When Nvidia (NVDA) opens on Monday, it will have experienced a 10:1 split, and we should remember that one of the purposes of stock splits is to facilitate distribution. That is to say that the lower price after the split attracts investors who avoided the stock at the higher price (i.e. the little guys). Over the years we have observed that stock splits frequently are followed by price corrections; however, Adam Johnson of The Bullseye American Ingenuity Fund on Fox Business quoted a Bank of America study stating that stocks that have a 5:1 split or greater are on average higher by 25% in the following 12 months, as opposed to the rest of the market being up only 12% in the same period. That may be true, but but a correction could also be in the cards as well.
The problem with NVDA is that it has advanced about 1100% since the 2022 low in an excruciating parabolic arc, and we expect that parabolics will eventually enter a correction. In the case of average companies, the correction can be quite brutal, -50% or more. But NVDA is currently one of the best companies ever, and if a correction comes, we would expect a high-level consolidation, which is a sideways trading range. We can see an example of this after the vertical advance at the beginning of the year, when NVDA corrected about -22% in March and April. There was another consolidation in 2023 involving a pullback of -25%. And finally, there was a -69% correction in 2021-2022, back before the magic of AI took hold.
Conclusion: Vertical advances beg for correction. In the case of a quality stock like NVDA, all that is usually needed is a relatively small pullback or consolidation. That is what we should be looking for sooner or later this year, and there seems to be good support at 970.00 . . . oh, wait. That will be 97.00 on Monday.
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: The market saw a somewhat bullish hollow red candlestick today. Price is sitting atop prior all-time highs. The PMO continues higher after reversing and avoiding a SELL Signal.
Investors don't appear too concerned about the decline to finish the week as the VIX's reading was lower on the day. This puts it above its moving average on our inverted scale. That combined with Stochastics above 80, there is internal price strength still available in the short term.
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SPY Weekly Chart: The market logged new all-time highs this week giving us an almost 57% gain since the 2022 low. That's substantial. The weekly PMO is indecisive but is currently on a Crossover BUY Signal. We would like to see a more robust PMO configuration, but it is technical higher so we'll take it. The market is traveling in a bearish rising wedge that tells us to expect a breakdown but for now the weekly PMO could support higher prices.
New 52-Week Highs/Lows: As we would expect New Highs lost ground today. What concerns us is that we are making new all-time highs yet we have so few New Highs. Notice the difference between this rally and the rally earlier in the year. This rally is not broad as we know. The High-Low Differential is decelerating somewhat but again is in decline despite all-time highs.
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.
We have big problems on the Swenlin Trading Oscillators (STOs). They topped today and sport negative divergences with price. Participation is thinning and shows a negative divergence as well. %PMOs Rising continues to decline.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
Briefly this week the ITVM turned up but it has returned to declining alongside the ITBM. We are seeing %PMO Xover BUY Signals improving, but it remains beneath the signal line. We also know that only 39% show rising PMOs so this indicator is likely to stagnate next week barring a strong rally.
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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.
The highest IT Bias still belongs to Utilities (XLU) however one look at its chart and we know there are problems. You'll also note that the GCI lost three percentage points this week. The sector is weakening.
The lowest IT Bias is still Energy (XLE) which continues to slide lower. The Crude Oil trade hasn't been helping matters, but that soon could change. For now, XLE continues to lose ground on the SCI.
This table is sorted by SCI values. This gives a clear picture of strongest to weakest index/sector in terms of intermediate-term participation.
Gold Miners hold the highest SCI reading alongside Utilities (XLU). We already discussed the weakening of XLU. GDX is also seeing some damage now. They had a terrible day and look ready for more decline.
The lowest IT Bias goes to Biotechnology (IBB) which had appeared to be ready to rally. It looks less bullish right now and given the loss of SCI points, should be handled with care.
This table is sorted by GCI values. This gives a clear picture of strongest to weakest index/sector in terms of long-term participation.
Energy (XLE) still has a strong long-term foundation based on its excellent long-term rally before the slide of the past month or so. It held up this week, but is definitely vulnerable right now given the loss on the SCI.
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 definitely do not like what we're seeing. We have %Stocks > 20/50EMAs reading below our bullish 50% threshold and negative divergences are still in play in our estimation. Both the Silver Cross Index and Golden Cross Index are in decline and below their signal lines so the bias remains BEARISH in the IT and LT. We should have far more robust numbers given we are making new 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: Cap weighting is throwing off the big picture of the market. The index is making new all-time highs while we have sickly participation beneath the surface. We have fewer PMOs rising. We have fewer stocks this week above key moving averages. None of this jibes with what may be perceived as a healthy rally. As long as mega-caps are bullish, the market will remain bullish. If weakness seeps into those stocks, the market is likely to tumble given we don't have everyone participating in the current rally. A hot jobs report didn't help today as yields shot to the sky. We may experience less volatility early next week as investors anticipate the Fed's announcement on Wednesday. Bets are that we could still see two rate cuts, but we have a feeling the Fed will dash those hopes which would mean lower prices likely in the market. We need to exercise caution. Honor your stops.
Erin is 50% long, 0% short.
Calendar:
Wednesday - Fed interest rate announcement and CPI reports will be released.
Thursday - Initial Jobless Claims and PPI
Friday - Consumer Sentiment
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BITCOIN
Bitcoin Daily Chart: Bitcoin rallied to overhead resistance this week and appears stumped. The PMO has turned down and so have Stochastics. The rising trend is still intact so for now we expect more sideways action along near-term lows above the 50-day EMA.
Bitcoin Weekly Chart: The weekly PMO is in decline and also suggests that Bitcoin will continue to have trouble near all-time highs.
BITCOIN ETFs
Today:
This Week:
INTEREST RATES
Yields soared today on the hot jobs report. This thrust suggests we will see them continue to rise. If the Fed opts not to cut rates next week (highly likely), we could see them continue pushing higher.
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 recaptured its prior rising trend on a stunning upside reversal. It wasn't enough to turn the PMO back up, but it's close. Stochastics did get yanked upward and suggest we will see the yield continue to rise. This is a good place for a reversal as it comes off the 200-day EMA.
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).
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This week the 30-Year Fixed Rate changed from 7.03 to 6.99.
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: Bond funds took a beating today on rising yields. It didn't take price back into the declining trend, but this doesn't look good. The PMO and Stochastics have both turned over.
There is support at the 20/50-day EMAs, but given indicators, it doesn't look that sturdy.
TLT Weekly Chart: The longer-term declining trend is still in force. One good thing about the weekly chart is that we have a bullish falling wedge. The weekly PMO has turned up giving us hope, however, with yields making a comeback we suspect it will turn down next week.
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 gapped up and broke out of its declining trend channel. The RSI is back in positive territory and the PMO is turning back up. Stochastics are rising strongly again. The Dollar does have a bullish outlook.
The bounce has come off strong support.
UUP Weekly Chart: The longer-term picture isn't quite so bright. We have a large bearish rising wedge along with a falling weekly PMO. The Dollar will have some work to do in the short term to move this chart bullish again. An upside breakout would be particularly bullish.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold was finally beginning to wake up. It was showing strength against the Dollar and rallied two days. Unfortunately the bottom fell out and the bearish double top seems to be winning out. The PMO has reversed lower and the RSI is back in negative territory. Stochastics have also topped.
The correlation between Gold and the Dollar has eased so it isn't out of the question that Gold could still rise even with a stronger Dollar. However, we believe the reverse correlation will be strengthening again soon.
GLD Weekly Chart: Gold looks toppy on the weekly chart. The double top is textbook. The confirmation line is now being tested. Gold's sharp decline today is likely to lead to a breakdown of the confirmation line. Should the pattern be confirmed, the minimum downside target would take price to about 200 or lower. The weekly PMO is topping which also doesn't inspire confidence.
GOLD MINERS: The bottom dropped out on Gold Miners as well as Gold. They were hit particularly hard. This really damaged participation. We still have bullish biases based on the Silver Cross Index, but that will likely begin diving lower based on current participation levels. Beware of this group.
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 managed to set up a rising trend this week. However, price is still stuck beneath resistance. It posed a problem today. Stochastics have turned back up and the PMO has decelerated so it doesn't look nearly as bearish as it did to start the week. Summer is arriving and typically we see more demand which should move price higher from here.
USO/$WTIC Weekly Chart: We see a large double top on the weekly chart along with a weekly PMO Crossover SELL Signal. This chart is bearishly configured so any rally that comes in on possible rising demand, could be short lived.
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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