We will discuss the new USO LT Trend Model SELL Signal in the "CRUDE" section below.
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Apple (AAPL) has begun a new short-term declining trend out of the August high. A very large double top has begun forming. The confirmation line is at the August low. We would look for a possible test of that level. The RSI is in negative territory below net neutral (50) and the PMO is headed lower on a Crossover SELL Signal. We even have Stochastics topping in negative territory. The unveiling of the new iPhone 16 didn't result in higher prices. Investors were unimpressed. Whether this negativity bleeds into the rest of the Magnificent 7 is unknown, but this certainly looks bad for AAPL.
The weekly chart shows the large double top. If price were to drop below the confirmation line, the minimum downside target of the pattern would take price to the support level at 160.00. The weekly PMO has topped.
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: Trading was a little rocky this morning, but it found its legs at lunchtime and rallied into the close. 10-minute Stochastics aren't encouraging, but the 10-minute PMO is still rising.
SPY Daily Chart: We saw a bullish hammer candlestick today, but these one-day patterns are usually more bullish when they arrive at a price bottom. The PMO is still in decline. The RSI is almost in positive territory.
The bearish double top reminds us of the Apple chart above, but in this case we have two days of rally not decline. The VIX is still elevated and is below its moving average on the inverted scale which suggests there is still some concern by market participants. They don't appear sold on this rally. Stochastics did turn up.
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S&P 500 New 52-Week Highs/Lows: New Highs did expand today, but we also saw a number of New Lows. The High-Low Differential is still in decline which puts a bearish spin on the chart.
Climax* Analysis: There were no climax readings today.
*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.
Both the Swenlin Trading Oscillators (STOs) turned up in near-term oversold territory. They are still in negative territory, but this is a welcome sight. Participation didn't see much expansion on the rally today, but %Stocks > 20EMA are above the 50% bullish threshold. We need far more rising PMOs than we have now to push the market higher.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT.
The STOs may've turned up but our Intermediate-Term Breadth Momentum (STO-B) and Volume Momentum (ITVM) indicators continued to decline. We still see a loss of 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 BEARISH in the intermediate term.
The market bias is BULLISH in the long term.
The Silver Cross Index is below its moving average still so the IT Bias is BEARISH. It is still reading above our bullish 50% threshold as is the Golden Cross Index. The Golden Cross Index is above its signal line so the LT Bias is BEARISH. We do need to be aware of the positive divergences on the chart that suggest we will eventually see all-time highs. However, price may need another trip down to support first.
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: We now have bearish biases on all of the indexes we follow so while this rally looks pretty good, there are still bearish forces at work. However, we have to say that this could be a market bottom coming into focus as the STOs and Stochastics turned up today. Participation didn't really expand today so the foundation of this rally is still suspect. We do have some much anticipated economic reports (CPI and PPI) getting released over the next two days that will likely determine the size of this month's rate cut. It seems highly likely to us that we will see the market churn in response. We will be on the lookout for a bottom, but it seems too soon to start looking toward new all-time highs.
Erin is 20% long, 0% short.
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CALENDAR
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BITCOIN
The short-term declining tops line has been broken. This looks like a good reversal off support. The PMO is turning up and Stochastics are rising so we are looking for higher prices on crypto.
BITCOIN ETFs
INTEREST RATES
Yields continue to decline and are nearing the next level of support. We have thought this level would be sturdy, but the strong declining trends suggest we will see them drop below this level. An upcoming rate cut will likely speed their decline.
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
As noted above yields look very bearish right now. $TNX has lost support and is headed even lower. The new PMO Crossover SELL Signal has occurred well below the zero line and Stochastics have topped. It will take a serious shift in momentum to turn this decline around.
BONDS (TLT)
IT Trend Model: BUY as of 6/5/2024
LT Trend Model: BUY as of 7/17/2024
TLT Daily Chart: Yesterday's comments still apply:
"TLT is breaking out and given the bearish look on yields, we would expect more upside out of TLT. The PMO is flat above the zero line and on a new Crossover BUY Signal. This signals pure strength. Stochastics are above 80 and as far as the RSI is concerned, price is not yet overbought."
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 has now hit overhead resistance. We will see if this rally is for real tomorrow. The indicators do suggest we will see a breakout. The PMO is still well below the zero line so it is signaling diminishing weakness not new strength, but with Stochastics looking so strong, a breakout does seem likely.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold remains in a holding pattern. UUP's rally didn't faze Gold which did manage its own rally today. The Dollar is at resistance but looks like it will breakout. We still think Gold will hold its own and stay bounded in this trading range. The indicators are neutral and unhelpful.
We note that discounts are paring back again and that means investors are getting more bullish on Gold. This could work in its favor, but discounts are getting pretty low. Sentiment is contrarian so if it gets too bullish it will likely mean a decline. For now we will look for this trading range to hold.
GOLD MINERS (GDX): Gold Miners rallied again today, but the declining trend is still intact. The Dollar is looking a bit more bullish and that could pose a problem for Gold and consequently Gold Miners. The PMO is still in decline. The Silver Cross Index continues to decline, but we are seeing some improvement to %Stocks > 20EMA. It is almost above our 50% bullish threshold. This looks pretty good, but we'd prefer to wait until that declining trend is challenged and overcome before getting bullish on GDX.
CRUDE OIL (USO)
IT Trend Model: NEUTRAL as of 8/1/2024
LT Trend Model: SELL as of 9/10/2024
USO Daily Chart: Today the USO 50-day EMA crossed down through the 200-day EMA (Death Cross), generating an LT Trend Model SELL Signal. On this six-month chart USO appears to be falling out of a trading range. Middle East tensions don't seem to be troubling investors, the big problem is production which is healthy. The PMO continues to drop and Stochastics are holding below 20.
On this one-year chart USO is declining toward the bottom of a wider trading range. Today's 50/200EMA crossover is the third in a year, so we must be prepared for the trading range to prevail. We'll look for a reversal at the December low, but the thrust of this decline suggests that level will be fragile. The last Death Cross came in right around the upside reversal.
USO Weekly Chart: USO has been in a trading range for almost three years, consolidating after the recovery from the 2020 crash. If the December low doesn't hold, there is stronger support available at 60.00.
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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