We have been noticing that equal-weight RSP has begun to outperform the cap-weighted SPY. This tells us a few things. First, mega-caps are clearly not doing as well as they have been and second, that the broad market is holding up.
Notice how the SPY has a rounded top while RSP made a new intraday high today. Price is not rounding off. This isn't a complete surprise as today a heavy sell-off (-6.38%) on NVDA did not bring the market completely down with it. We will be monitoring this, but it does suggest we could see the market hold this level as long as the broad market holds its own as it is right now.
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 8/14/2024
LT Trend Model: BUY as of 3/29/2023
SPY 10-Minute Chart: The market was on its way higher in the morning with a strong rally, but it couldn't hold it together and saw a big sell-off after lunch. It did manage to pull itself out of negative territory...barely.
SPY Daily Chart: Today the SPY formed a bearish filled black candlestick which does imply we'll see a decline tomorrow. Price continues to round off, but we do note the intraday high was higher than yesterday's high. The PMO is still holding up.
The VIX isn't moving much but isn't at 'complacent' levels. It is managing to stay above its moving average which is positive. Stochastics are holding above 80, but are angling lower so some of the internal strength is bleeding away.
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S&P 500 New 52-Week Highs/Lows: New Highs are intraday readings and with the big market rally to start the day, New Highs were at similar levels to yesterday on the rally. The High-Low Differential continues to rise but it hasn't really resulted in positive movement of late.
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) were mixed today with the STO-B reversing higher and the STO-V continuing to move lower. Participation is definitely holding up but %Stocks > 20EMA is overbought right now. We saw a few more rising PMOs on trading today.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT.
The ITBM is still rising, but the ITVM continues lower. Both are overbought and could use some unwinding. We are still monitoring new positive divergences on all of these indicators that do suggest we will make all-time highs in the intermediate term. %PMO Xover BUY Signals have topped now, but remain at a robust 80%.
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 and long terms.
Participation remains high for stocks above key moving averages. This is a condition that should keep the market elevated a bit longer. Both the Silver Cross Index and Golden Cross Index remain 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: The broad market picked up the slack today and in spite of mega-cap NVDA's big loss, it managed to mostly hold it together. The STOs and ITBM/ITVM are mixed right now as price rounds off so there is weakness still visible. Given equal-weight RSP is holding its own, it does suggest that there is some broad market strength. If mega-caps get back on board new all-time highs will be upon us. Participation is certainly robust, but today's failure to hold the rally does tell us to be on guard. Tomorrow we will see the PCE reports and that could sway the market in either direction so we will need to be nimble. Applying stops to protect against market failure is wise.
Erin is 35% long, 0% short.
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CALENDAR
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BITCOIN
Bitcoin rallied and mostly kept the rising trend intact. The PMO looks especially bearish especially given the drop in Stochastics. While we have been expecting a good rally, those indicators tell us that Bitcoin may not be through with the decline.
BITCOIN ETFs
INTEREST RATES
Yields moved higher on the day but continue to consolidate atop support. We expect more of the same until we get the expected rate cut from the Fed.
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 broke out of the symmetrical triangle not down which is quite bullish since the prior trend was down and these patterns are 'continuation' formations. The PMO has just triggered a Crossover BUY Signal, but it is well below the zero line so we're not sure were going to get a strong move higher. Stochastics and the RSI are below net neutral (50) so for now look for more sideways consolidation.
BONDS (TLT)
IT Trend Model: BUY as of 6/5/2024
LT Trend Model: BUY as of 7/17/2024
TLT Daily Chart: TLT is rounding off as the 20-year yield begins to trend a bit higher. We don't expect much out of yields one way or the other so similarly we shouldn't expect much out of TLT. The PMO had a Crossover SELL Signal today and Stochastics are headed lower, so we should be prepared for possible downside movement.
DOLLAR (UUP)
IT Trend Model: NEUTRAL as of 8/5/2024
LT Trend Model: BUY as of 5/25/2023
UUP Daily Chart: The Dollar is reversing higher before having to test support at the March low. This is a favorable condition. The rally will now be tested as price has reached a resistance zone and the declining trend is still intact.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold managed a rally even as the Dollar saw higher prices. That suggests internal strength. We now see flat tops and rising bottoms and that is a bullish ascending triangle. The PMO is bottoming above the signal line and Stochastics are camped out above 80. The Dollar does look more bullish right now and that could keep price from breaking out strongly, but ultimately we would look for new all-time highs.
Discounts on PHYS are moving lower and that does suggest investors may be getting more bullish on Gold. This could get us to new all-time highs.
GOLD MINERS (GDX): Gold Miners managed a rally today. The bull flag continues to mature. Participation was healed somewhat as far as stocks above their 20-day EMAs. The PMO has turned down, but that is a function of the flag formation. The Dollar may be about to rally and that will make a breakout tough, but given the flag, we are bullish on Miners. Now we need a breakout to confirm the pattern.
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 righted itself today. We are still monitoring a bullish double bottom formation. It hasn't been confirmed as we need a breakout above the August high first, but it looks pretty good especially with today's reversal. The PMO is rising on a Crossover BUY Signal, but Stochastics are falling. We may see some more choppy trading here.
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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