The Magnificent Seven were at it again, propelling the market ever higher. You can see from the summary below it was a good day for all but NVDA which continues to display weakness.
Under the "can't beat 'em, join 'em" category, one way to take advantage of this rally in mega-caps is to use an ETF like MKG. It is breaking out yet again. The one problem with the chart is the very overbought RSI, but what is really new here? It can maintain these conditions while in a bull market. You can see that the PMO has surged above the signal line and the OBV is confirming the rally. Stochastics are strong and it should be no surprise that it is outperforming the market in general. We've listed a 6.6% stop, but you can go where you're most comfortable.
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/SPX SECTOR/INDUSTRY GROUP INDEXES
Change Today: 
Change for the Week:
CLICK HERE for Carl's annotated Market Index, Sector, and Industry Group charts.
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 set as the jobs data mostly supported Fed rate cut or cuts this year. It also helped that we saw a rally in the mega-cap stocks. The PMO continues to rise with price. The RSI is very overbought, but it has held these conditions for awhile now with only a period of consolidation.
The Bollinger Bands on the VIX have shrunk significantly. Periods of low volatility are often followed by wild swings in volatility. Volatility is rarely our friend. At the moment the VIX is holding in overbought territory. Stochastics look very bullish. Relative strength is clearly in the mega-caps favor.
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SPY Weekly Chart: Price is now bumping up against a bearish rising wedge on the weekly chart that does suggest a breakdown out of this rally eventually. The weekly PMO is on the rise, but holds a negative divergence with price as it is lower than its prior top. It won't be official until the weekly PMO tops again below that prior top.
New 52-Week Highs/Lows: The negative divergence on New Highs persists this week and the High-Low Differential topped, setting up a negative divergence with price tops.
Climax Analysis: There were no climax readings today or this week. We do show negative Net A-D and Net A-D Volume on a rally day.
*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) reversed higher this week suggesting more upside is possible. We are still very unimpressed with participation. We have only 43% above their 20-day EMAs and only 43% with rising PMOs. Note that both indicators moved lower on today's rally.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
The ITBM and ITVM continue to travel in different directions with the ITVM rising and the ITBM falling. We like seeing the upside reversal but we would like it confirmed with both indicators rising. Only 43% of stocks hold PMO Crossover BUY Signals which is quite low given we are all-time highs. That sets up another negative divergence.
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PARTICIPATION:The following tables summarize participation for the major market indexes and sectors. The 1-Week Change columns inject a dynamic aspect to the presentation. There are three groups: Major Market Indexes, Miscellaneous Industry Groups, and the 11 S&P 500 Sectors.
All of the sectors, indexes and groups we follow have negative IT Biases. This is because none of them have a Silver Cross Index that is reading above the Golden Cross Index. This is not a healthy condition.
This table is sorted by SCI values. This gives a clear picture of strongest to weakest index/sector in terms of intermediate-term participation.
Regional Banks (KRE) gained an incredible number of points on the SCI this week, but one look at the chart and we are thoroughly unimpressed with what is going on. This is an attention flag to watch it more closely.
Energy (XLE) holds the lowest SCI reading and it saw no improvement despite its recent breakout. The Crude Oil trade hasn't reflected in XLE which is still only inching higher.
This table is sorted by GCI values. This gives a clear picture of strongest to weakest index/sector in terms of long-term participation.
Semiconductors (SMH) cemented their strength in the long term with gains on the GCI, putting it just under Gold Miners which didn't see any gains. They are starting to make a move again and that is reflected in the gain on the SCI.
Biotechnology (IBB) continues to struggle and it is losing ground on both the SCI and GCI and holds the lowest GCI value and nearly the lowest SCI value.
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 and long terms.
The Silver Cross Index dropped below its signal line this week moving our IT Bias back to BEARISH. It tells us almost half of the index are in corrections. It holds a negative divergence with price given that. It is below its signal line so the IT Bias is BEARISH. The Golden Cross Index spent the week in decline and is below its signal line as well so the LT Bias is also 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: The Silver Cross Index tells us that almost 50% of the stocks within the SPY are in correction mode. Clearly the mega-caps are the glue holding everything together and that could easily continue. The STOs are on the rise along with the PMO and Stochastics. However, when the market does decide to fail, it could be very painful with so few stocks ready to pick up the load. We saw negative breadth twice this week on rallies. Negative divergences also tell us the market internals aren't supporting new all-time highs. Staying within the mega-cap names should work...until it doesn't, so set stops and let the market take you out.
Erin is 40% long, 0% short.
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CALENDAR
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BITCOIN
Bitcoin Daily Chart: Bitcoin started the week with some promise on a small rally off support. That utterly failed over the weekend and the losses continued today. Support has now been broken. The PMO has topped beneath the signal line and Stochastics are below 20.
Bitcoin Weekly Chart: The weekly chart doesn't look much better. The weekly PMO is in decline on a Crossover SELL Signal. We can see that the support line from the daily chart is the confirmation line of a bearish double top on the weekly chart. The minimum downside target of the pattern would take price down to 40,000. We don't think that is in store, but more downside should be.
BITCOIN ETFs
Today:
This Week:
INTEREST RATES
Yields are making their way lower and we believe that condition will continue in the near term due to longer-term declining trends staying intact.
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 after starting the week off with a bang. There is a steeper declining tops trendline on the chart that does suggest we will see it move lower. It has now formed a declining trend channel. The PMO is topping and Stochastics look terrible.
MORTGAGE INTEREST RATES (30-Yr)**
**We watch the 30-Year Fixed Mortgage Interest Rate, because, for the most part, people buy homes based upon the maximum monthly payment they can afford. As rates rise, a fixed monthly payment will carry a smaller mortgage amount, which shuts many buyers out of the market, and potential sellers will experience pressure to lower prices (to no effect so far).
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This week the 30-Year Fixed Rate changed from 6.87 to 6.86.
Here is a 50-year chart for better perspective.
BONDS (TLT)
IT Trend Model: BUY as of 6/5/2024
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: TLT benefited from the crash in the 20-year yield this week. It had hit the skids, but managed to reverse on support. The PMO is now turning up along with Stochastics. Yields are looking bearish again so we do expect more upside in the near term.
TLT Weekly Chart: We continue to monitor the large bullish falling wedge on the weekly chart. It has yet to break out of it, but it is trying. The weekly PMO is trying to top beneath the zero line and the 20-year yield is in a long-term rising trend. It's due for a breakout based on the daily chart, but the weekly chart tempers our expectations.
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 now acting bearish. We have price making its way lower this week. The top has set up a bearish rising wedge that implies an upcoming breakdown ahead. The RSI just moved into negative territory and the PMO is nearing a Crossover SELL Signal. Stochastics are falling vertically. A breakdown seems likely.
UUP Weekly Chart: There is also a large bearish rising wedge on the weekly chart so a short-term decline could turn into an intermediate-term decline. The weekly PMO has also topped.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: The bearish double top has not been busted yet. That will take a breakout to all-time highs. This isn't out of the question as we now have a short-term bullish double bottom. The PMO has finally given us a Crossover BUY Signal. The RSI is not overbought so more upside can be accommodated and Stochastics are almost above 80.
Relative strength is picking up for Gold versus the Dollar and given the Dollar looks very weak, we should see more upside from Gold.
GLD Weekly Chart: We think you could make a case for a bull flag on the weekly chart which would imply an upcoming breakout which does confirm that very short-term double bottom on the daily chart. The weekly PMO is attempting to avoid a Crossover SELL Signal.
GOLD MINERS: The flip on the Dollar and the new found strength in Gold served Gold Miners (GDX) well. They are already nearing prior highs. The RSI is not overbought so they could continue to advance. There is a new PMO Crossover BUY Signal and the Silver Cross Index is nearing a "Bullish Shift" across the signal line. Participation in general shot back up leaving us bullish on Gold Miners.
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 been on a solid rally out of the June low and given the rise in demand for gasoline for summer travel, it should continue to advance. Stochastics did top and today saw a bearish filled black candlestick so a pause in the rally may be warranted.
USO/$WTIC Weekly Chart: It wouldn't surprise us to see the rally stall here given it is up against very strong overhead resistance. However, there is still the 2022 top and that is where we think it will settle. The weekly PMO has given us a Crossover BUY Signal so it doesn't seem likely that price will be stopped at this level.
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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