Last week the Biotechnology ETF (IBB) came very close to breaking down from an IT Trend Model BUY to NEUTRAL. On Thursday it looked as if the IBB 20-day EMA would cross down through the 50-day EMA, but on Friday it bounced off trading range support and broke up through both moving averages. At this point it has potential to make it to the top of the trading range (for the fourth time), and to maybe break out and continue higher. Fourth time charmed? Participation is strengthening as far as stocks above key moving averages and Stochastics look very bullish. We'll see.
The weekly chart is, perhaps, a little less bullish with a bearish rising wedge pattern, but IBB is in a rising trend.
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: There was no question regarding market direction today. Price saw a steady rising trend all day long. The final bar was a bit bearish getting the 10-minute PMO to top beneath the signal line.
SPY Daily Chart: Fresh all-time highs were set. The market is in a steady rising trend and based on the rising PMO it should continue in that direction. The RSI is getting close to overbought territory so a digestion phase may be ahead. Total volume was muted for a strong rally.
Considering we are at all-time highs, the VIX is still fairly elevated. The VIX is below its moving average on the inverted scale so there is some weakness based on the VIX. Stochastics on the other hand look very bullish as they have camped out above 80 signaling internal price strength.
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S&P 500 New 52-Week Highs/Lows: New Highs popped upward on today's rally which is good confirmation of broader support. The High-Low Differential is headed higher out of near-term oversold territory.
Climax* Analysis: There was only one climax reading on the four relevant indicators today, so we don't have a climax day. Also, SPX Total Volume was only 80% of the one-year daily average volume, which is not at all climax-like.
*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 Swenlin Trading Oscillators (STOs) were unanimous today as they both surged higher. Participation is picking up again with over 3/4ths of the index holding above their 20-day EMAs. We also saw more rising PMOs. This is the type of participation we need to see to keep the rally going.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
We are listing the ITBM and ITVM as neutral not overbought, but we could definitely say that the ITVM has hit overbought territory. It's gotten far more overbought so we don't see it as dangerous. Almost half of the index hold PMO BUY Signals which is good.
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.
With participation percentages reading higher than the Silver Cross Index and Golden Cross Index, we should see them inch higher. They are at very healthy levels and both are above their signal lines so the IT and LT Biases are 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: The rally was confident and strong from start to end. If we had a complaint, it would be that Total Volume was rather muted given the size of today's rally. The VIX is still somewhat elevated as well suggesting we do have investors who remain on the sidelines. The indicators are unanimous as they rise and participation has swelled indicating the broad market is on board with this current rally. Earnings season is kicking off and that could be a catalyst to higher prices if they come in similarly to last season. Friday's upside exhaustion climax was basically ignored by the market today so we do see the market likely to inch higher. However it's already getting overbought again so we should be on the lookout for a digestion phase.
Erin is 55% long, 0% short. (This is intended as information, not a recommendation.)
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CALENDAR
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BITCOIN
Bitcoin is about to test the declining tops trendline and given its recent burst of energy and the new PMO Crossover BUY Signal above the zero line, we would expect to see a move to test the June/July tops.
BITCOIN ETFs
INTEREST RATES
The Bond market was closed today.
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 is flirting with the 200-day EMA. This would be a good place to see it turn back down, but there is a new Silver Cross and the PMO is on the rise. Stochastics are holding above 80. We may see more digestion below resistance as it figures out what to do with the 200-day EMA.
BONDS (TLT)
IT Trend Model: NEUTRAL as of 11/10/2024
LT Trend Model: BUY as of 7/17/2024
TLT Daily Chart: TLT was up today and got back above the 200-day EMA. We don't favor an upside reversal here given the new Dark Cross of the 20/50-day EMAs and the declining PMO. Stochastics have taken up residence below 20 which implies extreme weakness. Maybe we'll see a pause in the decline, but we don't think it is over yet.
It dropped below the first rising bottoms trendline and now it is headed to the next. Maybe we'll get a reversal at that time.
DOLLAR (UUP)
IT Trend Model: BUY as of 10/9/2024
LT Trend Model: BUY as of 5/25/2023
UUP Daily Chart: The Dollar continues to rally and has now reached the next level of overhead resistance. The rally is very steep and needs to soften. The RSI is overbought which would also call for a pause. Still the PMO and Stochastics are very bullish right now so after a likely pause we would look for overhead resistance to be met at 29.20.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold finished slightly lower on the Dollar's rally today. The chart is leaning bullish. The RSI is positive and Stochastics are rising. The PMO is neutral. We notice that the relative strength line against the Dollar is beginning to rise again. There isn't enough here to look for new all-time highs, but it does tell us price shouldn't break down. We should see trading contained within the current tight trading range.
The Dollar and Gold are not correlated technically so Gold isn't quite so dependent on the direction of the Dollar. This is working in its favor given the steep rally on the Dollar and the sideways trading range on Gold.
GOLD MINERS (GDX): Gold Miners saw a small rally today. The short-term declining trend has been broken, but Gold is looking lukewarm at best. GDX is highly dependent on gold prices and gold looks less than exciting right now. A market rally will help, but it really needs Gold to get going again. Participation is very strong so it is ready to go when Gold prices go higher.
CRUDE OIL (USO)
IT Trend Model: BUY as of 8/10/2024
LT Trend Model: SELL as of 9/10/2024
USO Daily Chart: Crude Oil has formed a very short-term double top. We aren't looking for a big decline, in fact given problems in the Middle East right now, we should see Crude continue back up. This looks like a digestion phase for the last rally. Support should hold at the September top based on the indicators. A break below would confirm this double top and imply a drop to this month's low.
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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