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. Note that this month's price top is lower than the July price top. If price drops below the August low, an intermediate-term down trend will be established. The PMO has dropped below the zero line, which is bearish. While the Silver Cross Index (SCI) is currently 67%, the % Stocks > 50EMA is poised to bring it down to 44%.
The weekly chart shows that price dropping below the August low would violate the long-term rising trend line. The weekly PMO has topped below the signal line, also bearish.
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: The market attempted a rally to start the trading day, but ultimately it failed to hold at that level and established a declining trend. We did see a break in the declining trend but the final ten minutes saw quite a bit of selling to bring price back into the declining trend. We got some follow through on yesterday's downside initiation climax.
SPY Daily Chart: Support held today and we did see a bullish hollow red candlestick. However, the PMO is still in decline and is headed for a Crossover SELL Signal.
The VIX nearly penetrated the bottom Bollinger Band on the inverted scale. A puncture usually leads to a pause or possible upside reversal for price. Stochastics tumbled lower and are nearing negative territory. We still see internal weakness in both of these indicators.
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S&P 500 New 52-Week Highs/Lows: New Highs did pare back and we think some of those were lost in the decline from this afternoon. We note New Lows are making an appearance. The High-Low Differential is still moving higher but it is very overbought. Declines don't always lead to lower prices, but weakness generally follows.
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.
The Swenlin Trading Oscillators (STOs) are making their way lower suggesting more near-term weakness. Participation wasn't hit very hard with the decline, but we do note that %PMOs Rising has dropped beneath our 50% bullish threshold.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT.
The ITBM has now joined the ITVM in decline which confirms the decline in our short-term indicators. %PMO Xover BUY Signals had a negative crossover its signal line.
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.
The Silver Cross Index is still rising, but given fewer stocks are above their 50-day EMAs, we will likely see a top soon. It remains above its signal line so the IT Bias is BULLISH. The Golden Cross Index reversed higher, but we expect it to begin declining again given we have fewer stocks above their 200-day EMAs. The Golden Cross Index remains above its signal line so the LT Bias is BULLISH. Participation percentages are still in 'healthy' territory, but they are clearly headed lower.
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 followed through on yesterday's downside initiation climax. Price still looks very weak and with all of our indicators in decline we have to believe we will see more price decline. Participation is still what we would call healthy, but cracks are beginning to show as percentages continue to head lower. The ITBM was our only hold out, but today it turned lower with our other indicators. The FOMC will be lowering rates this month, but it appears that has already been baked in with the prior rallies. DP Diamonds subscribers were handed a variety of hedges to protect against further decline. Stops should already be in place and likely tightened in response to short-term weakness.
Erin is 40% long, 0% short.
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CALENDAR
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BITCOIN
Yesterday's comments still apply:
"Bitcoin has found some support, but given the ugly setup on the PMO and particularly on Stochastics, we aren't so sure this support level will hold. This is a good place to look for a bounce, but indicators simply aren't behind a rally."
BITCOIN ETFs
INTEREST RATES
Yields made a big move toward the next level of support. Declining trends are intact and suggest we will see more downside on rates.
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
We expected more sideways movement along support. We got that, but $TNX looks highly vulnerable to more decline as the PMO is topping. Stochastics have turned very negative today and suggest we should look for the yield to move even lower.
BONDS (TLT)
IT Trend Model: BUY as of 6/5/2024
LT Trend Model: BUY as of 7/17/2024
TLT Daily Chart: TLT enjoyed quite a rally today as interest rates tumbled today. It is set up for more rally with the PMO turning back up well above the zero line and Stochastics rising. The RSI is not overbought so TLT can accommodate more rally before getting 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 had a bad day but it didn't really upset the PMO which is nearing a Crossover BUY Signal. The chart is still weak with negative RSI and topping Stochastics so we could see some consolidation. It's only one day of decline, but it took out the rising trend so it is vulnerable to more decline.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold was up slightly, but given the decline in the Dollar and its inverse relationship, we should've seen more rally. Gold has set up a double top and does appear ready to break down below support. There is a new PMO Crossover SELL Signal and Stochastics are falling. We expect more weakness from Gold.
Discounts have been paring back suggesting investors are more bullish on Gold, it just hasn't resulted in much upside.
GOLD MINERS (GDX): With Gold looking weak and the market in decline, GDX has had a hard time. The decline has caused participation to slide with the Silver Cross Index dropping beneath its signal line. There is a new PMO Crossover SELL Signal that implies this group will continue to struggle.
CRUDE OIL (USO)
IT Trend Model: BUY as of 6/21/2024
LT Trend Model: BUY as of 2/27/2024
USO Daily Chart: Support was broken on today's decline. It is doubtful that it will make a reversal here given production has been increased by OPEC+. One thing that could work in its favor is the Oil Volatility Index. It has punctured the bottom Bollinger Band and many times you'll see an upside reversal. Price has gotten very stretched out so a pause might be in order. Overall we do expect Crude to continue moving lower.
We don't see much support below the current price level. We should start looking toward 64.00.
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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