Today the Nasdaq 100 ETF (QQQ) 20-day EMA crossed down through the 50-day EMA (Dark Cross), above the 200-day EMA, generating an IT Trend Model NEUTRAL Signal. The PMO is below the zero line and falling, and the Silver Cross Index is headed lower, possibly to 42% based on %Stocks > 50EMA.
QQQ remains above the rising trend line, but the weekly PMO is falling below the signal line. This is a mixed picture, but leaning toward bullish given the preserved rising trend. The bearish double top is something we have to monitor.
Also today, the Nasdaq Composite ETF (ONEQ) 20-day EMA crossed down through the 50-day EMA (Dark Cross), above the 200-day EMA, generating an IT Trend Model NEUTRAL Signal. This picture is much like the one for QQQ above. In this case the Silver Cross Index is headed possibly toward 36% based on %Stocks > 50EMA.
The weekly chart shows the more accelerated rising trend line has been broken, but the longer-term rising trend line is still a good. The weekly PMO is accelerating downward so the picture is somewhat mixed. We do see a double top that could spell further trouble ahead.
Finally, the Retail ETF (XRT) 20-day EMA crossed down through the 50-day EMA (Dark Cross), above the 200-day EMA, generating an IT Trend Model NEUTRAL Signal. Price remains within a narrow trading range with support nearly being met. The Silver Cross Index is falling below its signal line and participation has been bleeding off for some time. Given the PMO is below the zero line now, it is very vulnerable to a breakdown there.
The weekly chart shows the same issue with the trading range, which could continue to contain price movement. There is some bearishness here as the weekly PMO has topped below the signal line. Another indication we could see a breakdown out of the range.
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/SPX SECTOR/INDUSTRY GROUP INDEXES
Change Today: 
Change for the Week:
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 headed down in earnest to start the day, but eventually created another support level.
SPY Daily Chart: It is interesting that the decline subsided just as price reached support on the chart below. This would be a good place for an upside reversal, but the PMO is declining on a Crossover SELL Signal so it will take some effort to turn this around.
Of primary concern is the bearish double top on the 1-year chart. The confirmation line of the pattern lies at the August low.
Today the VIX did penetrate the lower Bollinger Band and that often times leads to some upside. Stochastics are very negative below 20 so we do see internal weakness. Mega-caps are really underperforming the equal-weight RSP suggesting they are leading the way down.
Here is the latest recording from 8/26 (No recording on 9/2). Click HERE to get the link to video library.
SPY Weekly Chart: The double top is a problem on the weekly chart as well. Price has again broken below the rising bottoms trendline and it dropped below the support of the 17-week EMA. The weekly PMO has topped beneath the signal line so the picture here is bearish.
New 52-Week Highs/Lows: New Lows are making a comeback as New Highs pare back. Definitely indicative of a market decline. The High-Low Differential topped this week adding to the bearish picture.
Climax Analysis: There were climax readings on all four of the relevant indicators, giving us an downside exhaustion climax. We will not depend upon this exhaustion to end the decline, rather expect some churn before the decline continues.
*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.
Both Swenlin Trading Oscillators (STOs) were down on the day. The STO-V had a moment where it was rising, but it has resumed the decline in negative territory. The STO-B has finally dropped into negative territory. Participation dropped precipitously as more stocks lost support at their 20-day EMAs. Rising momentum has been sucked out of the market. Only 17% hold rising PMOs.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT.
The ITBM and ITVM are both in decline but haven't left overbought territory yet. They can accommodate far more downside. PMO BUY Signals continue to diminish. %PMO Xover BUY Signals is now below our bullish 50% threshold.
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PARTICIPATION TABLES: The following tables summarize participation for the major market indexes and sectors. The 1-Week Change columns inject a dynamic aspect to the presentation. There are three groups: Major Market Indexes, Miscellaneous Industry Groups, and the 11 S&P 500 Sectors.
The highest IT Bias belongs to Consumer Staples (XLP). XLP is enjoying quite a rally and saw improvement to both the Silver Cross Index (SCI) and Golden Cross Index (GCI).
The lowest IT Bias unsurprisingly goes to Semiconductors (SMH) which continue to show extreme weakness. They lost 16 percentage points on the SCI and eight percentage points on the GCI. Very negative.
This table is sorted by SCI values. This gives a clear picture of strongest to weakest index/sector in terms of intermediate-term participation.
Regional Banks (KRE) continue to hold the top spot on the SCI. No gains were made on the SCI, but it did see gains on the GCI where it also holds the top spot. The group is looking less bullish right now so be careful here.
Technology (XLK) lost the most points on the SCI, but is somewhat healthier than Semiconductors (SMH) which hold the bottom spot on the SCI, as the SCI value for XLK is much higher than SMH's SCI.
This table is sorted by GCI values. This gives a clear picture of strongest to weakest index/sector in terms of long-term participation.
Communications Services (XLC) saw the biggest gain on the GCI, but this sector is looking bearish right now so we wouldn't be excited to own stocks in this sector right now.
Biotechnology (IBB) holds the lowest GCI value but it did manage to gain a point this week. It has a lot of work to do and with the winds of the market blowing downward, this aggressive group isn't likely to be successful.
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.
Both the Silver Cross Index and Golden Cross Index began declining this week. They are still above their signal lines so we have to read the bias a BULLISH in both timeframes. Participation has been sucked out of the market. %Stocks > 20EMA are now below our bullish 50% threshold. We do need to point out that there are positive divergences visible on this chart and that does suggest that the market could hold together in the longer term. It speaks to the longer term, not the shorter term which we deem very bearish right 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.
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CONCLUSION: Bearish biases are upon us based on the Bias Table above. Our DP Signal Table is also showing signs of stress as more BUY Signals fall by the wayside. We did see a downside exhaustion climax but with rising momentum being sucked out of the market, we aren't looking for a strong rally, more likely we will see a pause or some churn. The technicals are clearly bearish so we do expect weakness will continue to be a problem. The market doesn't seem ready for a strong rally. It was mentioned in the Diamond Mine this morning that we saw 'panic selling'. An extreme like this does call for a rebound, we just don't think it will turn into a big rally near-term.
Erin is 20% long, 0% short.
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CALENDAR
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BITCOIN
Bitcoin Daily Chart: Bitcoin lost support this week on its way lower. It dropped below the July low briefly. We would look for a test of the August low however. The RSI is very negative and the PMO is on a SELL Signal below the zero line. Stochastics are very weak as they oscillate below 20. Look for more decline over the weekend.
Bitcoin Weekly Chart: We do see a very large bull flag on the weekly chart, but one problem we see is that the last top did not test the top of the flag. We don't like its chances of staying within this flag given the declining weekly PMO. Still, the bull flag is intact for now.
BITCOIN ETFs
Today:
This Week:
INTEREST RATES
Yields are headed toward the second line of support. The declining trends are intact and given the rate cut we will see soon, we do think rates will continue to move lower, possibly below that next 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
Support has been met, but we do not think it will hold here. The PMO has topped well below the zero line and is headed for a Crossover SELL Signal. This is signaling pure weakness. Stochastics are also very bearish below 20.
MORTGAGE INTEREST RATES (30-Yr)**
**We watch the 30-Year Fixed Mortgage Interest Rate, because, for the most part, people buy homes based upon the maximum monthly payment they can afford. As rates rise, a fixed monthly payment will carry a smaller mortgage amount, which shuts many buyers out of the market, and potential sellers will experience pressure to lower prices (to no effect so far).
--
This week the 30-Year Fixed Rate remained at 6.35.
Here is a 50-year chart for better perspective.
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 mostly unchanged today as the 20-year yield held its ground. We like Bond funds right now given the very negative configuration of interest rates right now. They should see some excellent gains moving forward. The PMO is flattening above the zero line indicating pure strength. It is also on a new Crossover BUY Signal. Stochastics are above 80 as well. Look for Bonds to continue their rally.
TLT Weekly Chart: We have a bullish reverse head and shoulders on the weekly chart. The neckline of the pattern has been overcome. The minimum upside target of the pattern would take price likely to resistance at about 130.00. The weekly PMO is on the rise and the weekly RSI is positive and not overbought. This is a very bullish chart.
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 saw some diminishing weakness, but it ended the week in a new declining trend. The PMO is on a new Crossover BUY Signal, but the RSI is negative. Stochastics are rising, but in negative territory still. The mixed indicators suggest to us we'll see more chop.
UUP Weekly Chart: The bearish rising wedge on the weekly chart executed as expected with a breakdown. Price is so far unable to recapture the rising trend. Given the declining PMO and broken rising trend we should look for some decline intermediate-term. Although we wouldn't be surprised if it continued to consolidate above support.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold is in a holding pattern, but it is vulnerable to decline right now. Stochastics are falling and it is on a PMO Crossover SELL Signal. The Dollar looks likely to chop around so we could see this trading range continue.
The reverse correlation to the Dollar is strong right now, but with the Dollar looking choppy, it shouldn't make a huge difference. It seems most likely that we will see more sideways action with a possible drop below support.
GLD Weekly Chart: The weekly chart is bullish. We should see all-time highs again for Gold in the not so distant future. The rising trend is intact and we have that breakout out of the trading range from earlier in the year. The weekly RSI is positive and not overbought and the weekly PMO is on the rise holding a Crossover BUY Signal.
GOLD MINERS Daily Chart: The market has not been kind to Gold Miners. Gold has not been helping either. We now see a bearish double top developing on the daily chart below. Participation continues to dwindle with no stocks above their 20-day EMAs. More than likely there will be more downside to absorb.
GDX Weekly Chart: GDX is in a long-term trading range and it is near the top of that range suggesting we could see a trip back down. The weekly PMO has topped. We do still have a rising trend channel but the last two tops didn't test the top of it and that is bearish.
CRUDE OIL (USO)
IT Trend Model: NEUTRAL as of 8/1/2024
LT Trend Model: BUY as of 2/27/2024
USO Daily Chart: This week we found out that production from OPEC+ would loosen or stay the same. This put Crude into a free fall. Today's drop pushed price below support. This would be the place we would've looked for a rally, but support continues to be broken.
The next support level doesn't arrive until 64.00. We think that is a good target right now given the deeply negative PMO.
USO/$WTIC Weekly Chart: Price broke down from the bullish ascending triangle (flat top, rising bottoms). A bearish conclusion to a bullish chart pattern is especially bearish. It has busted the pattern. The weekly PMO is declining so we are expecting to see support tested. Middle East tensions could cause Crude Oil to turn around, but so far no one seems bothered.
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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