Gold opened at a fresh all-time high today. We'll discuss this in more detail in its section.
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The market was a little unsettled by the PPI and jobs reports this morning, but ultimately traders decided a smaller rate cut is still a rate cut nonetheless so the market climbed. We do note that it was held up to finish the day and we do see the 10-minute PMO moving lower currently so we may have some near-term weakness.
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 Daily Chart: New all-time highs are not that far away. We need to see them to bust the bearish double top we currently see. The PMO is rising toward a new Crossover BUY Signal...slowly.
The VIX moved above its moving average on our inverted scale and that could mean we are getting some near-term strength. Stochastics are very bullish as they rise strongly.
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S&P 500 New 52-Week Highs/Lows: We did see an expansion in New Highs but they are fairly low compared to the last time price hit this level. New Lows disappeared which is good. We don't like the decline in the High-Low Differential but so far it hasn't resulted in much downside.
Climax* Analysis: There were two climax readings on the four relevant indicators today, giving us a weak upside exhaustion climax. With SPY approaching all-time highs/overhead resistance, it is possible that the rally has exhausted itself. We need to stay tuned on that.
*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.
Both Swenlin Trading Oscillators (STOs) continue to make their way higher. The STO-B hasn't left negative territory just yet, but it looks good. Participation did see a slight expansion which is welcome. We are seeing more rising PMOs, but they are still reading below our 50% bullish threshold.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT.
Today Intermediate-Term Volume Momentum (ITVM) turned up. We didn't see the same from the ITBM, but it is an improvement. %PMO Xover BUY Signals turned up as well, but do remain at a relatively low level to support the rally. With more rising PMOs, we should see this indicator continue to expand.
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.
Both the Silver Cross Index and Golden Cross Index are rising together. The Silver Cross Index remains below its moving average so we still have to read the IT Bias as BEARISH, but the reading itself is healthy. Participation of stocks above their 20/50-day EMAs is lower than the Silver Cross Index so it could see a downturn. The Golden Cross Index is vulnerable to decline given %Stocks > 50/200EMAs is reading lower than it. 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: The market is happy about the upcoming rate cut even if it isn't as high as it'd like. This is kickstarting the index. However, we note a few issues. Overhead resistance is arriving at all-time highs and that could cause the rally to pause or even see a pullback. Also of concern are the declining STO-B and ITBM alongside the declining High-Low Differential. There is also today's upside exhaustion climax added to the mix. Ultimately this looks like a pretty good price bottom that could see more follow through, we just have to wonder if it will be enough to push price past resistance at all-time highs.
Erin is 30% long, 0% short.
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CALENDAR
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BITCOIN
Bitcoin found support and it is now headed higher. We do see that a Death Cross is lying in wait, but if price can get back above the 200-day EMA, the signal will be avoided. Overall it is in a wide price range. Based on the rising PMO and Stochastics, we are looking for a test of the August high.
BITCOIN ETFs
INTEREST RATES
Yields were mixed but longer-term rates did see an increase today. We will want to be on the lookout for an upside reversal now that support is nearing, but with an upcoming rate cut, we do expect them to test support first.
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 reversing, but the declining trend is still steep and with the upcoming rate cut we have to believe that $TNX will decline in sympathy. This does look like a good place for an upside reversal so we will watch the PMO to take our cue.
BONDS (TLT)
IT Trend Model: BUY as of 6/5/2024
LT Trend Model: BUY as of 7/17/2024
TLT Daily Chart: TLT has had a mechanical pullback toward the last breakout point. We expect it to hold here or possibly move higher as rates still haven't hit longer-term support yet. The PMO is flat above the signal line suggesting pure strength in this rally and Stochastics have set up residence above 80.
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 been turned away at resistance and could see another move down to test support. The PMO is already looking toppy beneath the zero line and Stochastics topped. We have a small double top that suggests price will continue lower.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Today gold made a new all-time high. The remarkable thing about this is that sentiment is still negative. In fact, gold has been making all-time highs all this year, yet sentiment remains negative. It has gotten less bearish, but we don't see premiums yet. This breakout looks solid as the PMO has reversed higher and is near a Crossover BUY Signal. Stochastics are back above 80.
The inverse correlation with the Dollar is strong and with the Dollar beginning to show weakness, this should be good for Gold as it should be. The last time we had a breakout to new all-time highs, price stalled and moved sideways. We should be alert for this again.
GOLD MINERS (GDX): Gold Miners popped today on Gold's all-time high and a positive market close. This looks like a solid breakout from the declining trend and should see some follow through. The Silver Cross Index has turned back up and so has the PMO. Participation has shot up and that should get the Silver Cross back above its signal line. Stochastics also look very bullish.
CRUDE OIL (USO)
IT Trend Model: NEUTRAL as of 8/1/2024
LT Trend Model: SELL as of 9/10/2024
USO Daily Chart: USO saw a strong follow through rally and it suggests it may've found a bottom. The PMO is now edging back up and Stochastics are moving slowly higher. The both are still weak as the PMO is well below the zero line and Stochastics are below 20, but this is an improvement.
USO is reversing before reaching the next line of support and this is bullish. $OVX is rising again after puncturing the bottom Bollinger Band on our inverted scale. That also implies this could be a good bottom for Crude.
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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