Today the Biotechnology ETF (IBB) 20-day EMA crossed down through the 50-day EMA (Dark Cross), above the 200-day EMA, generating an IT Trend Model NEUTRAL Signal. IBB has been in a months-long trading range, and we can see that the last thrust toward the top of the range fell short by about half the range -- clearly a sign of weakness.
The weekly chart shows a bullish long-term double bottom, which has executed by price breaking above the confirmation line. On the negative side, the rising trend is a bearish rising wedge. The weekly PMO just gave us a Crossover SELL Signal.
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: The market was unable to sustain yesterday's rally. It spent most of the day consolidating sideways. Stochastics have topped so we'll see if a decline materializes tomorrow.
SPY Daily Chart: The SPY saw a PMO SELL Signal today adding to the others we have already begun seeing. The SP100 is the only index left with a Crossover BUY Signal, but it is already in the process of crossing below its signal line. Price did manage a positive close today, but it closed beneath the open forming a bearish filled black candlestick that implies a decline tomorrow.
Stochastics continue to drop below 80. The VIX is hugging its moving average but is somewhat elevated at 19.00. We see weakness.
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S&P 500 New 52-Week Highs/Lows: New Highs did move up with the rally and we saw fewer New Lows. The High-Low Differential ticked up today which is bullish.
Climax* Analysis: Today there were no climax readings.
*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 OVERSOLD.
We've moved the condition to "oversold" for these indicators. We've certainly seen lower readings on both the Swenlin Trading Oscillators (STOs), but near-term they are definitely oversold. We now have a reading below our 50% bullish threshold on %Stocks > 20EMA. We did manage a few more rising PMOs though.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
Both the ITBM and ITVM can be considered "neutral". The ITVM is still a little bit overbought. Both indicators continue to decline. We are now seeing fewer PMO BUY Signals than we have in months. This indicator is near-term oversold, but continues to head lower. Given we have fewer rising PMOs versus PMO BUY Signals, that indicator is likely to move even lower.
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 is dropping quickly but is still holding onto a rising trend for now. It is below its signal line so the IT Bias is read as BEARISH. The Golden Cross Index has topped again and should continue lower given there are fewer stocks above their 200-day EMA. At this point there appears to be some whipsaw on Golden Crosses within the index that is keeping the Golden Cross Index from dropping as we would expect. It remains above its signal line so the LT Bias is still read as BULLISH.
Negative divergences on this chart suggest a market top may be in.
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: Our primary indicators, the PMO and Stochastics are in decline with a new PMO SELL Signal triggered today. The STOs and ITBM/ITVM are still falling suggesting we should get more decline. The filled black candlestick also portends lower prices tomorrow. Internal PMO damage tells us there aren't a lot of stocks out there to keep a rally going. A bright spot was a rising High-Low Differential, but past that we didn't see much in the way of bullish indications. The market is topping and we expect it to fall further based on weak internals and negative divergences.
Erin is 65% long, 0% short. (This is intended as information, not a recommendation.)
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CALENDAR
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BITCOIN
Bitcoin digested the rally and is now ready to move higher once again. The PMO is already trying to reverse higher and Stochastics already have. We expect to see some follow through on today's rally.
BITCOIN ETFs
INTEREST RATES
Yields took a breather today ticking lower. We still are looking for prior highs to be tested.
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 paused its rally today at overhead resistance at 4.3%. We see this as a pause only and expect $TNX will move higher soon. We could see it bounce around in this new zone first, but ultimately we are looking for a move to 4.5%. It's time for a break first.
BONDS (TLT)
IT Trend Model: NEUTRAL as of 11/10/2024
LT Trend Model: BUY as of 7/17/2024
TLT Daily Chart: TLT managed a small rally today as yields took a break from their rally. The declining trend is intact and believe it will stay intact. Stochastics did turn back up but they are very weak below 20. Maybe we will see a move to test the 200-day EMA before the decline resumes based on the falling PMO.
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 finally declined in a meaningful way. The rising trend is still visible and hasn't been broken with the decline today. The RSI did move out of overbought territory, but we think consolidation along new support seems most likely.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Since June GLD has moved higher in small steps. There is a breakout followed by a short consolidation, followed by another breakout -- up +20% since the June low, and sentiment is still negative. This routine will eventually break down, but so far, so good. Now we wait for the next breakout.
With the Dollar likely being in pause mode, Gold does have an opportunity to break out. However, with the correlation still positive between Gold and the Dollar, Gold could continue to consolidate a bit longer. A weaker Dollar should help it along eventually.
GOLD MINERS (GDX) Daily Chart: Gold Miners crashed today even with Gold and the market finishing up. They got ahead of themselves and it is now time to recalibrate. This is a level of support at the September high, but we expect to see it pull back a bit more. Of course if Gold breaks out again, GDX will reignite. This dip may offer a good entry soon.
CRUDE OIL (USO)
IT Trend Model: SELL as of 10/17/2024
LT Trend Model: SELL as of 9/10/2024
USO Daily Chart: Crude Oil fell again today as it struggles with overhead resistance at horizontal resistance and the 200-day EMA. The PMO is flat and unresponsive, but Stochastics continue to inch higher. We aren't looking for a big rally here, more likely it will continue to bounce around sideways.
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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