Today the Dollar Index ETF (UUP) 20-day EMA crossed up through the 50-day EMA (Silver Cross), generating an IT Trend Model BUY Signal. We'll talk more about this in the Dollar's section.
On the weekly chart we can see that UUP has recaptured the bottom of the rising wedge, so now the relevant structure is a rising trend channel. Quite bullish.
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 rally began in earnest to begin the day. Price then consolidated or digested the move, but another burst higher occurred to finish trading today. The 10-minute PMO is rising above the zero line so we see possible strength available for tomorrow.
SPY Daily Chart: The SPY rallied to a new all-time high today taking out the topping formation we had previously been monitoring. The PMO is back on the rise. Total volume was somewhat muted on today's rally.
The VIX is moving away from its bottom Bollinger Band on the inverted scale. It does remain below its moving average so weakness is still somewhat visible. Stochastics on the other hand are rising and could reach above 80 soon. That is a sign of short-term strength. We also notice that mega-caps are beginning to outperform the equal-weight RSP. That has many times kept rallies going.
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S&P 500 New 52-Week Highs/Lows: New Highs popped higher today and the High-Low Differential turned back up. This appears to confirm the advance.
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.
The Swenlin Trading Oscillators (STOs) are on the move higher which bodes well for this current rally. Participation finally saw some movement upward, but %Stocks > 20EMA is still in a declining trend. We saw an improvement in the number of rising PMOs as well. It is also in a declining trend.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT.
The ITBM is still in decline, but the ITVM turned back up today. This doesn't give us the confirmation we'd like to see, but it is an improvement. We also saw %PMO Xover BUY Signals bottom.
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 turned back up, narrowly avoiding a Bearish Shift below the signal line. The Golden Cross Index is rising again. Both of these indexes could turn lower as percentages of stocks above their 50/200-day EMAs are below or at the same level. We'll need more improvement to participation to keep the Silver Cross Index and Golden Cross Index rising. They are both 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: Small-caps are still underperforming the large-cap indexes so the broad market isn't quite on board yet. Mega-caps are beginning to outperform again and that could keep the index moving higher even with lackluster participation. A new all-time high was set and we do have positive movement on our indicators so we would expect some followthrough here. While indicators are turning around, we didn't see strong volume today, possibly a lack of conviction. We would be alert for a possible bull trap.
Erin is 55% long, 0% short. (This is intended as information, not a recommendation.)
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CALENDAR
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BITCOIN
We now have what looks like a double top on Bitcoin and that would imply we will see another trip down to support at 54,000. The PMO is picking up speed to the downside and the RSI just entered negative territory. Stochastics topped in negative territory. We see plenty of weakness on this chart.
BITCOIN ETFs
INTEREST RATES
Yields are back on the move higher and based on the strong rising trends out of the September low we expect them to continue to angle higher.
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
The PMO has now moved above the zero line indicating pure strength in this move higher. We should see the yield advance even higher. Stocahstics are above 80. The RSI did move into overbought territory so a pause beneath resistance at the 200-day EMA may be in order.
BONDS (TLT)
IT Trend Model: BUY as of 6/5/2024
LT Trend Model: BUY as of 7/17/2024
TLT Daily Chart: TLT just saw the PMO move below the zero line indicating pure weakness. Support is very near, but with Stochastics topping below 20 and the RSI so negative, we don't expect it to hold much longer.
Price is sitting on a rising bottoms trendline, but we expect the next rising bottoms trendline to be tested.
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 gapped up to continue the strong rally that began at the end of September. With the new Silver Cross and strong Stochastics alongside a now positive PMO, we see plenty of strength to carry it higher. The RSI is getting overbought so a digestion phase is needed.
Overhead resistance is arriving soon at 29.00. That could be where we'll see some consolidation or a pullback to pull the RSI out of overbought territory.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold is buckling under the pressure of the Dollar. We have a small double top that does imply we'll see even more downside. The Dollar looks very bullish so we expect Gold will continue to struggle moving forward. We now have a PMO Crossover SELL Signal and Stochastics have hit negative territory. We expect a test of the 50-day EMA.
Gold's relative strength is fading against the Dollar. It is no longer correlated with the Dollar technically, but we believe the strong rally in the Dollar will continue to drag Gold lower.
GOLD MINERS (GDX): Yesterday's comments still apply:
"Gold Miners confirmed the short-term head and shoulders pattern with a drop below the confirmation line. They also dipped below the 50-day EMA. Participation has been leached out by this decline. With weak Gold charts, we expect GDX to struggle. The rising trend is now being tested and will likely fail. The head and shoulders downside target would put price at about 36.00."
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 had another bad day, but it did form a bullish hollow red candlestick as price came off the lows to close above the open. The PMO is above the zero line, but Stochastics dipped below 80. It may be time for some consolidation on top of the 200-day EMA.
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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