Another wild day in the market. Much of the positive finish can be attributed to strength in the Mag 7 group, with NVDA up +8.16%. This big rally pulled the PMO back up and price is now above both the 20/50-day EMAs. This does look encouraging but it has hit an area of overhead resistance.
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.
Watch the latest episode of DecisionPoint on our YouTube channel here!
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 day began with heavy selling in the first hour. Surprisingly prices reversed upward, with SPY up nearly 3% from the morning low.
SPY Daily Chart: The PMO has turned up today and volume wasn't at blow off levels. The RSI is back in positive territory as well. We do note we are at an area of resistance.
We are still monitoring the large double top on the SPY. It will require a move to new all-time highs in order to dissolve the pattern. The VIX remains below its moving average on the inverted scale so there is still a bit of weakness visible. However, Stochastics have turned up and are rising strongly so we also see some internal strength returning to the market.
Mega-caps are taking control again as relative strength is rising against equal-weight RSP. Mega-cap strength could keep things elevated for the index.
Here is the latest recording from 9/9. Click HERE to get to our trading video list.:
S&P 500 New 52-Week Highs/Lows: Considering the large rally to finish the day, we didn't see that many New Highs. We also note that we saw an increased number of New Lows. The High-Low Differential is still falling suggesting we aren't out of the woods yet.
Climax* Analysis: There were no climax readings today. In fact, SPX Net A-D was negative, reflecting breadth more narrow than the price advance would have us believe. This is in line with the paring back of New Highs.
*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) held up and rose again today but we see that the STO-B barely moved up. Notice that participation didn't expand. We also didn't see any improvement to rising momentum.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT.
Intermediate-Term Breadth Momentum (ITBM) and Volume Momentum (ITVM) are still in decline. We also saw a loss of PMO BUY Signals on today's strong rally.
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.
The Silver Cross Index held steady and the Golden Cross Index managed a small gain. Both are at healthy levels. The Silver Cross Index is below its moving average though so we have a BEARISH IT Bias. The Golden Cross Index is above its signal line so the LT Bias remains BULLISH for now.
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.
****************************************************************************************************
CONCLUSION: It was a strong market reversal today but we don't quite trust it. Mega-caps, NVDA, likely led today's charge while the rest of the market stayed steady. Participation numbers did not improve with today's rally. We would be bullish had we seen improvements to participation levels. The ITBM and ITVM are still in decline. Declines outnumbered advances on this rally. Another sign that mega-caps are likely the reason for today's strong rally. The PPI report and jobless claims will take center stage tomorrow. The CPI report did lead to lower prices in the morning, but we know how that ended. At this time we are looking for market churn, but wouldn't be surprised if the index closes higher on the back of mega-caps. FYI, NVDA is down in after hours trading.
Erin is 20% long, 0% short.
****************************************************************************************************
CALENDAR
Have you subscribed the DecisionPoint Diamonds yet? DP does the work for you by providing handpicked stocks/ETFs from exclusive DP scans! Add it with a discount! Contact support@decisionpoint.com for more information!
BITCOIN
Bitcoin pulled back slightly today, but this still looks like a good price bottom. The PMO is nearing a Crossover BUY Signal and Stochastics are rising so we will look for more upside out of Bitcoin.
BITCOIN ETFs
INTEREST RATES
Yields ticked up today but remain in strong declining trends. We expect rates will continue down toward the next level of support. A Fed rate cut could bring them down below that support level.
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 short-term declining trend is still very steep. Today's gain did nothing to change this. The PMO Crossover SELL Signal occurred well below the zero line so it is signaling pure weakness right now. Stochastics topped below 20 suggesting strong internal weakness.
BONDS (TLT)
IT Trend Model: BUY as of 6/5/2024
LT Trend Model: BUY as of 7/17/2024
TLT Daily Chart: Yesterday's comments still apply:
"TLT is breaking out and given the bearish look on yields, we would expect more upside out of TLT. The PMO is flat above the zero line and on a new Crossover BUY Signal. This signals pure strength. Stochastics are above 80 and as far as the RSI is concerned, price is not yet 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 revealed little today except to say that overhead resistance is holding strong. Still the indicators are improving and should lead to an upside breakout. This price formation is very close to a double bottom.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold is trading in a narrow trading range. The indicators aren't particularly enlightening as they are sending mixed messages. We see this as a sign that we will continue to stay in this range a bit longer.
Sentiment is more bullish than it has been and that could suggest a move lower ahead as sentiment is contrarian. However, we still don't have premiums and we've seen readings pare back even more. Still we will need to keep monitoring this condition.
GOLD MINERS (GDX): Gold Miners look very interesting right now as they are reversing before reaching the last support level. That is bullish. Participation is beginning to expand again and Stochastics are rising again. We wish Gold looked more bullish. Gold doesn't look ready for a breakout yet. GDX's PMO is still in decline so it is early in this move and may be too soon to jump all the way in. The declining trend still hasn't been broken so there is some risk if you get involved now.
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 managed a rally today so we will be on the lookout for a new price bottom. It is early given the falling PMO, but Stochastics are edging higher.
The big problem is that we don't see any strong support at this level. It is at 64.00. However, if we do see a reversal here it would be very bullish as it would've reversed before testing support. $OVX has spent many days puncturing the bottom Bollinger Band and that is typically a condition that will lead to some upside. It's only one day of rally so we don't want to get that bullish yet.
Good Luck & Good Trading!
Erin Swenlin and Carl Swenlin
Technical Analysis is a windsock, not a crystal ball. --Carl Swenlin
(c) Copyright 2024 DecisionPoint.com
Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
DecisionPoint is not a registered investment advisor. Investment and trading decisions are solely your responsibility. DecisionPoint newsletters, blogs or website materials should NOT be interpreted as a recommendation or solicitation to buy or sell any security or to take any specific action.
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.
Helpful DecisionPoint Links:
DecisionPoint Alert Chart List
DecisionPoint Golden Cross/Silver Cross Index Chart List
DecisionPoint Sector Chart List
Price Momentum Oscillator (PMO)