The wondering is over. NVIDIA's earnings were not good enough to keep the stock from selling off. It was down -2.10% at the close, and it is down another -7.10% in after-hours trading at this writing.
Here's the daily chart as of the close. It has been looking like a top since last week, and today it finally broke down.
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: It was a down day to begin the day and things went south from there. We did see a pick up at the end of the day to recover some of the day's losses.
SPY Daily Chart: The market is rounding off and if futures have anything to say about it, it is likely going to be another day of decline. The PMO is beginning to top out. Price is not overbought as far as the RSI is concerned.
The VIX pretty much held its own today but did see a small decline on our inverted scale. Fear has not yet permeated the market. We'll see about tomorrow. Stochastics are angling downward, but remain above 80. Notice that the mega-caps have begun underperforming against equal-weight RSP. The broad market will have to hold things together, but can it?
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S&P 500 New 52-Week Highs/Lows: New Highs jumped on a down day which is bullish. The High-Low Differential remains bullish as well, but it is moving toward overbought territory.
Climax* Analysis: There were two climax readings today, but they were not very strong ones. SPX Total Volume was only 85% of the one-year daily average volume, but we shouldn't read too much into that, because today was a wait for NVIDIA day. As for our climax analysis, we think we'll have to call it a downside initiation climax. NVIDIA is not doing well in after-hours trading, so it is likely that the market will be down 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 NEUTRAL.
The Swenlin Trading Oscillators (STOs) have declined out of overbought territory. They still look very weak. Participation took a small hit today, but remains over 80%. We lost quite a bit of rising momentum on the decline but we still see 2/3rds of the index holding rising PMOs.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT.
Today the ITVM reversed lower. We didn't see the same out of the ITBM, but it was only fractionally higher today. %PMO Xover BUY Signals topped today. As noted yesterday, we have positive divergences on all of these indicators right now which tells us for now, the intermediate term should be safe.
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.
The Silver Cross Index is rising and given it is lower than %Stocks > 50EMA we should continue to see it rise further. The Golden Cross Index is another story. While it is rising, it is barely lower than %Stocks > 200EMA and that suggests it will be vulnerable to decline soon. Both Indexes are 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: Well NVDA has finally reported and the report was not as perfect as it needed to be. We have a downside initiation climax and the decline in futures and after hours trading suggest we will see a decline tomorrow. The market has been rounding off and showing weakness anyway. The STOs and dwindling momentum suggest that weakness will continue further. Yet in the intermediate term we have robust participation numbers and positive divergences. At this point we would expect more short-term weakness with an understanding that we could get an upside reversal to follow. We wouldn't be expanding portfolios necessarily as we have seen short-term weakness bleed into the intermediate term.
Erin is 35% long, 0% short.
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CALENDAR
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BITCOIN
Bitcoin continued to post losses today after breaking the rising trend. We have another lower high this month compared to May, June and July so it is likely time to move bearish on Bitcoin again. The PMO has topped and Stochastics dropped into negative territory below net neutral (50). It is vulnerable to more downside.
BITCOIN ETFs
INTEREST RATES
Yields were mixed but most inched higher. They are consolidating above support, but look ready to take another trip down to the next 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
The symmetrical triangle formation does imply we will see a breakdown here, but we also note that the PMO has triggered a Crossover BUY Signal. We wouldn't put too much weight on the PMO as it is well below the zero line. We have diminishing weakness not new strength.
BONDS (TLT)
IT Trend Model: BUY as of 6/5/2024
LT Trend Model: BUY as of 7/17/2024
TLT Daily Chart: TLT saw another decline today but it did form a higher high and higher low. It does look toppy right now and we have a PMO Crossover SELL Signal. The PMO is still well above the zero line so we are looking at diminishing strength not new weakness. We would look for more sideways 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 managed a rally but the indicators remain quite bearish. Support hasn't been met yet and we are expecting that before an upside reversal. The PMO has decelerated its decline but Stochastics remain below 20 signaling weakness. It's time to start looking for an upside reversal, but we don't expect it before support is tested.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: A rising Dollar took Gold down a notch today. Unfortunately we can see a small double top forming that could portend lower prices on Gold here. The indicators are currently holding up with a positive RSI, rising PMO and Stochastics above 80.
Discounts on PHYS are moving lower and that does suggest investors may be getting a bit more bullish on Gold. It hasn't really played out in higher prices yet. We are mildly bullish on Gold.
GOLD MINERS (GDX): Participation took a big hit on Gold Miners today with many of them losing support at their 20-day EMAs. Stochastics have dropped below 80. We could be in for more decline, but we hold out some hope for the group given the bull flag on the chart. They may continue lower, building the flag further. Gold needs to pick it up as the market looks weak and that could cause further damage to GDX.
CRUDE OIL (USO)
IT Trend Model: BUY as of 6/21/2024
LT Trend Model: BUY as of 2/27/2024
USO Daily Chart: The bullish double bottom is still there but Crude has taken a turn for the worse. The PMO is still technically rising, but Stochastics have topped and the RSI moved below net neutral (50). We'll still look for an upside reversal, but this decline is rather forceful and could see more follow through.
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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