We'll talk about the shift in the intermediate-term bias in its section.
NVDA has been displaying weakness since its fall from all-time highs. It has now formed a textbook bearish head and shoulders pattern. The minimum downside target would actually put price below the support level we've annotated. A drop to the support level would be over 20% or would put NVDA in a bear market. This isn't a given, but the indicators are certainly in favor of more decline nonetheless. The RSI is still positive, but there are problems on the chart. The PMO is declining on a Crossover SELL Signal and Stochastics are almost below 20. The OBV is confirming the decline with a decline of its own.
You'll note that relative strength is failing for the Semiconductor group and NVDA is one of the main contributors. It is beginning to underperform the group and is already underperforming the SPY.
We don't know how far or even whether NVDA will give up the ghost and correct, but the technicals certainly favor that conclusion.
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
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 bearish double top in the short-term timeframe has pretty much busted with today's bullish engulfing candlestick. The PMO has switched gears and is rising again saving it from a Crossover SELL Signal.
Mega-caps continue to have a strangle hold on the market as we can see relative strength continuing to rise against equal-weight RSP. The VIX nearly penetrated the upper Bollinger Band today. Typically upside punctures on the inverted scale lead to downside reversals. However, the Bands are very close together so punctures may not result in those reversals.
Here is the latest recording from 7/1:
S&P 500 New 52-Week Highs/Lows: New Highs were up slightly as we would expect on a rally day although we would've expected more. We have a negative divergence with New Highs right now. The High-Low Differential turned down today sealing in its 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.
We saw Swenlin Trading Oscillators (STOs) reverse higher today on the rally. This does look like a nice rally to new all-time highs, but participation didn't see much gains. We still have less than 50% of stocks holding rising PMOs or holding above their 20-day EMAs.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
The ITBM and ITVM were mixed with the ITBM moving lower and the ITVM inching upward. This isn't a resounding confirmation of rising STOs, but the ITVM is interesting. The amount of PMO BUY Signals dropped again on today's rally. With only 42% of stocks showing rising PMOs (above), we know that we could lose more ground on PMO BUY Signals.
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 the intermediate term.
The market bias is BEARISH in the long term.
Yesterday the Silver Cross Index topped. Today it dropped beneath its signal line for a "Bearish Shift" that moves our intermediate-term bias to BEARISH. It was already reading very low given the rally to all-time highs, now it has sealed in its negative divergence with yesterday's top. Participation readings are also showing negative divergences. The Golden Cross Index is in decline so we have a negative divergence there too.
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: Today saw a healthy rally in the SPY that pushed prices to new all-time highs and pushed the PMO back upward above its signal line. Maybe all we are going to get is this period of consolidation instead of a decline. The market could see higher prices given the bullish charts of the Magnificent Seven (minus NVDA) and rising STOs. This handful of stocks are the index right now based on relative strength to equal-weight RSP. Negative divergences could come home to roost given breadth remains a problem so we would still advise caution on expanding your portfolio.
Tomorrow the market will be closed early but the report data won't be available then so expect this report at the normal time.
Erin is 40% long, 0% short.
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CALENDAR
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BITCOIN
Bitcoin pulled back today but we still see a high likelihood that it will make its way back to the top of its trading range. This time around overhead resistance held at the 20-day EMA. Stochastics are still rising so while the PMO is flat, we still see some upside available to Bitcoin.
BITCOIN ETFs
INTEREST RATES
Yields pulled back slightly, but new rising trends are being established so we are looking for them to make their way up to their 2024 highs. We have to say that long-term yields appear to have formed bull flags.
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
After yesterday's strong gains, $TNX paused today. We still expect a test of the declining trend given the new PMO Crossover BUY Signal and strongly rising Stochastics.
BONDS (TLT)
IT Trend Model: SELL as of 3/20/2024
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: Bonds got a respite today as yields paused their rush higher. We think this is temporary particularly given the falling PMO and Stochastics drop below 20. Yields also look bullish as they have begun to form intermediate-term bull flags.
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 hasn't done much, but ultimately it is still holding a rising trend. The PMO flattened today, holding the same value as yesterday so momentum could become a problem. We will rely on Stochastics right now which are holding bullishly above 80. We wouldn't be surprised if we see more sideways movement from the Dollar.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold isn't doing much of anything. Indicators are about as neutral as you can get with the RSI and Stochastics reading near 50 and the PMO flat. We have to expect more of the same, but we haven't forgotten about the bearish double top that overshadows the chart.
GOLD MINERS (GDX): Gold Miners have a head and shoulders top that does suggest we will see a breakdown not a bounce at support the next time around. The PMO is declining and participation remains thin. A bounce isn't out of the question though given the Silver Cross Index has reversed higher. The Dollar also looks less bullish.
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 pulled back, but it still set a higher high and a higher low. The rally doesn't appear fragile. We are looking for a breakout soon given the strongly rising PMO and strong Stochastics holding above 80.
Price could stumble a bit at overhead resistance. A move above will bust the large bearish double top.
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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