percentage points. This group is primarily responsible for the rise in the Tech sector.
Regional Banks (KRE) hold the lowest SCI reading and they lost 24 percentage points this week (the most) as the group slumps lower.
This table is sorted by GCI values. This gives a clear picture of strongest to weakest index/sector in terms of long-term participation.
Gold Miners (GDX) are on the decline as evidenced by the SCI change, but they still have a strong foundation on the GCI due to the incredible rally they had. We don't think that will last.
Biotechs (IBB) hold the lowest GCI reading. They have plenty of work to do. Results were mixed this week with the SCI gaining and the GCI losing.
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.
Considering we had a rally this week to new all-time highs, the internals are terrible. With less than 50% of stocks above the 20/50-day EMAs, we are listing the ST Bias as BEARISH. Those percentages continued to fall this week. The negative divergences are stark on all of the indicators. The Silver Cross Index dropped below our bullish 50% threshold this week. Both the Silver and Golden Cross Indexes are in decline and both are below their signal lines so we read the IT and LT Biases as 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 is advancing higher on the backs of the mega-cap stocks. If you are trying to trade within the index outside of those primary names, you're likely having a hard time given the poor participation. Price is overbought and we saw the High-Low Differential top. All of these negative divergences and falling STOs haven't resulted in a decline.The question is whether these mega-cap names can continue to push the index higher. They could, but this doesn't mean all is well. Bets on mega-caps are vulnerable based on overbought conditions, but the broad market offers little to us. One look at the NYSE and we know there are problems with the broad market. Be sure stops are in place in case we finally see the big guys break and the market decline in earnest.
Erin is 45% long, 0% short.
Calendar:
(1) The market will be closed on Wednesday June 19 for the Juneteenth holiday.
(2) Next 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.
Monday - Empire State Manufacturing Survey
Tuesday - US Retail Sales Reports
Thursday - Initial Jobless Claims and Housing Starts
Friday - PMI Reports and Existing Home Sales
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BITCOIN
Bitcoin Daily Chart: We're noticing a broad bearish double top on Bitcoin that flashes a warning. The RSI has left positive territory and the PMO is declining on a Crossover SELL Signal. Stochastics are very weak. The overall bias is bearish on Bitcoin. We could see a Dark Cross of the 20/50-day EMAs soon.
Bitcoin Weekly Chart: The double top is definitely visible on the weekly chart. The weekly PMO is in decline on a Crossover SELL Signal. We expect more downside ahead for Bitcoin.
BITCOIN ETFs
Today:
This Week:
Double tops are visible on all of the ETFs.
INTEREST RATES
With positive inflation reports this week, yields spent most the week in decline. The declining trends suggest we will continue to see them fall. That is generally good for the market, but again, look at the NYSE chart and note that lowering rates didn't help this week.
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
This week $TNX dropped beneath the bullish falling wedge. Bearish conclusions to bullish chart patterns is especially bearish. The indicators are terrible so we do expect rates will continue to drop.
MORTGAGE INTEREST RATES (30-Yr)**
**We watch the 30-Year Fixed Mortgage Interest Rate, because, for the most part, people buy homes based upon the maximum monthly payment they can afford. As rates rise, a fixed monthly payment will carry a smaller mortgage amount, which shuts many buyers out of the market, and potential sellers will experience pressure to lower prices (to no effect so far).
--
This week the 30-Year Fixed Rate changed from 6.99 to 6.95.
Here is a 50-year chart for better perspective.
BONDS (TLT)
IT Trend Model: SELL as of 3/20/2024
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: Bonds are on the rise and should continue to advance given the bearish outlook on yields. Overhead resistance is nearing, but given the rising PMO and Stochastics above 80, we should see it overcome.
The strongest level of overhead resistance doesn't arrive until price hits about 99.00.
TLT Weekly Chart: We have two bullish chart patterns on the weekly chart. First is the bullish falling wedge and second is a reverse head and shoulders. Price is about to break from the wedge as expected. The weekly PMO suggests the breakout will occur very soon.
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 this week and today broke out above resistance. It did form a filled black candlestick so we could see a decline on Monday. The PMO is rising on a Crossover BUY Signal, but admittedly Stochastics look wishy washy. Still we would look for the rally in the Dollar to continue based on today's breakout.
UUP Weekly Chart: We do have a large bearish rising wedge on the weekly chart, but we also see the weekly PMO surging (bottoming) above the signal line which is very bullish. We could see an upside breakout from the pattern.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: We continue to monitor the bearish double top on Gold. Gold doesn't want to break down and today rallied strongly in spite of the Dollar's rally. The PMO could be about to bottom again. Stochastics are rising again. Since the PMO has not yet turned up we will look for more sideways action with a possible move up toward resistance. The bearish double top will not be busted unless price overcomes both tops. That doesn't look that likely right now.
Discounts have pared back so investors are warming somewhat to Gold. A market decline could make Gold a star particularly if traders aren't as bearish as they've been. We ultimately would like to see big fat discounts as that generally leads to rallies. Sentiment is too 'bullish' right now.
GLD Weekly Chart: The double top is ominous on the weekly chart and certainly suggests we will get a breakdown versus a breakout on Gold. The weekly PMO has topped as well.
GOLD MINERS: GDX is in decline and doesn't look like it will reverse. It is arriving at support but internals are very weak with the Silver Cross Index beginning to fall fast. A strong rally in Gold today did push them higher, but there is a clear declining trend. The PMO is nearing the zero line and Stochastics are stuck below 20. There is likely more downside to absorb.
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 broke out of its declining trend this week. The PMO is on a Crossover BUY Signal but it is below the zero line leaving us less confident about the signal. Stochastics are still rising but have decelerated quite a bit. Overhead resistance is near so we could see consolidation.
There is a large bearish double top that we are monitoring in the intermediate term.
USO/$WTIC Weekly Chart: Ultimately price is within a trading range and unfortunately price is angling down toward the bottom of it. The weekly PMO is on a Crossover SELL Signal. This could cause gravity to press down in the shorter term. Best not to get too bullish here.
Good Luck & Good Trading!
Erin Swenlin and Carl Swenlin
Technical Analysis is a windsock, not a crystal ball. --Carl Swenlin
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