Today the Industrial Sector (XLI) 20-day EMA crossed down through the 50-day EMA (Dark Cross) above the 200-day EMA, generating an IT Trend Model NEUTRAL Signal. The daily chart shows a bearish head and shoulders with the neckline at about 120. The minimum downside target of the pattern would likely take price down to about $112.50.
However, the weekly chart makes the formation look more like a bullish flag, which we think implies the most likely outcome. Still, we do have a weekly PMO in decline so it will be hard work to get the breakout.
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 standout issue on this chart is that SPX Total Volume was 178% of the one-year daily average volume. Maybe it has to do with investors standing aside ahead of the holiday next week, but that is just a guess. Today's candlestick was bearish engulfing so it does imply another decline on Monday. We can see a small bearish double top in the very short term that doesn't bode well either.
The PMO has turned down and is already nearing a Crossover SELL Signal. This is based solely on price so the fact that it is driven by mega-caps suggests they could be weakening.
SPY Weekly Chart: The SPY was unable to manage a positive close this week. We have identified a rising wedge which does imply a breakdown of the rising bottom trendline. The weekly PMO is still looking good, but it did decelerate slightly this week. Price is entirely too overbought based on the weekly RSI.
SPY Monthly Chart: We're monitoring a parabolic advance on the monthly chart. Remember these patterns beg for correction. The monthly PMO is still rising, but this advance is getting overdone based on that parabola and the fact that the monthly RSI has moved into overbought territory. However, we do know it can tolerate overbought conditions based on prior history.
New 52-Week Highs/Lows: New Highs expanded, but the market was up part of the day and these readings are intraday, they take the highest value for the chart, not the last value. We expect some of those New Highs fell by the wayside by the time of the close. At the same time, we didn't see but one New Low which is good for a down day. The High-Low Differential topped this week. It holds a negative divergence with price.
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 Oscillators (STOs) were mixed with the STO-B losing and the STO-V gaining. We see this as an injection of uncertainty into the market. We saw a tiny bit of expansion in %Stocks > 20EMA but we lost some rising PMOs. Percentages are below our 50% bullish threshold.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
Both the ITBM and ITVM moved down together. We did manage to get %PMO BUY Signals to rise by a percentage point, but still only half of the index hold BUY signals. This isn't healthy given our move to all-time highs. When mega-caps fail, we don't have many stocks that will be able to pick up the slack.
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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 and only positive IT Bias belongs to Semiconductors (SMH), but they are losing ground based on the loss of points from the Silver Cross Index.
Energy (XLE) has the lowest IT Bias as it struggles to make up ground on the Crude Oil rally. We like this sector, but we do note that no improvements were made on the Silver Cross Index or Golden Cross Index.
This table is sorted by SCI values. This gives a clear picture of strongest to weakest index/sector in terms of intermediate-term participation.
Regional Banks (KRE) gained the most SCI points and that was followed closely by Transports. These are key areas of the market that we want to see improve. Particularly Transports which based on Dow Theory should signal an improving market environment.
Gold Miners (GDX) and Utilities (XLU) lost the most SCI points as both are beginning to show signs of weakness. XLU has been taking back most of its prior gains and GDX is likely to be hampered by a rising Dollar and falling Gold.
This table is sorted by GCI values. This gives a clear picture of strongest to weakest index/sector in terms of long-term participation.
GDX may hold the highest GCI reading, but we see the group as very weak moving forward. It was a huge rally out of their lows and that pushed the GCI very high, but note the loss to the SCI.
Biotechnology (IBB) holds the lowest GCI ranking and it also lost a point this week. This sector has not been able to get going, but we do note it did manage to gain a percentage point on its SCI. Still, the chart doesn't look all that constructive right now.
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 intermediate-term bias is BULLISH.
The long-term bias is BEARISH.
The Silver Cross Index is on the rise but as we have pointed out most of this week, it is at a very low reading. It is above its signal line so while the reading isn't robust, it still must be read as BULLISH. The Golden Cross Index ticked up, but ultimately is in a declining trend. The reading is good, but it is below its signal line so the LT Bias is 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 are now looking at a short-term bearish double top pattern which is yet another reason we are looking for the market to finally top and move lower. We've been touting all of the negative participation, breadth and negative divergences for the past week. It hasn't come home to roost yet. The indexes may be rising, but it is due primarily to those XL-cap stocks with very little participation by smaller-caps. We did see an uptick in participation when mega-caps slumped this past week, but none of it stuck as participation shrunk as quickly as it had expanded. We have a parabolic advance on the SPY in the long term that begs for correction. Employ stops and consider selling into strength. We don't know when it will happen but we should prepare for a decline.
Erin is 45% long, 0% short.
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CALENDAR
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BITCOIN
Bitcoin Daily Chart: Bitcoin is flirting with support, but given the declining PMO and topping Stochastics, we are looking for that level to be lost. The declining trend is strong.
Bitcoin Weekly Chart: After breaking out of its parabolic formation, price has formed a large bearish double top so the decline isn't likely over. The weekly PMO is falling as well. We are bearish on Bitcoin in both the short and intermediate terms.
BITCOIN ETFs
Today:
This Week:
INTEREST RATES
Yields broke out of consolidation zones. Declining trend are still intact, but these upside reversals suggest we will see those declining trends tested.
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 10-year yield broke out of a bullish falling wedge this week and is on its way to test the longer-term declining trend. The 50-day EMA could pose resistance, but the nearing PMO Crossover BUY Signal suggests it will break through. Stochastics are also favorable. We would look for a test of the intermediate-term declining trendline.
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 6.87 to 6.86.
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: Yields are reversing and hence Bond funds are too. Today saw a huge bearish engulfing candlestick on TLT. It broke down through all three key exponential moving averages. The RSI dropped into negative territory and the PMO generated a Crossover SELL Signal today. Stochastics are diving lower. We should look for more decline for TLT.
TLT Weekly Chart: TLT is butting up against the top of a bullish falling wedge. Based on the reversal in interest rates, we don't see a breakout on the horizon. We would look for support to be tested at the April low.
TLT Monthly Chart: TLT is attempting to put together a reverse head and shoulders on the monthly chart. We also see the monthly PMO triggering a Crossover BUY Signal. The short and intermediate terms do not look especially bullish and with a possible rate cut by the Fed later this year, we could see an upside reversal in the longer term.
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 was up slightly for the week. The short-term rising trend is holding up. The PMO is still rising and Stochastics are holding above 80 so we see a bullish bias in the short term.
UUP Weekly Chart: The short term may look bullish, but we have to keep in mind that we have a big bearish rising wedge on the weekly chart. The weekly PMO is rising at this time so it wouldn't surprise us if we got a very bullish upside breakout from the wedge.
UUP Monthly Chart: The Dollar looks good on the monthly chart. The monthly RSI is not overbought and the monthly PMO is on the rise. We don't see a parabolic formation at this time, but it isn't out of the question that the Dollar would go back down to test the current rising trend. All three timeframes show rising PMOs so we are bullish.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: The Gold chart hasn't been much to look at. The indicators are very neutral as they move sideways without hinting at direction. The bearish double top formation leaves us leaning bearish. We also see too much bullish behavior on the Dollar.
Relative strength is trending lower. The inverse correlation isn't strong, but it is there and with Gold's relative strength line moving lower, we believe Gold will continue to struggle. With neutral indicators, we will look for more sideways consolidation.
GLD Weekly Chart: This does have the appearance of a bull flag on the weekly chart, but we can also see that bearish double top. The weekly PMO is about to trigger a Crossover SELL Signal so we suspect the double top will win out.
$GOLD Monthly Chart: Another problem for Gold is the parabolic advance out of the 2015 low. As we often say, these formations beg for correction. However, the monthly PMO is still on the rise so the formation could persist, we just think that double top on the daily and weekly charts will win out and we'll get the high level consolidation or correction out of the parabola.
GOLD MINERS: GDX is attempting to reverse off support. We don't believe it will be successful in carrying this rally further with Gold looking neutral to bearish and the Dollar looking bullish. The market also seems ready to reverse lower. Participation is not good and the Silver Cross Index is in decline, losing percentage points quickly.
CRUDE OIL (USO)
IT Trend Model: BUY as of 6/21/2024
LT Trend Model: BUY as of 2/27/2024
USO Daily Chart: Crude Oil had a pretty good week and it looks like it will rally higher. The summer months are here and demand generally picks up which pushes Oil prices higher. The RSI is positive and not overbought and the PMO is rising nicely. Stochastics are holding above 80 signifying internal price strength.
We are at a resistance level right now, but given the positive indicators, we would expect a breakout here.
USO/$WTIC Weekly Chart: We see a bullish ascending triangle on the weekly chart that implies we will get a breakout. This rally is arriving at the start of summer so a breakout seems plausible. The weekly PMO is above its signal line so the Crossover BUY Signal is intact.
WTIC Monthly Chart: On a monthly basis, Crude doesn't look that bullish given the falling monthly PMO. Price is back above the resistance area at the 2018 high and it was a very good month for $WTIC. We have a symmetrical triangle and they can break in either direction, though it tends to break in the direction of the prior trend which is up.
Good Luck & Good Trading!
Erin Swenlin and Carl Swenlin
Technical Analysis is a windsock, not a crystal ball. --Carl Swenlin
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