NVIDIA (NVDA) has had two excellent days of rally so we thought it a good time to review the chart and give NVDA a check-up. The chart does seem to imply more upside for NVDA but overhead resistance will likely pose a problem. The RSI is positive and not yet overbought which is good. The PMO is back on a Crossover BUY Signal, but it is rather flat. Stochastics are back above 80 so we have internal strength visible.
One thing that we noticed is that the relative strength of Semiconductors to the SPY is rising. The industry group is beginning to outperform again and that is good for the market. NVDA is outperforming the SPY, but notice that it isn't outperforming its industry group right now. It is inline with it so that is acceptable given it is already outperforming the SPY. But, it does tell us there might be better choices as far as relative strength against the group. One tidbit, Taiwan Semiconductor (TSM) is outperforming the industry group so it is worth a look.
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
CLICK HERE for Carl's annotated Market Index, Sector, and Industry Group charts.
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 was in steady decline most of the day but it did manage to reverse midday and take back some of the earlier losses. Stochastics have turned back up.
SPY Daily Chart: The market continued to churn today logging a small decline. Price does look a bit toppy right now but the PMO is still on the rise and based on the RSI price is not overbought at this level.
The VIX is holding above its moving average on the inverted scale and hasn't penetrated the upper Bollinger Band yet. Stochastics still look very healthy as they oscillate above 80. There is still internal strength.
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S&P 500 New 52-Week Highs/Lows: As expected New Highs pared back on the decline and two New Lows were detected. At this point the chart is somewhat bullish given the rising High-Low Differential.
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 NEUTRAL.
The Swenlin Trading Oscillators (STOs) were mixed today. We did see the STO-V reverse higher but the STO-B is still in decline. Participation slumped today but still remains above the bullish 50% threshold, however, rising momentum has really taken a hit with now less than half of the index showing rising momentum. That is not healthy.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT.
The ITBM and ITVM were mixed with the ITBM succumbing to a decline after holding the same value yesterday. The ITVM does continue to rise which is bullish, but as we noted previously, it is overbought. %PMO Xover BUY Signals has topped and today it dropped beneath its signal line. It is reading above the 50% bullish threshold, but it isn't likely to stay there long given only 44% have rising PMOs. Its top has set up a negative divergence with price tops. We could also say that the ITBM has set up a negative divergence as well given tops are declining while price's are rising.
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.
Participation is beginning to slide lower as more stocks lose support at their 20/50-day EMAs. The Silver Cross Index topped today, but it does remain above its signal line and the reading is healthy so the IT Bias is BULLISH. The Golden Cross Index is still rising strongly, but that should end soon given we have about the same amount of stocks above their 200-day EMA. %Stocks > 200EMA is the delimiting factor for the Golden Cross Index. 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 environment hasn't changed much this past week as price continues to churn. We have seen some all-time highs, but price isn't moving much. Today saw mixed STOs and ITBM/ITVM so there is some weakness under the surface. Negative divergences are developing again. The biggest concern right now should be the loss of rising momentum within the index. PMO BUY Signals are being lost and will continue to be lost if more stocks don't see rising PMOs. We sense weakness under the surface, but must admit that participation percentages are still above 50%. Overall we expect more churn as not all of our indicators are in decline.
Erin is 60% long, 0% short.
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CALENDAR
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BITCOIN
Yesterday's comments still apply:
"Bitcoin has now hit overhead resistance as we suspected it would. The short-term declining trend was dispensed with and it looks ready to test the next level of resistance at the July top. Indicators are strong and the RSI is not overbought so we will look for more upside."
BITCOIN ETFs
INTEREST RATES
Yield are attempting to reverse higher above support. Some are more bullish than others. The 10-year yield, 20-year yield and 30-year yields all look very bullish on their upside reversals. The rest are rather mushy or in 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
$TNX is in a rising trend and did ultimately break above its declining trend in the short term. Longer-term it is still in a decline, but we must admit that the indicators are bullish enough to expect more upside here. Momentum looks good, but the PMO is still well below the zero line so the yield could see this rally fail. Stochastics do look very bullish and the RSI did move above net neutral (50) so for now we will look for $TNX to rise a bit more.
BONDS (TLT)
IT Trend Model: BUY as of 6/5/2024
LT Trend Model: BUY as of 7/17/2024
TLT Daily Chart: The 20-year yield is making a comeback and that has really hurt TLT. Long-term yields are bullish right now so we do expect to see more downside for TLT. Stochastics just dropped below 20 and the PMO is declining quickly leaving its signal line behind. The 50-day EMA has arrived as possible support.
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 rallied today, but remains within a trading range. Indicators are mostly neutral so we do expect this range to stay intact longer.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: The inverse correlation held somewhat true today with the Dollar. The Dollar was up and Gold was down. We do note that Gold was not down as far as the Dollar was up so that is bullish for the day despite the decline. It may be time for Gold to cool given the overbought RSI, but the rising trend looks sturdy and the PMO and Stochastics are very positive. We could see a pause if the Dollar is going to rise further.
Discounts are beginning to retreat so traders are getting more bullish on Gold.
GOLD MINERS (GDX): Gold Miners stalled today on Gold's decline but they still look very bullish. We do expect Gold to continue to make all-time highs so we should see this group benefit greatly as it already has. Participation is near perfect and the Silver Cross Index is rising strongly. A pullback would be welcome for an entry.
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 lost support at the 20-day EMA and the rising trend looks very vulnerable. The PMO is already topping and it is well below the zero line. Stochastics are still above 80, but they too have topped. The RSI dropped below net neutral (50). We expect more pullback.
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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