Today the Technology Sector (XLK) 20-day EMA crossed down through the 50-day EMA (Dark Cross) above the 200-day EMA, generating an IT Trend Model NEUTRAL Signal. Participation has sunk and Stochastics have taken up residence below 20. We have a bearish bias in the IT and LT based on the Silver Cross Index and Golden Cross Index. Price has landed on the 200-day EMA so there is an opportunity for a small bounce.
On the weekly chart, while XLK has had a vigorous pullback, serious technical damage has not yet taken place. Price is only moving back to the rising trend line. However, we have a weekly PMO SELL Signal that does portend that the rising trend could be taken out.
Also today, the Transportation Average ETF (IYT) 20-day EMA has crossed down through the 50-day EMA (Dark Cross) above the 200-day EMA, generating an IT Trend Model NEUTRAL Signal. As with Technology, participation is has sagged, but the Silver Cross Index and Golden Cross Index are still above their signal lines so we have a bullish bias in the IT and LT still.
On the weekly chart we see that IYT has been in a somewhat ragged trading range for almost four years. A trip back to the bottom of the range will take a decline of about -35%. So far support is holding but the weekly PMO is accelerating lower so this support level is especially vulnerable.
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/SPX SECTOR/INDUSTRY GROUP INDEXES
Change Today: 
Change for the Week:
CLICK HERE for Carl's annotated Market Index, Sector, and Industry Group charts.
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 gap down move that took price back into the declining trend. Somewhat capricious investors have flip flopped this week between being bullish Wednesday to now being very bearish.
The VIX crashed on our inverted scale and investors as fear was injected into the market with today's hefty decline. It has now punctured the lower Bollinger Band so there is an opportunity to see a snapback. Stochastics have topped in negative territory so internal weakness is visible.
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SPY Weekly Chart: The rising wedge has now resolved as expected to the downside. The pattern doesn't really give us a downside expectation. Price managed to close just above the 17-week EMA, but it looks vulnerable.
SPY Monthly Chart: Price managed to stay above the parabolic arc through the end of July, but it has crashed the first two days of August, which accounts for the monthly PMO starting to decelerate.
New 52-Week Highs/Lows: New Highs did manage to expand slightly today and we saw a surprise move by the High-Low Differential as it reversed upward.
Climax Analysis: There were three climax readings on the four relevant indicators today, giving us a downside exhaustion climax. SPX Total Volume was 159% of the one-year daily average volume, which indicates that today's decline was probably a blowout. Exhaustion with blowout volume will probably result in a bounce next week. We note that yesterday and today, SPX Net A-D were not at climax levels, which means that breadth is not as broadly negative as is should be.
*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 NEUTRAL.
Swenlin Trading Oscillators (STOs) are both in decline now with the STO-V diving into negative territory. This is not a good sign for the short term. Participation slumped and is now below our bullish 50% threshold. We've lost quite a few rising PMOs. This will make it harder for the market to have a lasting rally if we do get a bounce next week.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL to OVERBOUGHT.
Both the ITBM and ITVM continued their declines today as we would expect. More than half of the index still hold PMO BUY Signals, but given we've lost so many rising PMO, this number is likely to move below our 50% bullish threshold sooner rather than later.
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PARTICIPATION TABLES: The following tables summarize participation for the major market indexes and sectors. The 1-Week Change columns inject a dynamic aspect to the presentation. There are three groups: Major Market Indexes, Miscellaneous Industry Groups, and the 11 S&P 500 Sectors.
The highest IT Bias goes to both Biotechnology (IBB) and Healthcare (XLV). IBB did lose some SCI percentage points, but is hanging tough adding points to the GCI. XLV is seeing great improvement to the SCI and even gained a point on the GCI.
The lowest IT Bias belongs to the NDX (QQQ) which has been hit very hard by the drop in mega-caps. The SCI was hit hard this week as more stocks lose their Silver Crosses.
This table is sorted by SCI values. This gives a clear picture of strongest to weakest index/sector in terms of intermediate-term participation.
Regional Banks (KRE) has the strongest SCI reading at near 100%. The GCI even gained a point. The chart looks less than impressive right now so we aren't sure how long the SCI will hold up.
Semiconductors (SMH) unsurprisingly has the lowest SCI value as the group continues to be slammed.
This table is sorted by GCI values. This gives a clear picture of strongest to weakest index/sector in terms of long-term participation.
KRE and Gold Miners (GDX) hold the highest GCI readings. Both KRE and GDX are showing signs of distress now so we expect these percentages will fall next week.
IBB holds the lowest GCI value, but it did see an increase this week. Today IBB dropped perilously and doesn't look particularly bullish at the moment.
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 has now topped and could see a drop below the signal line soon. This means the IT Bias is likely to switch to BEARISH next week if the decline continues. Participation has sunk to levels that imply both the Silver Cross Index and Golden Cross Index will both continue to decline. The GCI has some room before the bias changes to BEARISH with a drop below the signal line.
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 Bias Table is flipping quickly toward BEARISH Biases especially in the intermediate term. We are also starting to lose Silver Cross BUY Signals on our Signal Table. The indicators are nearly all bearish with the exception of the High-Low Differential which managed to turn up today. Today saw a clear downside exhaustion climax. Combined with a VIX spiking into very oversold territory, we should see some sort of a rebound. Think "dead cat bounce". It will likely be fueled by "buy the dippers". We see problems with a topping Silver Cross Index and Biases shifting BEARISH on our table. Declining STOs also put a bearish spin on any bounce we might see. The broad market is finally cracking based on lower participation so it is likely any rebound will be followed by more decline, hence "dead cat bounce" nomenclature.
Erin is 20% long, 0% short.
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CALENDAR
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BITCOIN
Bitcoin Daily Chart: Bitcoin is declining out of a bearish double top formation. The indicators are now reading bearish so we would expect this decline to continue toward the 200-day EMA.
Bitcoin Weekly Chart: We do see a bull flag on the weekly chart, but it appears price is ready to test the bottom of the flag. This is high level consolidation after a parabolic breakdown. Given the flag, we do expect Bitcoin to eventually test all-time highs. With a declining weekly PMO, it isn't likely to happen until this near-term decline completes.
BITCOIN ETFs
Today:
This Week:
We see bearish triple tops developing on all of these charts.
INTEREST RATES
Yields dove lower this week taking them down to support. This is a support zone so we expect them to move lower to test the next level of support available. Rate cut discussions are likely to keep yields moving lower.
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
In very bearish fashion, $TNX plunged below the bottom of an already declining trend channel. This is especially bearish, but we do note it is sitting on support now. The PMO topped twice below the zero line and is in decline so we do expect to see $TNX move even lower.
MORTGAGE INTEREST RATES (30-Yr)**
**We watch the 30-Year Fixed Mortgage Interest Rate, because, for the most part, people buy homes based upon the maximum monthly payment they can afford. As rates rise, a fixed monthly payment will carry a smaller mortgage amount, which shuts many buyers out of the market, and potential sellers will experience pressure to lower prices (to no effect so far).
--
This week the 30-Year Fixed Rate changed from 6.77 to 6.78.
Here is a 50-year chart for better perspective.
BONDS (TLT)
IT Trend Model: BUY as of 6/5/2024
LT Trend Model: BUY as of 7/17/2024
TLT Daily Chart: Bonds are off to the races as yields continue to plunge lower. These funds are likely to continue moving higher as yields look particularly bearish. This week's breakout was incredible. It is getting overbought based on the RSI, but the PMO and Stochastics are very bullish and suggest overbought conditions will persist.
This was a breakout above the 2023 top.
TLT Weekly Chart: We've been monitoring the bullish falling wedge on the weekly chart and this week it executed as expected with a breakout. The weekly RSI isn't overbought so it can accommodate more upside. The weekly PMO is accelerating higher. Bonds have a very good chance of breaking out above 2023 tops.
$USB Monthly Chart: Let's put the bond rally into a very long-term context. We can see that bonds rallied for 40 years, but they broke down from the long-term rising trend channel in 2022. From there they had a substantial decline that formed a falling wedge pattern, which will normally resolve to the upside. Which it did. We have been expecting a bear market rally, which is now in progress. It has long been our expectation that the bear market rally will fail, and we can see that $USB has a long way to go before it can recapture the long-term rising trend line. We doubt that will happen.
DOLLAR (UUP)
IT Trend Model: BUY as of 1/23/2024
LT Trend Model: BUY as of 5/25/2023
UUP Daily Chart: The Dollar gapped down on trading today taking it to the support zone formed by the May/June lows. The PMO has topped beneath the signal line and is now below the zero line so we should expect a breakdown here. Stochastics confirm this outlook.
We're starting to see a possible head and shoulders top on the Dollar which also suggests a breakdown ahead.
UUP Weekly Chart: The large bearish rising wedge on the weekly chart also suggests we will see the Dollar continue to fall. The expectation is a breakdown of the rising bottoms trendline. The weekly PMO is in decline. All signs and charts point to more decline.
UUP Monthly Chart: The monthly chart shows us that the Dollar is still in a long-term rising trend. The topping monthly PMO tells us we could see a test of the rising bottoms trendline. That implies a sizable decline 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: All things being equal, Gold should've traded higher on such a big decline in the Dollar, but not so. This implies weakness. The prior double top was exterminated when price overcame both tops. Unfortunately, we now have another double top developing. The PMO is still on the rise and so are Stochastics, so this could bust rather quickly. We just need to be aware that there are bearish forces now being detected with this double top and today's relative weakness to the Dollar.
GLD Weekly Chart: Gold is still flirting with all-time highs. The weekly PMO is flat and rather unhelpful, but this does look like a nice breakout. The double top on the daily chart is the big problem, but it isn't really visible here. We are cautiously optimistic about Gold's intermediate-term outlook.
$GOLD Monthly Chart: Long term we have a parabolic advance and those beg for correction. However, we could see more upside given the very bullish monthly PMO. We should be on guard though as price is very overbought based on this chart and those conditions tend to lead Gold downward.
GOLD MINERS: Gold Miners are back in a declining trend. They looked ready to reverse higher, but Gold isn't cooperating right now and neither is the market for that matter. We have a PMO top beneath the signal line and participation has thinned greatly. So far it is holding above support, but we see that as highly vulnerable right now given the very short-term negative look for Gold. Stochastics have also topped in negative territory. Expect more downside.
CRUDE OIL (USO)
IT Trend Model: BUY as of 6/21/2024
LT Trend Model: BUY as of 2/27/2024
USO Daily Chart: On Wednesday Crude rallied and broke through a declining trend on Middle East issues with Israel and Iraq. That was very short-lived as price tanked yesterday and today. Support is nearing and that makes sense as a good reversal area. Indicators are very negative so we should expect a decline to at least that level with a good chance of a breakdown.
We see a large double top formed by the April high and July high. This could imply that price has much further to fall.
USO/$WTIC Weekly Chart: We still see a bullish ascending triangle on the weekly chart (flat top, rising bottoms). The expectation is an upside breakout, but given the very negative daily chart, we would look for the rising trend to be tested. The weekly PMO is in decline on a Crossover SELL Signal so that rising trend is very vulnerable.
WTIC Monthly Chart: We see a symmetrical triangle on the monthly chart. These are continuation patterns. This means the prior trend will be continued. The prior trend was down so it calls for a breakdown. The monthly PMO is in decline which also favors a breakdown. Middle East unrest could get Crude to switch gears as it did Wednesday, but without that it seems likely Crude will continue to make its way lower.
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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