Today the Nasdaq Composite ETF (ONEQ) 20-day EMA crossed up through the 50-day EMA (Silver Cross), generating an IT Trend Model BUY Signal. Price is moving sideways since hitting all-time highs and with price braiding along the 20/50-day EMAs, we could see yet another signal change. Participation could be stronger with the Silver Cross Index reading below our bullish 50% threshold.
The weekly chart shows price playing tag with the most accelerated rising trend line, and the weekly PMO is falling, but the chart looks mildly bullish.
Also today, the Nasdaq 100 ETF (QQQ) 20-day EMA crossed up through the 50-day EMA (Silver Cross), generating an IT Trend Model BUY Signal. It is also braiding the 20/50-day EMAs so this signal could also fall by the wayside. Participation is stronger here suggesting mega-caps are still holding sway within this tech heavy index.
The weekly chart looks similar to ONEQ with the weekly PMO falling, but the chart still looks bullish as it holds its rising trend quite easily.
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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: The market continued to trade flat as investors await the Fed rate decision on Wednesday. We know there will be a rate cut, the question is by how much?
SPY Daily Chart: Price is nearing overhead resistance at all-time highs, but given the rising PMO on a Crossover BUY Signal, we do think they will reach them. We may experience a pause beforehand.
The double top is still being monitored. It was never confirmed by a drop below the confirmation line. It will bust if price reaches all-time highs as we believe it will. Stochastics are above 80 now which implies internal strength.
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S&P 500 New 52-Week Highs/Lows: New Highs burst forth today on a mild rally. It is overbought right now, but we also note that the High-Low Differential has turned back up well above the zero line which bodes well.
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 UP and the condition is OVERBOUGHT.
The Swenlin Trading Oscillators (STOs) have already reached overbought territory. They certainly can move more overbought. They look bullish as they rise. We are also seeing an expansion in stocks above their 20-day EMA. 2/3rds of the index now have rising momentum.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT.
The ITBM and ITVM have reversed higher but are sitting in overbought territory. They aren't as overbought as they can get and they are rising in concert which is bullish. Nearly half of the index have 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 BULLISH in the intermediate and long term timeframes.
Participation is expanding again and isn't in overbought territory yet. We also see positive divergences leading into this rally. Both the Silver Cross Index and Golden Cross Index are above their signal lines so the IT and LT Biases are read as BULLISH. They are not overbought and are holding at healthy levels.
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 nearing all-time highs once again and it is lined up to reach them. However, we may see some digestion of the current rally first as that level has psychological significance. Add that to the nearing FOMC rate decision and we should see more sideways or muted trading going into those all-time highs. The STOs and ITBM/ITVM are rising and now the High-Low Differential has joined in. There are positive divergences on the Silver Cross Index and Golden Cross Index and they are reading at healthy levels. For now we are cautiously bullish as we move toward all-time highs.
Erin is 30% long, 0% short.
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CALENDAR
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BITCOIN
Bitcoin is pulling back again and has just reached support. The rising trend is intact in the short term, but it seems vulnerable given the topping PMO below the zero line. We also see that price turned back down before reaching the declining tops trendline which is a bearish sign.
BITCOIN ETFs
INTEREST RATES
Yields continue to make their way lower toward support. We'll watch for a possible reversal at that level, but with the upcoming Fed rate cut, we could see this support level broken if yield fall in sympathy.
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 declining trend is steep and it doesn't appear that $TNX will break free from it. The PMO is flat beneath the zero line and that implies pure weakness. Stochastics are also below 20 and the RSI is negative. We aren't looking for a bottom here.
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 been enjoying a rally and it will likely continue to given the very bearish look of the 20-year yield. The PMO is flat above the zero line indicating pure strength. Also indicating strength are Stochastics which are holding easily above 80. Bond funds are likely to continue rising.
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 formed a short-term bearish double top right along overhead resistance. The PMO has topped well below the zero line and Stochastics are falling fast. The Dollar holds a bearish bias.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: With the Dollar slightly lower, we should've seen Gold rise today, but we didn't. All-time highs were hit last week and now it is likely time for some consolidation. We still like the metal especially given the rising PMO on a Crossover BUY Signal. Stochastics also look bullish above 80. So maybe we'll see more of a melt upward.
Discounts are still rather high given we hit all-time highs so not all traders are bullish on Gold. Maybe this is weighing on it right now.
GOLD MINERS (GDX): Gold may be cooling after hitting all-time highs so it may be time for Gold Miners to cool as well. This would likely offer a great opportunity to get involved with a very strong industry group. Participation is incredibly strong and there is a new PMO Crossover BUY Signal. Stochastics just popped above 80. We still higher prices for GDX, it just may require a small pullback or pause in line with Gold.
CRUDE OIL (USO)
IT Trend Model: NEUTRAL as of 8/1/2024
LT Trend Model: SELL as of 9/10/2024
USO Daily Chart: Crude is making a nice reversal, but the indicators still haven't firmed up. The PMO is mostly flat and Stochastics while rising are in negative territory. Resistance is also nearing so we could see this rally cool somewhat. A move above resistance would have us more confident in the strength of this advance.
This does look like a bullish "V" bottom on the one-year chart and that would imply a rally to test highs at 78.00. Price did reverse before having to test support at 64.00 and that is bullish too. It all comes down to how price handles this resistance level.
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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