Today the United States Oil Fund ETF (USO) 20-day EMA crossed down through the 50-day EMA (Dark Cross), below the 200-day EMA, generating an IT Trend Model SELL Signal. USO has been in a ragged trading range, and currently the moving averages are extremely close together. This is not a high-confidence signal, and if USO chops upward again, the signal could change within a few days.
The weekly chart emphasizes the length of the trading range and that it has not been resolved.
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: This morning the market dashed out of the gate on favorable economic reports and hit the high for the day (and another all-time high) in the first five minutes. It spent the rest of the day in a trading range, closing near the low.
SPY Daily Chart: Today we have a bearish filled black candlestick that would imply we'll see a decline tomorrow. The PMO is still rising above the zero line so we do see some strength.
The VIX was little changed today and still technically sits below its moving average on the inverted scale. Stochastics dropped below 80 so there is some internal price weakness visible.
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S&P 500 New 52-Week Highs/Lows: New Highs were up on the day, but didn't reach earlier levels. Still, the High-Low Differential is positive and rising so we don't detect any damage on this chart.
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 OVERBOUGHT.
The Swenlin Trading Oscillators (STOs) both rose on the day so they are firming up, the problem is they are overbought and vulnerable to decline. The big problem we noticed today was the loss of stocks above their 20-day EMAs. It was a rally day so we should have seen an expansion not a contraction. We also lost some rising momentum within the index.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT.
We are listing both the ITBM and ITVM as overbought now. They can certainly accommodate more upside, particularly the ITBM, but we should be on notice that we could see them turn lower. The ITBM currently holds a negative divergence with price as we have declining tops on the ITBM and rising tops on price. We did see a few more PMO BUY Signals today which is good given we lost some internal momentum.
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.
The Silver Cross Index has turned down once again. Participation of stocks above their 20/50-day EMAs is lower than the Silver Cross Index percentage so we could easily see it continue to move lower toward a Bearish Shift. The Golden Cross Index has stagnated. It could conceivably rise given there are more stocks above their 200-day EMA. Overall they are holding at bullish levels for 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: We have a mixed bag of internals right now. The STOs and ITBM/ITVM are all moving higher, but all are overbought. Participation shrank on a rally day which does suggest the market could be topping. We also saw fewer rising PMOs and the Silver Cross Index topped again. We could certainly see higher prices, but given yesterday's upside exhaustion climax and today's filled black candlestick, we would look for a decline before an advance tomorrow. It looks to be a quiet day for economic reports tomorrow so that should keep volatility low. Tomorrow is also the last trading day prior to options expiration, so that also tells us to expect low volatility.
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 took the day off on its rally. It was time for digestion so we aren't surprised. We had also just overcome the bearish declining tops trendline. We still believe it is headed higher after a pause given the strong PMO.
BITCOIN ETFs
INTEREST RATES
Yields reversed higher today and could be done with their digestion phase. We will see more pressure put on Bonds.
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 already reversing but we do see that overhead resistance is holding at the 200-day EMA and mid-July low. The PMO accelerated higher above the zero line so we do expect overhead resistance to be overcome. Stochastics are holding above 80.
BONDS (TLT)
IT Trend Model: NEUTRAL as of 11/10/2024
LT Trend Model: BUY as of 7/17/2024
TLT Daily Chart: With the rally in the 20-year yield, TLT was hit hard. It appeared that yields would continue to move lower, but they are already getting bullish again. Price failed to overcome the 20/50-day EMAs, but is currently holding on support. The PMO is accelerating lower so we don't expect support to hold.
DOLLAR (UUP)
IT Trend Model: BUY as of 10/9/2024
LT Trend Model: BUY as of 5/25/2023
UUP Daily Chart: Yesterday's comments still apply:
"The Dollar broke out above the late July top and is headed to the June top. The RSI is overbought so UUP does need a pause or slight pullback. However, the indicators are still very positive. Stochastics look especially bullish. We're looking for a move to 29.20 where we suspect we will see that pause."
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold set a new all-time high even as the Dollar rallied. Their reverse correlation has changed to positive (see second chart) so this could continue. Usually when we get a new all-time high Gold cools. Given the flat PMO on a Crossover SELL Signal, we aren't looking for much follow through at this time. However, with Stochastics pushing above 80 it may have a bit more upside left.
Discounts are low but not as low as they can go so we don't see sentiment as a problem right now.
GOLD MINERS (GDX): Gold Miners rallied again today despite yesterday's bearish shooting star. They look really good now and should see more upside, but if Gold cools as it might given new all-time highs, it will be slow going. For now we are cautiously optimistic on both Gold and Gold Miners.
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 reversed higher today but couldn't avoid the Dark Cross SELL Signal. We are still looking for support to be tested at 68.00 given the falling PMO and diving Stochastics. At the same time this is a level of support at August lows so we could see price consolidate here first.
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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