It was a short trading day but it was clear from the beginning of trading that investors were in a bullish mood. NVDA and TSLA boosted the index higher with gains of +4.57% and +6.54% respectively.
We will say that the head and shoulders on NVDA is breaking up with today's strong rally, but the PMO hasn't turned back up yet. Stochastics did turn up but are still in negative territory. It is still vulnerable, but looking a little less so today.
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: New all-time highs were hit on today's rally higher. Price is now leaving the congestion area of the prior pause. The PMO is still making its way higher.
The RSI is back in overbought territory. Stochastics look very bullish as they have reversed and moved back above 80. There is still internal price strength even if the participation internals are weak. Mega-caps continue to prop up the index as we see relative strength continuing to rise against equal-weight RSP.
Here is the latest recording from 7/1:
S&P 500 New 52-Week Highs/Lows: New Highs did see a gain, but the negative divergence is still in play. The High-Low Differential continued lower after topping yesterday.
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) made their way higher again today suggesting we could see more upside on the index. Participation wasn't swayed by today's rally. Both indicators are reading below our bullish 50% threshold.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
The ITBM and ITVM remain mixed with the ITBM continuing to inch lower and the ITVM continuing its rise higher. We lost some PMO BUY Signals today.
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.
The Silver Cross Index saw a Bearish Shift across its signal line yesterday and remains at a low reading. This has set up a steep negative divergence with price. It is below its signal line so the IT Bias is BEARISH. The Golden Cross Index is also losing ground. It is below its signal line so the LT Bias remains 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 feel like a broken record. The market internals are not healthy, but the index moves higher. We saw a Bearish Shift on the Silver Cross Index yesterday and if you look at the Bias Table above, you'll see all indexes (except QQQ) have bearish biases. Yet, the index continues to make its way higher. The direction of the index is not representing the lack of participation within, but it does leave it vulnerable to decline. Negative divergences are stark and they generally play out with a decline eventually. However, STOs are rising again so we wouldn't be surprised to see the index make its way higher in the short term despite negative divergences.
Erin is 40% long, 0% short.
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CALENDAR
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BITCOIN
Bitcoin saw its PMO top beneath the signal line which is especially bearish. It is already testing support again. The large double top formation hasn't been dispelled so it is vulnerable to a breakdown. We had seen some improvements as price did inch higher, but this big failure yesterday and today have really hurt indicators and the bullish outlook it held days ago.
BITCOIN ETFs
INTEREST RATES
Yields continued to pull back today and have thus preserved longer-term declining trends.
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 dropped significantly today as it retraced and took back all of the gap up gains. The declining trend is still intact and generally when we see a decline before a test of the trendline it is bearish. The PMO is still on the rise so we could see a resumption of the rally, but we think today's loss foreshadows a likely continuation.
BONDS (TLT)
IT Trend Model: SELL as of 3/20/2024
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: Bonds may have a new lease on life as yields really took a tumble today. This is coming off support. The PMO hasn't turned up yet. Stochastics did but they are still in very negative territory. We have a feeling we are at an inflection point for both yields and bonds.
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 is starting to round off. We note that the PMO has turned down. Stochastics are still holding above 80 and price is sitting on support so we don't want to get too bearish here. Let's just say it is vulnerable.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold took advantage of a weak Dollar and rallied strongly. It is still in a holding pattern as it consolidates sideways. We do note that relative strength is picking up for Gold. The PMO is so close to a Crossover BUY Signal. Resistance is being met again and this has been an area that has held strong so we aren't going to get too bullish yet.
GOLD MINERS (GDX): Gold Miners took advantage of the rally in Gold and the market to explode higher. We did mention it could see some upside as the Silver Cross Index had turned up. Participation has shot back up and with the Dollar looking weaker, we see GDX as having an opportunity to continue the rally.
CRUDE OIL (USO)
IT Trend Model: BUY as of 6/21/2024
LT Trend Model: BUY as of 2/27/2024
USO Daily Chart: We saw a small rally in Crude Oil. Demand is picking up for the summer and that should fuel prices to move higher. Overhead resistance is arriving, but given the strongly rising PMO and Stochastics holding above 80, we expect a breakout.
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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