Small-caps and mid-caps have seen quite a resurgence as today's signals imply.
Today the S&P 400 Mid-Cap ETF (MDY) 20-day EMA crossed up through the 50-day EMA (Silver Cross), generating an IT Trend Model BUY Signal. The Silver Cross Index is now rising almost vertically and we see a nice expansion in participation of stocks above their key moving averages.
The weekly chart shows a break this year above the resistance line drawn across the 2021 top. MDY has been consolidating above that line, now support, and it looks as if it will soon break out of that consolidation pattern. It is approaching all-time highs and looks very bullish. We also note that the weekly PMO is decelerating its decline.
The S&P 600 Small-Cap ETF (IJR) also switched from NEUTRAL to an IT Trend Model BUY Signal. They broke to new highs today essentially busting the triple top pattern we were previously monitoring. Like MDY we see excellent readings on participation and the Silver Cross Index is rising vertically.
As IJR breaks above the line of resistance, it is heading for another line of resistance drawn across the 2021 top, the all-time high of 116.50. The weekly PMO is flat above the zero line, a very bullish configuration. It is also decelerating its decline on this week's strong rally.
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: The market rallied today and was accompanied by broad participation. It is clearly overbought as the RSI suggests.
We've now annotated a rising trend channel that price could mill about in for some time longer, particularly given broader participation. The VIX is tightly bound by its Bollinger Bands as volatility as essentially left the market. Stochastics continued downward on the rally, but ultimately are holding above 80 signaling strength.
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SPY Weekly Chart: Price is now breaking upward and out of the bearish rising wedge. A bullish conclusion to a bearish chart pattern is particularly bullish. The weekly PMO is rising as price continues to log new all-time highs.
The broad market appears to be recovering, but the Magnificent 7 are not recovering yet. Here are tables showing yesterday and today. There was some relief from selling, but no sign of bargain hunting.
YESTERDAY:
TODAY:
New 52-Week Highs/Lows: Further evidence of broadening is the number of New Highs being logged with the rally. The High-Low Differential turned back up this week.
Climax Analysis: We have two indicators with climax readings and two close to climax, we might need to consider today a climax day, but SPY didn't make a new high today, so it is not clear if it is an upside initiation or exhaustion. Considering that all but two of the 26 indexes we follow were up today, we think upside initiation climax is appropriate. This causes us to expect more upside next week, but we should wait to see how the market opens Monday before taking any action.
*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 OVERBOUGHT.
Swenlin Trading Oscillators (STOs) have entered overbought territory, but the strength of their rise is not to be ignored. We also saw even more expansion in both %Stocks > 20EMA and %PMOs Rising.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
The ITBM and ITVM began confirming the short-term indicators this week as they are now both rising in concert. We saw a hefty amount of new PMO BUY Signals as well.
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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.
Regional Banks (KRE) hold the highest IT Bias and it is no surprise given the giant leap the Silver Cross Index made this week. Bank stocks are in the spotlight as earnings are being reported. So far it has proved to be positive for the group.
The lowest IT Bias belongs to Energy (XLE). XLE still has a strong long-term foundation based on the Golden Cross Index reading, but the deterioration it has suffered in the intermediate term has taken its toll on the bias. It did see some improvement in the Silver Cross Index, but the Golden Cross Index lost some ground. It's long overdue for Energy to awaken based on the positive Crude Oil trade.
This table is sorted by SCI values. This gives a clear picture of strongest to weakest index/sector in terms of intermediate-term participation.
Semiconductors (SMH) hold the highest reading and they saw gains this week despite the weakness that we see seeping into the group. We would be cautious with this group for now.
Materials (XLB) hold the lowest SCI reading and it got even worse this week by double digits. We have to say the chart is beginning to look very bullish so a reversal may be in the works for next week.
This table is sorted by GCI values. This gives a clear picture of strongest to weakest index/sector in terms of long-term participation.
Real Estate saw the greatest gain of three percentage points on the GCI and an incredible 16 points on the SCI. With interest rates declining this sector could continue to see gains.
Transports (IYT) lost the most percentage points and it saw a pretty large loss in the SCI as well. We want to see this group do well as it usually is a sign of a healthy market.
Gold Miners (GDX) continue to hold the highest GCI ranking and with the incredible gains on the SCI, we expect more good things out of this group.
Biotechs (IBB) hold the lowest GCI value, but they are seeing improvement and are worth a look right now.
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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.
This week we saw a "Bullish Shift" on the Silver Cross Index as it vaulted its signal line to switch the IT Bias to BULLISH. Participation has shot up this week and given percentages are so much higher than the SCI, we should expect it to continue to rise. Even the Golden Cross Index has an opportunity to improve given more stocks are above the 50/200-day EMAs.
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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: Looking at our table above, the market bias for all of the indexes is bullish right now. The rally has really broadened out and that could keep things elevated. Both short and intermediate-term indicators are rising in concert and participation has shot up. Small-caps and mid-caps have really shined these past two days. Mega-caps may be struggling a bit right now, but with more stocks kicking into gear, the index should continue to rise without their help. We had an upside initiation climax that also suggests we will see higher prices. As we previously said though, we will need to see how the market opens on Monday to get a better understanding of whether these favorable conditions will persist. It's looking pretty good right now.
Erin is 40% long, 0% short.
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CALENDAR
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BITCOIN
Bitcoin Daily Chart: Bitcoin has been in consolidation mode this week making no headway against resistance, but still holding support. Indicators are flat and reveal very little, but there is an overarching chart pattern that does suggest a breakdown rather than a breakout.
Bitcoin Weekly Chart: There is a very large bearish double top on the weekly chart that is somewhat visible on the daily chart above. Price has dropped beneath the confirmation line of the pattern which suggests we will see further downside. The pattern calls for a minimum downside target that could take price all the way down to 40,000. We're not so sure that will happen but there is a clear bearish bias going on here.
BITCOIN ETFs
Today:
This Week:
INTEREST RATES
Yields are in an intermediate-term decline and we suspect that support will be tested before long. With it looking more and more likely the Fed will cut rates, we should continue to see yields fall. The yield curve is still inverted.
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
We have a declining trend channel on the 10-year yield and it is heading down to test the bottom of the channel. The PMO is on a Crossover SELL Signal that developed beneath the zero line which is very bearish.
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).
--
This week the 30-Year Fixed Rate changed from 6.95 to 6.89.
Here is a 50-year chart for better perspective. It looks as though we may have a head and shoulders top.
BONDS (TLT)
IT Trend Model: BUY as of 6/5/2024
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: TLT is enjoying a rally off the decline in the 20-year yield. It is ready to test overhead resistance, but given the nearing PMO Crossover BUY Signal, we are expecting that level to be broken. Yields look particularly bearish so it is time for Bond funds to shine even more.
TLT Weekly Chart: We have a bullish falling wedge on the weekly chart that also implies an upside breakout ahead. The weekly PMO has now risen above the zero line.
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 broke down as expected from the bearish rising wedge. Support is arriving soon, but indicators look particularly bearish so we doubt it will hold at that level. We'll be watching for any bullish indications on the chart when that level is reached as it would be a good reversal point.
UUP Weekly Chart: We have a large bearish rising wedge on the weekly chart as well that also tells us to expect more downside from the Dollar. The weekly PMO has just triggered a Crossover SELL Signal which also implies more decline ahead.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: The double bottom was confirmed this week with the breakout above the confirmation line at about 218.00. It is still part of a bearish double top, but it appears Gold is headed to new all-time highs. If so, the pattern will be busted. Given the positive PMO and Stochastics the expectation is more upside.
We also see that Gold is showing good relative strength against the Dollar. The correlation between the two is getting more pronounced and that is good given the Dollar looks so bearish. We also saw a spike in discounts yesterday that tells us bearish sentiment is still there, but sentiment is contrarian so high discounts can be very good for Gold.
GLD Weekly Chart: Price rallied to new all-time highs and has been consolidating the rally ever since. It looks as though it is building energy for a breakout move. The weekly PMO has reversed and is on a Crossover BUY Signal and the weekly RSI is positive and not yet overbought. Gold looks primed for a breakout.
GOLD MINERS: Gold Miners broke out this week and they continue to look very bullish. 100% of stocks are above their 20/50EMAs and the Silver Cross Index is at a very high reading of 89%. This is a very strong area of the market and with Gold set up for a breakout, it should continue to fare well even though it is getting overbought.
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 pulled back today but set a higher high and higher low so this new rally isn't being compromised. We didn't like the decline this week and did get bearish, but now we see this as a likely bull flag with a high likelihood of a breakout ahead. The PMO isn't helping us reach a conclusion as it is flat and Stochastics aren't much better. We are still cautiously bullish on Crude.
USO/$WTIC Weekly Chart: It makes sense that we would see a pause where we did this week given strong overhead resistance on the weekly chart. However, the chart suggests we will see a breakout. Near-term we have a bullish ascending triangle (flat top, rising bottoms) and the weekly PMO is currently on the rise. We remain cautious because we could see another dip toward the rising bottoms trendline before we get a breakout.
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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