Today the Nasdaq Composite ETF (ONEQ) 20-day EMA crossed down through the 50-day EMA above the 200-day EMA (Dark Cross), generating an IT Trend Model NEUTRAL Signal. Price has violated the rising trend line, the daily PMO is below the zero line and falling, and the Silver Cross Index has dropped below the 50% level, all of which is bearish.
We see similar problems on the weekly chart. There is an opportunity to hold onto the longer-term rising trend, but we have a weekly PMO in decline on a Crossover SELL Signal.
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 11/14/2023
LT Trend Model: BUY as of 3/29/2023
SPY Daily Chart: Today saw a snapback, but we note that it was holding much higher during the day and fell off to finish it. The PMO has now sunk below the zero line and is showing no signs of deceleration.
Price recapture support as price bounced off the 200-day EMA. The VIX was still elevated and is situated underneath its moving average. Stochastics are holding below 20 so there is internal weakness still.
Here is the latest recording from 8/5:
S&P 500 New 52-Week Highs/Lows: New Highs and New Lows were negligible. The High-Low Differential continues moving lower in a declining trend.
Climax* Analysis: Today there were three climax readings and an "almost" on the four relevant indicators, giving us an upside initiation climax. SPX Total Volume contracted but was still 125% of the one-year daily average. Expectations are for a continued rally, but they should be tempered with our belief that a bear market is in progress.
*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 DOWN and the condition is SOMEWHAT OVERSOLD.
Swenlin Trading Oscillators (STOs) are continuing their decline despite today's rally. They could be considered oversold, but we expect them to move much lower. We saw only a slight increase in participation and while we gained rising PMOs, they still have anemic reading below 30%.
Intermediate-Term Market Indicators: The intermediate-term market trend is DOWN and the condition is NEUTRAL.
Both the ITBM and ITVM are moving lower and we saw a loss of PMO BUY Signals in spite of the rally.
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 now BEARISH in the intermediate term.
The market bias is BULLISH in the long term.
The Silver Cross Index is reading above our 50% bullish threshold so there is some foundation available for a rally, but given percentages of stocks above their 20/50-day EMAs are much lower, it will continue to slide lower. It is below its signal line so the IT Bias is BEARISH. The Golden Cross Index is above its signal line so the LT Bias is still BULLISH. It is declining and given participation of stocks above their 200-day EMAs is lower, it will continue to decline.
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: As yesterday's downside exhaustion climax suggested, we got a nice snapback rally after yesterday's deep decline. It is now followed by an upside initiation climax that implies this rally is likely to continue at least for the next day or two, but underlying weakness abounds. Participation is very low and we are losing PMO BUY Signals within the index. Our primary indicators the STOs and ITBM/ITVM are all in decline. We don't think this rally will get legs, it is more likely a reaction to a decline that was overdone. Look for some more rally over the next day or two, but be prepared for it to fail as we do believe we are entering a bear market.
Erin is 20% long, 0% short.
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CALENDAR
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BITCOIN
As with the market, Bitcoin saw a nice snapback today as it set up another line of support. Stochastics have turned back up and the PMO did show a little bit of deceleration. We think this is a good place to look for a reversal, but we need the PMO to turn back up soon.
BITCOIN ETFs
INTEREST RATES
Yields seem to have found a bottom as treasuries have topped. This support level does look like a good place to start an up leg.
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
After the waterfall decline, $TNX managed to snap back above resistance. The PMO is decelerating and Stochastics have turned up so we would look for the yield to begin making its way back up.
BONDS (TLT)
IT Trend Model: BUY as of 6/5/2024
LT Trend Model: BUY as of 7/17/2024
TLT Daily Chart: We saw a deep decline off the bearish filled black candlestick. Yields are looking far more bullish as they bounce off support so it is likely time for Bond funds to cool and pull back. The PMO is decelerating its rise and Stochastics have topped.
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 also rebounded today, but formed a bearish filled black candlestick. The PMO remains in decline and Stochastics have dropped below 20 so we do expect it to resume the decline.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold showed another day of relative weakness against the Dollar. It was down much lower than the Dollar was up. The bearish double top is developing further. It will be confirmed with a drop below support. Stochastics are falling so we do expect this decline to continue a bit longer.
The PMO remains on a Crossover SELL Signal and the RSI dropped into negative territory. Weakness is definitely visible right now.
GOLD MINERS (GDX): Gold Miners managed a rally despite the drop in Gold. Gold still looks bearish to us and that will apply gravity to GDX's price. The Silver Cross Index is in decline and based on the dismal participation of stocks above their 20/50-day EMAs, it will likely pick up speed on the way down. This doesn't look like a place to enter.
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 slid lower. Tensions in the Middle East are not translating to higher Oil prices and neither is summer demand. Support is arriving and that does offer a good reversal point. However, indicators are still very bearish with the PMO declining below the zero line and Stochastics declining below 20. It was a bullish hollow red candlestick today and that does imply we'll get rally tomorrow, however yesterday's hollow red candlestick did not fulfill. There is still downside pressure being applied.
While we could see a reversal at this level, we note that support is the confirmation line of a large double top formed by the April highs and July high. Crude Oil is especially vulnerable.
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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