This week Semiconductors (SMH) was up 4.14% taking price to overhead resistance. It had a bad day today as most of Technology pulled back, but "under the hood" it does look like we could see a breakout soon. The PMO is now in positive territory and rising. If we had one complaint about the chart it would be the low Silver Cross Index percentage, but given the strong readings in stocks above their key moving averages, it should start rising again soon. Notice that SMH itself is nearing a Silver Cross. This group isn't a lock for next week, but it is set up well with a double bottom. The market is not showing great strength right now. It will need to be looking up next week in order for this group to perform.
On the weekly chart, there is still the problem of a large head and shoulders top. It appears it will bust given price didn't drop beneath the neckline. Price is back above support and appears ready to make a run at all-time highs. The weekly PMO is turning up.
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/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 spent the morning trading in the green, but that enthusiasm waned midday and the market ultimately closed in the red. The 10-minute PMO topped beneath its signal line which doesn't necessarily bode well for the next open.
SPY Daily Chart: Yesterday's bearish filled black candlestick came through with a decline today as expected. New all-time highs were hit this week, but price started to show weakness to end the week. In any case, the PMO continues to rise and we see price is not overbought right now based on the RSI's location below 70.
A little bit of fear was injected into the market as the VIX dropped on the inverted scale, almost dropping below its moving average. Stochastics are holding above 80 so there is still short-term internal price strength. Notice that this week, mega-caps didn't outperform equal-weight RSP. The relative strength line is flat so everyone is responsible for what the index is currently doing.
Here is the latest recording from 9/23. Click HERE to get the link to video library.
SPY Weekly Chart: While we can see the bearish rising wedge formation, we can also see the double top breakout, which adds weight to the bullish picture. The weekly PMO is on its way up toward a Crossover BUY Signal.
SPY Monthly Chart: There is one trading day left in September, but we find it best to do the monthly review at the end of a week. If there are any radical events on Monday, we'll be sure to cover any changes in the monthly assessment.
A parabolic advance is obvious, and it is likely to result in a breakdown . . . eventually. For now the monthly PMO is rising on a Crossover BUY Signal so more upside is definitely possible.
New 52-Week Highs/Lows: New Highs have set up a negative divergence with price. We also notice that the High-Low Differential is trying to top in overbought territory.
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 UP and the condition is NEUTRAL.
In an interesting turn of events, both Swenlin Trading Oscillators (STOs) turned up today with healthy advances. They may be detecting some bullish behavior under the surface and could suggest a good week ahead. We do note that there is a negative divergence on %PMOs Rising. We don't want to see a declining trend in momentum within the index, and we are.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT.
The ITVM just keeps moving higher and is about to take out what could have become a negative divergence like we have on the ITBM. The ITBM is still in decline and not confirming STOs. We have a barely bullish reading on %PMO Xover BUY Signals. There is a clear negative divergence on that indicator.
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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 Discretionary (XLY). The primary reason is the strong Silver Cross Index (SCI) alongside a mediocre Golden Cross Index (GCI). The GCI didn't gain any percentage points, but the SCI did see a nice increase. We know this sector is on fire right now so the GCI should begin gaining soon.
The lowest IT Bias goes to Semiconductors (SMH) and this is primarily due to the damage that was done to the SCI on their correction. The GCI also has been very low. The SCI did gain quite a few percentage points this week so the group is on the rise.
This table is sorted by SCI values. This gives a clear picture of strongest to weakest index/sector in terms of intermediate-term participation.
Utilities (XLU) hold the top spot on the Silver Cross Index (SCI). It is now reading at 100% which is due to its steady rise to the sky. We would remind things are as good as they get right before they get as bad as they can get so keep that in mind. The GCI saw a good gain as well as this sector continues to march ahead.
Energy (XLE) has been in a declining trend and that has caused the SCI value to be the lowest on the table. It did make some gains, but overall we don't like this area of the market.
This table is sorted by GCI values. This gives a clear picture of strongest to weakest index/sector in terms of long-term participation.
The biggest gain on the Golden Cross Index (GCI) was in Technology (XLK). If the market is going to continue to rise we should expect the GCI to gain even more ground as this area of the market generally leads direction.
Biotechnology (IBB) holds the lowest GCI reading and it lost ground this week. The Healthcare sector is topping and Biotechs are being taken with it as the Silver Cross Index (SCI) also lost ground.
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.
Price gained somewhat on the week, but participation was mostly stagnant. That is okay given the high readings, but if we start to bleed off that participation, the index will likely turn over. The Silver Cross Index is rising strongly and it should continue to given there are more stocks above their 50-day EMA vs. the Silver Cross Index reading. It is above its signal line so the IT Bias is BULLISH. The Golden Cross Index topped today but given we have more stocks above their 200-day EMA, this is likely a temporary condition. It is above its signal line so the LT Bias is BULLISH.
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: New all-time highs were logged this week, but the market ended with a fizzle not a sizzle. The good news is that both STOs turned up today, but that is tempered by the new negative divergences that are peppering the indicator charts. The market is poised for higher prices based on participation and rising STOs, but we don't see any enthusiasm associated with making new all-time highs. We even had an interest rate cut and it didn't really stimulate the market much. With the mixed messages on the charts, we think the market could go either way next week. The condition is neutral while the trend remains up. As we often say, we need to take our cue from the open on Monday.
Erin is 60% long, 0% short.
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CALENDAR
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BITCOIN
Bitcoin Daily Chart: Bitcoin broke through overhead resistance this week and is poised to move higher given the strongly bullish indicators. We are looking for a test of all-time highs eventually. For now we are focusing on the next level of resistance at the July top.
Bitcoin Weekly Chart: After a parabolic advance, Bitcoin has been in a high level consolidation that has formed a flag on a flagpole. The expectation is an upside breakout. Price is making its third attempt at breaking out. The weekly PMO is turning back up so we think we'll see that breakout this time around.
BITCOIN ETFs
Today:
This Week:
INTEREST RATES
Yields are looking bullish as they bottom right above support. They were lower on the day, but do look like they could continue to rise from here. We aren't so bullish that we'd trade PFIX. This could simply be diminishing weakness not new strength.
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 broke out of its declining trend this week, but it does look like consolidation rather than a strong upward move. The PMO is rising on a Crossover BUY Signal but it is still well below the zero line so this is diminishing weakness not new strength.
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).
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This week the 30-Year Fixed Rate changed from 6.09 to 6.08.
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: Bonds spent the first part of the week in decline, but managed to right the ship to finish the week as the 20-year yield softened. The PMO looks very negative, but this is an interesting reversal off the 50-day EMA. As noted in the section on interest rates, yields do look bullish right now so we are expecting more downside pressure on Bond funds.
Stochastics did turn up but remain very negative below 20. Read this as diminishing weakness not new strength.
TLT Weekly Chart: We should see more upside out of Bonds in the intermediate term based on the weekly chart. We have a confirmed bullish reverse head and shoulders. The minimum upside target of the pattern would take price to about 130. We just may have to deal with near-term weakness first based on the daily chart.
TLT Monthly Chart: We see a clear bottoming formation (mostly the reverse head and shoulders) that also suggests we will see higher prices for Bonds in the long term. The monthly PMO also suggests we will see more upside.
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 been chopping around sideways in a trading range. The chart can be read neutral to bearish. Bearish is the negative RSI and the PMO being below the zero line. Stochastics are trying to bottom, but are in negative territory. We see that a neutral. We should expect more sideways trading action with a likely test of support again.
UUP Weekly Chart: There is a bearish rising wedge that resolved as expected with a decline. The pattern unfortunately doesn't reveal a minimum downside target, it only calls for the breakdown. Given the declining weekly PMO we would expect this level of support to be broken eventually.
UUP Monthly Chart: We still have a nice rising trend on the monthly chart that could mean we will see an upside reversal, however, the monthly PMO has topped and triggered a Crossover SELL Signal. Since it technically is not the end of the month, that monthly PMO Crossover could disappear after Monday's close.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold had reached overbought territory upon hitting new all-time highs this week, but today's decline took the RSI out of overbought territory which is positive. Still we are expecting a small decline or pause at this time. The PMO is still positive and Stochastics are above 80. We still need to see overbought conditions alleviated.
Discounts are still quite elevated considering we have hit all-time highs. This is a bullish situation in our minds as there is still an opportunity for investors to get more bullish. Bullish investors should mean higher prices near term. If we start to see premiums, sentiment will have gotten too bullish. For now we like having some bearish sentiment.
GLD Weekly Chart: Price has broken out and is rising strongly. The weekly PMO is rising above the zero line on a Crossover BUY Signal. This timeframe is very bullish for Gold.
$GOLD Monthly Chart: The primary technical difficulty facing gold is the probable consequence of the recent parabolic advance, which got even steeper this month. We should expect the arc to break down . . . eventually. It may be a relatively minor event, setting a lower bottom to decelerate the angle of the rising trend. It could also be a lot worse, but that is not what we're expecting. We think that worst case would be a pullback to the support line at 2080, a -20% decline.
GOLD MINERS Daily Chart: Gold was lower on the day and it took its toll on Gold Miners. We like Gold, but Gold is ready to consolidate or pause. Sensitive Gold Miners may see more pullback on that weakness in Gold. This is a good situation as we do like Gold in the intermediate term. A strong pullback will offer us an opportunity to get back into GDX. If you own it, prepare for some more downside before we get another strong upside move. Participation is incredibly strong, but as we mentioned before, things generally get as good as they'll get before they get as bad as they can get. We don't see a huge decline ahead, but certainly a trip back to support and possibly a move a bit lower than that before it reverses. If Gold decides to continue its rise, this group will definitely benefit.
GDX Weekly Chart: We have a nice rising trend on the weekly chart, but we do notice that overhead resistance is near. The weekly PMO is on the rise so the bias is still bullish.
GDX Mostly Chart: As with the weekly chart, the main issue is nearing overhead resistance. Should it breakout, there is plenty of upside potential. The monthly PMO is rising strongly and that does suggest we'll get a breakout.
CRUDE OIL (USO)
IT Trend Model: NEUTRAL as of 8/1/2024
LT Trend Model: SELL as of 9/10/2024
USO Daily Chart: After a huge decline mid week, Crude rebounded today and took price back above prior support. The PMO top beneath the zero line is a problem. We have a feeling today's rally will be short-lived. Stochastics are still falling lower and the RSI is negative. We do have to admit that the Crude Volatility Index ($OVX) has penetrated the lower Bollinger Band on our inverted scale and that often times leads to a rally.
USO/$WTIC Weekly Chart: Crude is in a sideways trading range and we believe it is ready to test the bottom of the range. The weekly PMO is still in positive territory, but it is on a Crossover SELL Signal. We'll be watching to see if the weekly PMO can turn back up next week.
WTIC Monthly Chart: We are at a key area of support on the monthly chart. There is a steep declining trend and the monthly PMO is declining sharply. The monthly RSI is negative. This level of support is definitely vulnerable.
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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