All of the indexes were lower today except for the SP400 (MDY) and the SP600 (IJR) which were up +0.20% and +0.75% respectively. We thought we would examine the IJR chart. You'll want to remember some of the participation readings here and compare them to the SPY right now. It is a very different picture. %Stocks > 20/50/200EMAs are quite elevated and the Silver Cross Index is reading at a healthy 72%. The SPY in contrast has participation readings in the 60% range. Additionally, the SPY has a decline PMO on a SELL Signal while IJR has a strongly rising PMO on a Crossover BUY Signal. If there was a doubt that the broader market is participation, this chart tells us that in fact, participation is robust.
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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: We definitely see a bull flag on the SPY right now and that could mean higher prices ahead. We saw a decline today, but we also saw a higher high and a higher low.
The PMO is declining on a SELL Signal still so it may be a difficult uphill climb from here. We also have annotated a large rising wedge pattern that suggests a breakdown. At this point, it does appear to be rebounding off that rising trend so we could see another trip to the top of the pattern. The VIX is below its moving average on our inverted scale and Stochastics are in decline so we are detecting internal weakness.
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S&P 500 New 52-Week Highs/Lows: Yesterday New Highs pared back on a rally and here today we have New Highs gaining on a decline. We must remember these are intraday New Highs so earlier in the day when the index was up, these could've been logged. This did push the High-Low Differential higher.
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) are now both in negative territory which does suggest the market is vulnerable to decline. We saw a slight decrease in participation and the number of rising PMOs. Not unexpected for a market decline.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT.
Both IT Breadth and Volume Momentum (ITBM/ITVM) moved lower today confirming already declining short-term STOs. We still have a healthy number of PMO BUY Signals.
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.
As noted in the opening, we don't see the same type of participation as we do in IJR. The readings are good, not great. They could still support higher prices. We should be warned that the Silver Cross Index could see a decline soon given %Stocks > 50EMA is reading very close. Both the Silver Cross Index and Golden Cross Index 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: We got our wish for more New Highs and a rising High-Low Differential, but STOs and now the ITBM and ITVM are all in decline. This suggests internal weakness as does falling Stochastics and the PMO Crossover SELL Signal. The broad market is mostly saving the day as mega-cap stocks take a breather, but we wonder how long this condition will last. The bull flag does imply an upside breakout ahead, but mega-caps could continue to put a damper on the SPY. For now with so many mixed signals, we are going to look for more churn before we look for a breakout based on the flag formation.
Erin is 45% long, 0% short.
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CALENDAR
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BITCOIN
Bitcoin is giving back some gains, but ultimately the rising trend is intact. It may need to soften with more decline, but the chart still looks bullish enough to expect a test of all-time highs again. The RSI is not overbought and the PMO is still on the rise. Stochastics are holding above 80. Yesterday's Silver Cross bolsters the bullish picture.
BITCOIN ETFs
INTEREST RATES
Yields were mixed today. We've been looking for a recovery in the very short term, but past that the declining trends are holding fast so ultimately we'll look for a decline toward 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
Yesterday's comments still apply:
"$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: TLT has set up a near-term double top. While this is quite bearish, we still have a long-term declining trend on the 20-year yield that hasn't been broken. Price is also sitting on support at the 50/200-day EMAs so all is not lost. We do see a high likelihood that price will eventually test the confirmation line of the double top or at least come close. We think the intermediate-term rising trend will hold up.
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 is inching higher but overall it is in a trading range between the May low and June top. The RSI and Stochastics look positive, but the PMO is still flat. We expect more churn with a melt up toward the May high.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold managed another small rally today, keeping it above near-term support. Discounts pared back meaning investors are getting a bit more bullish on Gold. Stochastics are still in decline, but the PMO is already trying to turn back up. There is a good chance that Gold will find its way back toward all-time highs.
GOLD MINERS (GDX): Gold Miners were unchanged as the forces of Gold and the market counteracted with Gold rising and the market declining. We have to say they are looking interesting as they consolidate above the 20-day EMA. Gold looks a little more bullish so we wouldn't be surprised if this group rebounds. Participation is robust with the Silver Cross Index moving higher above the signal line. Stochastics do tell us that they are still vulnerable to more decline.
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 nearly dropped out of the bull flag today. The indicators are all in bearish agreement right now, but the pattern does tell us to expect an upside breakout. Support is arriving at the 200-day EMA. We'll need to see an upside reversal soon or the pattern could bust.
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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