We will discuss the USO signal change in the USO section below.
NVIDIA (NVDA) is leading the charge downward, so we thought it would be appropriate to peek at the chart. From the all-time high in June NVDA has fallen -28% as of today. The first obvious support is at 96.00, which will be a decline of -32%, if NVDA falls that far.
NVDA began a parabolic advance in 2022, which finally broke down last week. Even with a seemingly bullet proof company like NVIDIA, parabolic advances beg for correction, and we think that the AI story has been overworked. At some point, we can expect bargain hunters to step in, but it would be prudent to wait for the daily and weekly PMOs to turn up before moving in.
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: Price is now up against a short-term declining trendline and that does suggest the decline is not over yet. Mega-caps are falling and it is taking its toll on the index.
The PMO is headed to the zero line. The VIX is well below its moving average and Stochastics while rising are still in negative territory. Internal weakness is clearly visible. Note the relative strength line to equal-weight RSP. It has been in a steady decline which points directly to the weakness in mega-caps.
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S&P 500 New 52-Week Highs/Lows: New Highs popped today suggesting the broad market isn't letting go yet. The index is vulnerable based on the declining High-Low Differential.
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 DOWN and the condition is NEUTRAL.
The Swenlin Trading Oscillators (STOs) are finally rising together which does put a positive spin on a negative trading day. Participation held up on the decline as well.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is SOMEWHAT OVERBOUGHT.
The ITBM and ITVM are still mixed with the ITBM rising and the ITVM falling. We saw no new PMO Crossover BUY Signals. We still have a healthy number of those signals despite the market decline.
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.
Yesterday's comments still apply:
"The market bias is BULLISH in the intermediate and long terms.
Both the Silver Cross Index (SCI) and Golden Cross Index (GCI) turned up. The SCI has a bit more room to move higher based on the higher percentage of stocks above the 50-day EMA. We have a similar situation with the GCI which is reading below the percentage of stocks above the 200-day EMA. Both are above their signal lines so the IT and LT Biases are 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: The relative strength line to equal-weighted RSP is declining sharply as mega-caps continue to bring the index down. However, beneath the surface we still have fairly robust participation readings as well as both the Silver Cross Index and Golden Cross Index rising. Broad participation is so far holding up but as we can see that might not translate to the index which could continue to fall based on Mag 7 declines. The STOs are rising again suggesting some upside is available. The question is whether smaller-cap members can keep the index from falling. The Fed could come in and give us the expected rate cut decision tomorrow afternoon and that could fuel the market higher by day's end.
Erin is 45% long, 3% short.
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CALENDAR
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BITCOIN
Bitcoin is hitting overhead resistance and may be forming a small double top formation. The indicators are looking more soft with the PMO looking toppy and Stochastics falling so we could see some decline before we see another run at all-time highs.
BITCOIN ETFs
INTEREST RATES
Yields are falling and a likely rate cut decision arriving tomorrow could keep them running lower. Declining trends are intact so we are looking for a test of support.
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 saw a PMO Crossover SELL Signal today and Stochastics are diving lower. We are looking for the 10-year yield to continue making its way lower.
BONDS (TLT)
IT Trend Model: BUY as of 6/5/2024
LT Trend Model: BUY as of 7/17/2024
TLT Daily Chart: Yesterday's comments still apply:
"Yields are looking bearish and that will help Bond funds move higher. TLT is set up well given the indicators. The RSI just entered positive territory and the PMO is back on the rise. Stochastics look very encouraging. We are looking for a successful test of overhead resistance."
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 formed another filled black candlestick as it edges higher. This candlestick implies the Dollar will make its way lower tomorrow. The PMO is nearing a Crossover BUY Signal and Stochastics are approaching territory above 80. Overall it is holding a short-term rising trend so we do expect the Dollar to continue to trend higher.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold saw a nice rally today that is breaking through the near-term declining trend out of the last high. We are also seeing Gold beginning to show relative strength to the Dollar. The PMO has flattened. Stochastics are rising now. The indicators are somewhat mixed so we will look for sideways movement for now.
GOLD MINERS (GDX): Gold Miners rallied on Gold's gain today. The declining trend has not been broken and the PMO is still declining, but we could be looking at a good reversal point for GDX as participation is coming back for stocks above their 20-day EMA. The 50-day EMA could provide needed support as well. We don't want to get too bullish here as that declining trend hasn't been broken yet.
CRUDE OIL (USO)
IT Trend Model: NEUTRAL as of 7/30/2024
LT Trend Model: BUY as of 2/27/2024
USO Daily Chart: Today the USO 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 bull flag formation has disintegrated adding to the bearish picture for Crude right now. The PMO has now entered negative territory and Stochastics are falling below 20. It's a very negative picture, but support has been reached. Unfortunately the bearish forces on the chart tell us to expect more decline 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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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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