Today the S&P 400 Mid-Cap ETF (MDY) 20-day EMA crossed down through the 50-day EMA (Dark Cross) above the 200-day EMA, generating an IT Trend Model NEUTRAL Signal. In February MDY broke out and into what has become a trading range narrow enough to flatten the moving averages and make them susceptible to whipsaw signals.
The weekly chart shows that MDY had a long-term breakout and is consolidating above the support line which is constructive. This chart breakout is bullish, and we should look on the daily chart for the PMO and price to turn upward. This would be a potential entry point for the next leg up. For now we want to see the double top formation fall away.
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: In the very short term, we have a small double top formation that does imply we will see some downside movement. The market managed a positive close today, but the PMO is about to give us a Crossover SELL Signal. We note a negative OBV divergence as well.
Stochastics have dropped below 80 which is a short-term crack in the foundation. The VIX Bollinger Bands have shrunk tightly as volatility has been non-existent during this period of sideways consolidation.
Here is the latest recording from 7/1:
S&P 500 New 52-Week Highs/Lows: New Highs contracted on a rally day. The High-Low Differential did turn back up, but it holds a negative divergence with price tops.
Climax* Analysis: There were no climax readings today; however, please take note of the SPX Net A-D of -258 on a day when SPY was slightly up.
*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 Oscillator for Breadth (STO-B) dropped precipitously today, bringing it below the prior low. This is not a good sign. However, on the other hand, the Swenlin Trading Oscillator for Volume (STO-V) did tick upward on the day. We aren't sure what is going on here, but ultimately the STO-B is a big problem. We lost participation of stocks above their 20-day EMAs and we saw a contraction on Rising PMOs on a rally day.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
Both the ITBM and ITVM moved lower on the day with the ITBM losing quite a bit of ground. Less than 50% of the index hold PMO Crossover 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 BULLISH in the intermediate term.
The market bias is BEARISH in the long term.
Today the Silver Cross Index topped. It is very near a Bearish Shift across the signal line. That would move the IT Bias to BEARISH and we are very close. For now it remains above its signal line so the IT Bias is BULLISH. The Golden Cross Index is falling gently and reads at a fairly healthy 71%. However, we only have 63% holding above their 200-day EMAs. This implies the Golden Cross Index will fall further. It is below its signal line so the LT Bias is 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: As we continue to see, breadth is not moving inline with the index. In fact, today Net A-D was negative on a rally day. Participation continues to be scraped away as the Silver Cross Index topped today. The STO-B dropped quite a bit today and the PMO is nearing a Crossover SELL Signal. Everything is pointing to a market top. However, we do note from today's DP Trading Room that most of the Magnificent Seven look bullish so we could continue to see the index inch higher. Our portfolios are difficult to fill given only about a third of the index show rising momentum. Keep those stops in play.
Erin is 40% long, 0% short.
CALENDAR
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BITCOIN
Bitcoin looks ready to head back to the top of its trading range. The RSI isn't positive yet but it is on its way and the PMO has flattened likely in anticipation of more upside. Stochastics look constructive.
BITCOIN ETFs
INTEREST RATES
Yields rose steeply today in the longer term. We expect this condition to persist.
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 gapped up today after breaking out of a bullish falling wedge. The indicators are now fully bullish. We are looking for a break from the intermediate-term declining tops trendline.
BONDS (TLT)
IT Trend Model: SELL as of 3/20/2024
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: Bonds were hit especially hard by the strong advance in yields. TLT has now lost support. The PMO now has a Crossover SELL Signal and Stochastics are tumbling lower. We are looking for yields to continue to rise so we should continue to see TLT lose ground.
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 finished mostly unchanged but it remains in a rising trend and is holding above support. The PMO is still rising and Stochastics are camped out above 80 so we would expect the Dollar will continue to show some strength.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold continues to meander sideways within a bearish double top formation. We keep waiting for the indicators to give us a hint as to which way it wants to go but so far no luck. We will look for more consolidation.
Stochastics are beginning to rise so for now we expect support will hold up.
GOLD MINERS (GDX): Miners are traveling within a possible bearish head and shoulders pattern. The Silver Cross Index is losing ground quickly as more stocks drop beneath their 20/50-day EMAs. Stochastics are interestingly rising right now so support could hold up a bit longer.
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 rallied strongly today. The rising PMO and Stochastics above 80 tell us that there is more upside to be had.
Overhead resistance will be arriving soon. That could be an area where price holds up.
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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