Today the Nasdaq Composite ETF (ONEQ) 20-day EMA crossed up through the 50-day EMA (Silver Cross) above the 200-day EMA, generating an IT Trend Model BUY Signal. The advance from the August low has been pretty much straight up, and we should be cautious of a potential pullback, as a "pause to refresh" is certainly due.
The weekly chart shows the breakdown from a rising trend line, followed by an upside reversal and the recapture of the rising trend line. The chart is bullish.
Also today, the Retail Industry Group ETF (XRT) 20-day EMA crossed up through the 50-day EMA (Silver Cross), generating an IT Trend Model BUY Signal. Participation is above average but it already is being compromised by just one day of decline. The Silver Cross Index had a Bearish Shift across the signal line today giving it a bearish bias in the intermediate term.
The weekly chart shows that XRT has been in a trading range for most of this year, consolidating the escape from a lower level 18-month trading range in 2022/23. The weekly PMO is drifting down slightly because of the consolidation activity.
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 upside exhaustion climax played out as expected with a day of digestion.
SPY Daily Chart: Price still remains above support and is headed to all-time highs. The RSI is not yet overbought despite the lengthy rally and the PMO is moving higher on a Crossover BUY Signal.
The VIX is showing a little deterioration on our inverted scale. Stochastics are still rising and are well above 80 suggesting we still have internal strength.
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S&P 500 New 52-Week Highs/Lows: New Highs did expand on today's decline which is positive and we didn't see any New Lows again. The High-Low Differential is technically rising but is showing no exuberance yet.
Climax* Analysis: There were no climax readings today. SPX Total Volume expanded slightly, but still was only 85% of the one-year average daily volume, which could be considered constructive on a consolidation 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 OVERBOUGHT.
Swenlin Trading Oscillators (STOs) dropped today out of overbought territory. Participation saw slight shrinkage. %Stocks > 20EMA is getting overbought so a decline was good. We have slightly less rising momentum, but enough to keep the rally on track.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT.
The ITBM and ITVM were unperturbed by today's minor decline as they both continue to rise. The ITBM is overbought, but could accommodate more upside should we see it. %PMO Xover BUY Signals is rising and is at a healthy 70%.
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 of stocks above their 20/50/200-day EMAs are at healthy levels, although %Stocks > 20/50EMAs are getting on the overbought side. As with the ITBM and ITVM they can accommodate more upside. The Silver Cross Index is rising and should continue to rise. It is above its signal line so the IT Bias is BULLISH. The Golden Cross Index is also on the rise, but may not be able to continue to rise much further given 76% are above their 200-day EMAs compared to 74% with golden crosses. It is above its signal line so the LT Bias is 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: There were technical reasons as to why the market stalled, yesterday's upside exhaustion climax being one of them, but the fact that the Fed Head is speaking at Jackson Hole tomorrow probably has something to do with it as well. The market is pricing in a rate cut, but we wouldn't be surprised if the market saw an uptick on news from the FOMC. Overall with STOs now in decline, we are looking for more consolidation or a small pullback. With the ITBM and ITVM rising we don't think the bull market is vulnerable. There just may be some turbulence ahead.
Erin is 45% long, 0% short.
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CALENDAR
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BITCOIN
The PMO is ever so close to a Crossover BUY Signal and we still see a bull flag on the chart. The declining trend was on its way to be broken, but ultimately price dropped back within the flag. Stochastics tell us that we may be in for more sideways movement before a breakout.
BITCOIN ETFs
INTEREST RATES
Yields were down on the day. New short-term rising trends are already in jeopardy so an upside reversal seems less likely.
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 is back to testing support as it once again dropped out of the bullish falling wedge. The PMO has topped beneath the signal line so we suspect this support level will not hold. Stochastics have topped in negative territory again. This chart is full of weakness.
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 above the prior high and is on its way to test the August top. We think it has a good chance of breaking out there given the rising PMO and rising Stochastics.
This is a strong area of overhead resistance, but it was broken today.
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 dropping quickly and we don't see support coming for awhile. The indicators are decidedly bearish so we suspect it will fall even further.
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 and is testing new all-time highs. It did form a bearish filled black candlestick, but given the Dollar looks so weak, we expect Gold will continue to make new all-time highs. The PMO is rising and Stochastics are above 80.
With the Dollar looking weak, we want the correlation to get back close to a perfect inverse. If not, Gold could find itself in a decline even with a weak Dollar. Relative strength does look very positive as it is rising against the Dollar.
GOLD MINERS (GDX): Gold Miners broke out above the July top and still look very bullish. Despite the strong rally, the RSI is not yet overbought. The PMO is rising on a Crossover BUY Signal and participation is robust. Now we wait for the Silver Cross Index to move back above its signal line. While participation is clearly overbought, we can see that these conditions can persist during a good rally like we are having now.
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 continues to slide lower. It lost support today. The PMO Crossover SELL Signal suggests to us that it has further to fall. That signal came in below the zero line so we see pure weakness. Stochastics are also in sharp decline which also suggests more downside ahead.
We have strong support at the prior lows so we will look for a deceleration in this decline as we get closer to it.
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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