Today the Materials Sector ETF (XLB) 20-day EMA crossed up through the 50-day EMA (Silver Cross) above the 200-day EMA, generating an IT Trend Model BUY Signal. XLB is in a narrow trading range and this is the fourth signal change in two months, and the second in two weeks, so we should be prepared for more whipsaw until there is some sort of breakout.
The weekly chart shows price consolidating after a long-term breakout. This chart looks bullish with the weekly PMO decelerating.
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 saw a steady uptrend today with an interesting thrust to finish the day. The 10-min PMO is on a Crossover BUY Signal and Stochastics are rising.
SPY Daily Chart: Today's rally pushed price past resistance at the late July top. We now have eight consecutive days of rally. This begs for a decline.
The VIX is reading above its moving average on the inverted scale and Stochastics are at the top of the range signifying internal strength.
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S&P 500 New 52-Week Highs/Lows: Good news on the New Lows, there were none. We also see that the High-Low Differential has turned back up for now.
Climax* Analysis: There were unanimous climax readings on the four relevant indicators today, giving us another upside exhaustion climax. SPX Total Volume contracted substantially to only 83% of the one-year average daily volume, so the up thrust may finally be exhausted. Again, we will look for some churn, but will take our lead from the open tomorrow.
*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.
The Swenlin Trading Oscillators (STOs) have now reached extremely overbought territory. We also note that %Stocks > 20EMA are also overbought. %PMOs Rising is also getting overbought.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT.
The ITBM is now what we would consider overbought. The ITVM isn't quite there yet as it had to recover from negative territory. We now have a very healthy 65% of stocks with 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 and long terms.
We note that participation, particularly stocks above their 20-day EMA are getting overbought. The Silver Cross Index is rising strongly and is above its signal line so the IT Bias is BULLISH. The Golden Cross Index has topped, but does have an opportunity to rise given there are more stocks above their 200-day EMA than there are stocks with Golden Crosses. It remains above its signal line so the LT Bias is also 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 market is in need of a digestion period and our indicators are in agreement. First, there is today's upside exhaustion climax and second, indicators in most timeframes are overbought. They aren't as overbought as they can get, but STOs are pretty close. We finally have strong participation, but now it is getting too strong and thus overbought. The Silver Cross Index is rising, there were no New Lows and STOs/ITBM/ITVM are still rising so we would prepare for some churn or consolidation rather than a deep pullback.
Erin is 40% long, 0% short.
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CALENDAR
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BITCOIN
The bull flag is getting rather extended as price continues to trend lower. We aren't ready to scrap the pattern. The PMO is flat and not really declining despite this declining trend so we still see potential for an upside reversal.
BITCOIN ETFs
INTEREST RATES
Yields were mixed. They have establish new rising bottoms trendlines so at this point we are looking for them to reverse higher from here. However, a rate cut announcement could affect this support level.
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 do have a short-term rising trend off the August low, but $TNX doesn't look all that interested in moving higher yet. Still indicators are bullish in our estimation so for now we are going to look for $TNX to inch higher.
BONDS (TLT)
IT Trend Model: BUY as of 6/5/2024
LT Trend Model: BUY as of 7/17/2024
TLT Daily Chart: TLT broke out of the symmetrical triangle as the pattern suggested it would. Remember symmetrical triangles are continuation patterns, so the prior trend should be 'continued' and in this case, the prior trend was up. The PMO is still on the rise but Stochastics are limp. Yields are soft, but we are expecting them to rise again soon and that will put downside pressure on TLT. More than likely we are going to see more sideways churn as rates figure out which way they want to lead.
This is a strong area of overhead resistance.
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 slipping lower and closed beneath the 200-day EMA for the first time this year. The PMO is falling fast, the RSI is negative and Stochastics are below 20. We see more downside ahead for the Dollar.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: We would've expected to see Gold do well given the Dollar was down, but the correlation between the two has eased as you can see on the second chart below. Today's decline is likely due to all-time highs having been reached with investors not ready to push it to another all-time high. The indicators look good so we do expect Gold to resume its rally soon.
GOLD MINERS (GDX): Gold Miners are off to the races and with a new bullish bias on Gold, we expect the rally will continue. Participation is very strong, albeit overbought. The PMO is on a new Crossover BUY Signal and the RSI is not overbought yet. We will look for a breakout above the July top, but it wouldn't surprise us if we saw some profit taking here.
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 sank today dropping below the 200-day EMA. Support has been reached, but it appears the decline is picking up speed. The PMO is nearing a Crossover SELL Signal and Stochastics are dropping. We will look for a test of support at the June/August lows.
We have strong support at the prior lows so we will look for a deceleration in this decline soon.
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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