Today the Retail ETF (XRT) 20-day EMA crossed up through the 50-day EMA (Silver Cross), generating an IT Trend Model BUY Signal. XRT has been range bound for about nine months, and this is the eighth 20/50EMA crossover in the last five months. This signal doesn't have any credibility.
The weekly chart shows the consolidation is part of a rising trend, which could resolve the upside. The weekly PMO does appear to be bottoming.
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 SPY nearly found itself in positive territory to end the day. We do see a possible bullish double bottom on the chart and the 10-minute PMO did find its way into positive territory.
SPY Daily Chart: On the last two trading days before end-of-quarter options expiration prices were a little more volatile than we normally expect. Note that SPX Total Volume was substantial today (2.52 times the one-year daily average volume), which is what we do normally expect. We always point it out so that subscribers won't attribute the high volume to something else. The market is preserving its rising trend on the rally.
The indicators are bullish with the VIX above its moving average on the inverted scale, PMO rising on a Crossover BUY Signal and Stochastics above 80. There is some internal strength that could keep the rally going.
Here is the latest recording from 9/17. Click HERE to get the link to video library.
SPY Weekly Chart: Price remains in a rising trend and is recapturing the prior rising trend. As we are aware, price did hit all-time highs this week. We note that weekly PMO is rising right now. This chart is bullish.
New 52-Week Highs/Lows: We still saw a number of New Highs on today's decline and only one New Low so internals are still fairly strong. This week the High-Low Differential turned back up.
Climax Analysis: After yesterday's upside exhaustion climax, today we got a little churn. There was one climax reading, but we think that can be attributed to the heavy volume associated with options expiration.
*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.
The STOs are making their way lower despite the market hitting all-time highs. This is worrisome. They were down by quite a bit today as well. Participation thinned very slightly, but we don't like the declining trend on %PMOs Rising.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT.
The ITBM and ITVM are still in overbought territory. Today the ITBM pulled back which confirms the falling STOs. The ITVM still looks fairly healthy on its rise, but it was up only slightly today. We can see that %PMO Xover BUY Signals topped today but is at least reading above our bullish 50% threshold.
_______
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) which enjoyed quite a rally. It is looking toppy right now, but it still gained eight points on the Silver Cross Index so internals are still strong.
The lowest IT Bias goes to Semiconductors (SMH). They were hit hard near-term on the Silver Cross Index bringing it down to 28%. Because the Silver Cross Index is lower than the Golden Cross Index (which is still reading at a healthy 60%), it has the IT Bias 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.
Real Estate (XLRE) is now showing 100% of stocks holding a Silver Cross. This sector is also looking toppy so as we often say, things get as good as they're going to get before they get as bad as they're going to get. Be careful with this sector.
Energy (XLE) has the lowest Silver Cross Index value, but it did see some gains this week. The sector is looking more bullish, but still displays weakness near-term on the price chart.
This table is sorted by GCI values. This gives a clear picture of strongest to weakest index/sector in terms of long-term participation.
Regional Banks (KRE) hold the highest Golden Cross Index (GCI) reading. It didn't see any gains on the GCI, but it did see some on the Silver Cross Index. This group looks poised to move even higher.
The lowest reading belongs to Energy (XLE) and it lost some percentage points this week. While there is a recent rally, it looks like diminishing weakness not necessarily new strength.
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 holding strong and we do see some positive divergences. This breakout resolves those divergences so we will see if we get more upside out of them. The Silver Cross Index is rising strongly above its signal line so the IT Bias is BULLISH. The Golden Cross Index is also rising strongly and is above its signal lines so the LT Bias is BULLISH. For now %Stocks indicators are reading higher than both the SCI and GCI so they should continue to move higher.
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: The market is acting very toppy after hitting all-time highs yesterday. We didn't see the follow through on yesterday's pop and we are noticing some short-term issues. Of primary concern are the declining STOs and ITBM. We should see them rising after all-time highs but instead they tell us to use caution. We also noticed that momentum is slowly leaving the market based on %PMOs Rising. The positive divergences have essentially resolved with yesterday's move to all-time highs. At this point we would exercise caution and keep your stops in play as we could see a pullback next week.
Erin is 60% 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 Daily Chart: Bitcoin broke through its declining tops trendline this week and looks ready to take on the next level of resistance. The indicators have really firmed up with the PMO now sitting above the zero line. We're detecting new strength that would imply a breakout ahead.
Bitcoin Weekly Chart: After the parabolic rise broke down, we saw a high level area of consolidation that is forming a flag on a flagpole. The expectation is an upside breakout. Price did reverse before testing the bottom of the flag which is bullish. Now we wait for the weekly PMO to turn back up.
BITCOIN ETFs
Today:
This Week:
INTEREST RATES
Yields are beginning to reverse just above support which is bullish. The rate cut has been absorbed at this point so we could see rates turn back around from here. We wouldn't be trading on this reversal as upside potential will likely be limited.
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 fell today but it does look like it is ready to make an upside reversal. The declining trends are still intact. The PMO did trigger a Crossover BUY Signal, but we read this as diminishing weakness not new strength which is why we aren't betting on a big time reversal here.
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 changed from 6.20 to 6.09.
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: With yields reversing, Bond funds are seeing declines. TLT has lost near-term support and is about to lose the shorter-term rising trend. We see diminishing strength on the PMO and Stochastics are moving lower. We have a strong feeling that this rising trend will be broken but the flat PMO above the signal line tells us that the decline may not pick up speed, this could just be a stumble on the way higher.
There is a support zone that price is sitting on top of and that should hold up.
TLT Weekly Chart: The weekly chart is still very bullish as price rises out of a bullish reverse head and shoulders. Overhead resistance is nearing and it looks quite sturdy. We're fairly close to that level so that could explain the near-term weakness on the daily 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 has formed a new trading range and based on the flat PMO, we are expecting it to continue to keep price bounded. Even Stochastics are moving sideways.
Price is struggling right at the 200-day EMA as resistance. The declining trend is still intact but at least price didn't need to test the bottom of it before trying to rally. That is a good sign, but price action is still weak.
UUP Weekly Chart: We got the breakdown out of the bearish rising wedge. It doesn't suggest a downside target. Price is finding some support here, but the weekly PMO is in decline which does imply we could see a breakdown.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold again made all-time highs today. It looks very bullish right now. The RSI is getting overbought so we may see another pause here. The PMO is rising gently on a Crossover BUY Signal and Stochastics are holding above 80.
Discounts are more elevated than we would expect given the all-time highs being set. Apparently investors are still hesitant to get involved. This suggests more upside as this rally should entice more to participate.
GLD Weekly Chart: We have a strong rising trend that pulled price out of a consolidation zone. The weekly PMO is rising. The one problem is that the weekly RSI is overbought. We can see that Gold can hold that condition, but not for very long. A pause may be in order soon.
GOLD MINERS Daily Chart: With Gold on the rise, Gold Miners have reversed higher. Gold looks very bullish right now and that will be bullish for Gold Miners. The "under the hood" chart shows us that internals are very strong with this group and that should keep things elevated. If the market does take a turn for the worse, that would apply downside pressure, but higher Gold prices will translate to higher prices for GDX.
GDX Weekly Chart: Price has tackled the first level of overhead resistance and now it is set to test the next level. Given the strong rising trend and rising weekly PMO we would expect a breakout there.
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 Oil is enjoying a rally that has formed a bullish "V" bottom. These patterns suggest a move that will go higher than the left side of the "V". The PMO is on a new Crossover BUY Signal and Stochastics are rising so the picture is bullish. We still must acknowledge that USO is currently holding a death cross of the 50/200-day EMAs so it is considered to be in a bear market still. This looks good, but it may see some churn on its way up.
USO/$WTIC Weekly Chart: Crude is in a sideways trading range and does appear to be making its way up after coming close to testing the bottom of the range. The weekly PMO is mostly flat so we should expect this trading range to stick around longer. Overhead resistance is very strong so we will be surprised if it can break through that level given the weak weekly PMO.
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)