Today the Technology Sector (XLK) 20-day EMA crossed up through the 50-day EMA (Silver Cross), generating an IT Trend Model BUY Signal. Price still needs to exceed the August top for a new rising trend to be established. Nevertheless, XLK seems to be range bound at the moment. The PMO is accelerating higher and participation is fairly robust so it does have an opportunity to advance further.
On the weekly chart XLK has remained above the long-term rising trend line, and the weekly PMO has turned up, so XLK is still bullish in this time frame.
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 decided to celebrate yesterday's rate cut today with a big gap up on the open. Price continued higher from there but did lose some steam going into the close.
SPY Daily Chart: We finally have a new closing all-time high. The PMO is rising gently and the RSI is not yet overbought so we could see price advance further.
The VIX moved back above its moving average on the inverted scale and Stochastics are still above 80 so internal strength is visible.
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S&P 500 New 52-Week Highs/Lows: New Highs expanded as we would expect on a rally but they haven't recaptured the prior height yet. Good news is that the High-Low Differential turned back up today.
Climax* Analysis: There were two climax readings on the four relevant indicators, and SPX Total Volume was solid. The climax readings were not robust, but we think it appropriate to call this an upside exhaustion climax. This doesn't look like a blowoff, but there is that potential.
*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.
Bad news on the short-term indicator chart. Both the Swenlin Trading Oscillators (STOs) are moving lower now. Participation is still robust at 80% and did expand today. We saw more rising PMOs today as well.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT.
Both the ITBM and ITVM are rising and suggest that any decline we get will likely be short in duration. We are seeing more 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 very healthy right now as most stocks are holding above key moving averages. The Silver Cross Index is rising strongly and given the big reading on %Stocks > 50EMA it should continue to rise further. It is at a healthy 76% and is above its signal line so the IT Bias is BULLISH. The Golden Cross Index is still rising and based on a higher reading on %Stocks > 200EMA it should also continue to move higher. It is above its signal line so the LT Bias is BULLISH still.
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 decided that the rate cut was something to celebrate today. Participation remains robust and the biases remain bullish. The Bias Table above shows nearly all entities on Bullish IT Biases. However, we could experience a hiccup given today's upside exhaustion climax. We also have the problem of topping STOs on day when the market hit all-time highs. We should be prepared for some of the air to be pulled out of the market balloon. Options expiration this week is an end-of-quarter expiration. Expect very high SPX Total Volume. We don't want to misread it should it be expansive.
Erin is 60% long, 0% short.
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CALENDAR
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BITCOIN
Bitcoin broke through the declining trend. If it gets over the August top we will have a new rising trend. The PMO has now entered positive territory on a Crossover BUY Signal and the RSI is not overbought despite the recent rally. Stochastics look particularly bullish so we would expect more upside for Bitcoin.
BITCOIN ETFs
INTEREST RATES
Yields were mixed today. Most long-term yields were lower as were the very short-term duration. The all important 10-year yield was higher on the day. This does look like a good place to see an upside reversal, but with the Fed rate cut that may take some more time.
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 got a new PMO Crossover BUY Signal but the PMO is well below the zero line so we see this as diminishing weakness not new strength. Stochastics are rising so we could see the yield move higher again tomorrow. We will be watching to see if the current declining trend can be broken.
BONDS (TLT)
IT Trend Model: BUY as of 6/5/2024
LT Trend Model: BUY as of 7/17/2024
TLT Daily Chart: TLT was down again as the 20-year yield rose today. It did form a bullish hollow red candlestick so this could be it for the decline, but given it lost support and the PMO has a new Crossover SELL Signal, we think we could see more weakness here. Stochastics are also falling. Price is still sitting in a rising trend, but that seems highly vulnerable right now.
The next level of strong support is just below 98.00.
DOLLAR (UUP)
IT Trend Model: NEUTRAL as of 8/5/2024
LT Trend Model: BUY as of 5/25/2023
UUP Daily Chart: Yesterday's bullish engulfing candlestick did not see follow through today as the Dollar made its way lower. It appears to be establishing a new trading range. The PMO did top well below the zero line and Stochastics turned down in negative territory. We would look for a test of the August low.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold hit another closing all-time high today, but it does remain mostly below resistance. The Dollar looks somewhat weak and indicators on this chart are firming up somewhat. The PMO is gently rising and the RSI is positive. Stochastics are attempting to turn around as well.
Discounts remain elevated for PHYS so in spite of all-time highs, investors are not warming to Gold. Large discounts are usually good for Gold since sentiment is contrarian. We are looking for Gold to continue to make all-time highs.
GOLD MINERS (GDX): Gold Miners got a boost from Gold, but also from a rising market. We like Gold right now so we have to like GDX. Participation is still very strong and both the Silver Cross Index and Golden Cross Index are above their signal lines so the IT and LT Biases are BULLISH right now. We expect more upside here.
CRUDE OIL (USO)
IT Trend Model: NEUTRAL as of 8/1/2024
LT Trend Model: SELL as of 9/10/2024
USO Daily Chart: It appears yesterday was a stumble at resistance as today it managed to overcome. There is a new PMO BUY Signal and the RSI just entered positive territory. Stochastics also reached positive territory today. Next up is a test of the 200-day EMA.
As noted yesterday, 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.
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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