The market was up over 1% today and that was primarily due to the rebound on NVIDIA (NVDA) and Tesla (TSLA). Apple (AAPL) and Amazon (AMZN) were down only slightly.
In today's trading room we were asked whether a double bottom is developing. Typically those are reversal patterns and need to reverse a trend. More than likely what we are looking at is a bearish double top. We are getting a rebound off support which is keeping the pattern from truly confirming. While we could see more upside, the PMO is in decline and today's rally didn't arrive on impressive volume. NVDA is vulnerable still.
TSLA is forming a rounded top that is digesting the previous rally. The PMO is at a very high reading which is good, but it has started to look a bit toppy. Today's rally did cause it to flatten, but we still see TSLA as vulnerable too.
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: The market came back to life today. This looks like a breakout from a bull flag and as such would imply more upside ahead. It was interesting to note is that defensive Utilities and Real Estate saw good rallies today as if investors are hedging their bets.
The PMO is still declining on a Crossover SELL Signal, but it looks as though we are getting the reversal that the VIX suggested when it dropped beneath its lower Bollinger Band on the inverted scale. Stochastics are looking weak as they have declined into negative territory.
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S&P 500 New 52-Week Highs/Lows: In a strange turn of events, New Highs pared back considerably on this rally. We saw more New Highs on prior declines. This tells us that the broad market may be cooling as the mega-caps begin to show strength. The High-Low Differential topped today in warning.
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.
Swenlin Trading Oscillators (STOs) turned down last week and did not recover. We are pleased to see some expansion in stocks above their 20-day EMAs as well as seeing more rising PMOs.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT.
IT Breadth Momentum (ITBM) turned back up today in overbought territory while IT Volume Momentum (ITVM) continued lower. %PMO Xover BUY Signals turned back up today above the signal line which is bullish.
PARTICIPATION CHART (S&P 500): The following chart objectively shows the depth and trend of participation for the SPX 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 BULLISH in the intermediate term.
The market bias is BULLISH in the long term.
The Silver Cross Index has decelerated, but is still on the rise. That could continue as we have a greater percentage of stocks above their 20/50-day EMAs. Two-thirds of the index now have a 20-day EMA above the 50-day EMA which is healthy enough to keep the index elevated. It is also above its signal line so the IT Bias is BULLISH. The Golden Cross Index topped last week. %Stocks > 50/200EMAs still hold a slightly higher percentage so it could move higher, but not much higher. It so far remains above its signal line so the LT Bias is BULLISH.
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 a surge in growth and technology stocks today. The Mag 7 had a good showing and pushed the SPY higher. However, we also saw expansion in defensive Utilities and Real Estate. Investors may be hedging their bets. The lack of New Highs has us questioning the veracity of the rally which should have seen at least as many New Highs as the decline did last week. Participation did see some expansion, but not a great deal. STOs are still in decline and the High-Low Differential topped today. However, it does look as if we are rallying out of a bull flag. We'll be watching participation closely for any cracks in the foundation. So far it is holding up. It will be interesting to see if both mega-caps and smaller-caps within the index can show strength at the same time.
Erin is 45% long, 0% short.
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CALENDAR
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BITCOIN
Today Bitcoin saw an IT Trend Model "Silver Cross" BUY Signal as the 20-day EMA crossed above the 50-day EMA. The rally is being supported by the indicators. The RSI isn't overbought yet so we should see a move to test all-time highs ahead. Stochastics also are holding strongly above 80.
BITCOIN ETFs
INTEREST RATES
Yields are making a move higher in the shorter-term, but overall declining trends are still intact. We see a possible rally in yields to test declining trendlines.
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 has reversed before testing the bottom of the declining trend channel. That is a good sign that we could see a breakout when it tests the top of the channel. Stochastics have reversed as has the PMO. We see diminishing weakness not new strength. We'll see how it handles resistance at the 50-day EMA.
BONDS (TLT)
IT Trend Model: BUY as of 6/5/2024
LT Trend Model: BUY as of 7/17/2024
TLT Daily Chart: Yields are looking bullish in the very short term so TLT and other Bond funds are likely to see downward pressure. Today the PMO triggered a Crossover SELL Signal and the RSI dropped into negative territory. Stochastics are falling. We would look for a test of the rising bottoms trendline.
We see the development of a bullish ascending triangle (flat top, rising bottoms) so this decline is likely going to be limited to the rising bottoms trendline.
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 resolved the bearish rising wedge with a breakdown, but it managed to reverse on support. The PMO is flat and the RSI is negative so we suspect that we will see more churn out of 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 dropped precipitously yesterday and was lower earlier in the day. However, GLD managed a small gain that kept price barely above the 20-day EMA. Gold looks weak right now with the declining PMO and Stochastics so we should prepare for at least a test of the 50-day EMA, but more likely support at the earlier double bottom.
The Dollar is churning and we expect the same from Gold. Discounts are very elevated so we about to enter a period of strong bearish sentiment that tells us to look for a possible upside reversal or even breakout. Sentiment is contrarian so very bearish investors would be good for Gold when it hits extremes.
GOLD MINERS (GDX): Gold Miners managed a small rally today but didn't really get back above prior support. The PMO has topped and we are slowly losing participation under the surface. The Silver Cross Index has topped. The rally is beginning to be digested, but a weak outlook on Gold could mean an uphill battle.
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 has formed a bull flag that implies we will see a breakout and a move that is the height of the flagpole. The question is how long will this flag continue to build before a breakout. Today did see a bullish hollow red candlestick so we should see a move back to the top of the flag. The picture will turn very bearish if price drops out of the flag instead of rallying out of it. For now the pattern looks encouraging.
The 200-day EMA is arriving soon as support.
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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