Tomorrow mega-cap Amazon (AMZN) and Apple (AAPL) will be reporting after the bell. The charts are setup quite differently going into earnings with one looking quite bullish and the other somewhat bearish.
AMZN is looking pretty good right now. Today saw a rally that took price upward and out of an already rising trend channel. This is especially bullish although there was a bearish filled black candlestick today that suggests price could fall back tomorrow. The RSI is not overbought and there is a new PMO Crossover BUY Signal. Stochastics are rising and we can see some outperformance by the group and AMZN against the SPY. It is showing leadership among the group based on rising relative performance in the final indicator window.
This week it appears we have a solid breakout above resistance. We'll see if it sticks this time. The weekly PMO has turned up.
AAPL is looking weak. We have a very short-term bearish double top developing. The RSI is about to dip into negative territory below net neutral (50). The PMO is on a new Crossover SELL Signal and Stochastics are tumbling lower. The industry group itself is starting to show deterioration against the SPY and AAPL is showing some deterioration as well against the SPY. It is holding its own in the industry group but given the group is underperforming, it is causing AAPL to underperform.
The weekly chart shows an upside breakout from a bearish rising wedge which is positive. It is holding a rising trend. The problem lies in the weekly PMO which has topped.
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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 held its own in the morning, but at lunch time negative territory was reached with prices continuing to decline from there.
SPY Daily Chart: We have a congestion zone where price is churning. It does look toppy to us, but so far support is holding. The PMO continues to decline on a Crossover SELL Signal.
The VIX below its moving average on the inverted scale and Stochastics are in decline. Stochastics are holding in positive territory for now but we detect weakness overall.
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S&P 500 New 52-Week Highs/Lows: New Highs did expand slightly on the decline but remember these are intraday readings. It is likely that we didn't have that many New Highs by day's end. The High-Low Differential looks very bearish in its decline.
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 OVERSOLD.
Swenlin Trading Oscillators (STOs) rose again today but remain in negative territory. Interestingly on the decline we did see a slight expansion on %Stocks > 20EMA and %PMOs Rising.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
The IT Breadth Momentum (ITBM) and IT Volume Momentum (ITVM) have not reversed yet to confirm short-term STOs. We did see a slight expansion in %PMO Xover BUY Signals but the reading remains very low.
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 diving lower and is below its signal line so the IT Bias is BEARISH. The Golden Cross Index is also in decline but hasn't dropped beneath its signal line so the LT Bias is BULLISH. We should see the Golden Cross Index drop beneath its signal line soon given we have lower readings of stocks above their 200-day EMA versus the Golden Cross Index. Negative divergences are still a problem.
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 market is overdue for a sizable decline and given internals we should be seeing a breakdown, but support keeps on holding. We sense that mega-caps are holding the index together given we have so few rising PMOs and PMO BUY Signals. They are reporting earnings and that could continue to hold the market together longer. Bad earnings and all bets are off, the decline will be on. Internals did see some improvement on today's decline, but nothing that changes the weak foundation. We still expect low volatility going into the election and Fed announcement next week.
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 took a breather as it prepares to vault all-time highs. We expect it to rise higher, but it could use a little consolidation to keep the RSI out of overbought territory. The PMO looks very bullish and Stochastics are holding above 80 so we should expect all-time highs to be broken.
Bitcoin Weekly Chart: Yesterday's comments still apply:
"This breakout is especially bullish as it is executing a large bull flag on the weekly chart. The flag implies much much higher prices for Bitcoin. The weekly PMO is about to give us a Crossover BUY Signal above the zero line."
BITCOIN ETFs
INTEREST RATES
Yields were mostly back on the rise today. The rising trends are steep but are holding up. We would expect a pause or consolidation soon, but we wouldn't be surprised if they just keep rising. We are still looking for 2024 highs to be challenged.
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 bearish rising wedge has technically executed with the drop below the rising bottoms trendline. It did close within so we don't think the pattern is finished yet. It is time for a pause to soften this steep rising trend. The RSI is basically overbought and also needs to see that relief. The PMO is still rising so any decline will likely be temporary.
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, but formed a bearish filled black candlestick so we should expect a decline tomorrow. The declining trend is getting close to being broken and the PMO is flattening out. Stochastics are also rising. Yields are overbought so maybe we'll see a pause in their rally that would allow Bond funds to recover a bit more.
Price did get back above the long-term rising bottoms trendline, but as noted above, the declining trend is still intact for now.
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 took a breather today, but was down only -0.24%. This was enough to get the PMO to top and it moved the RSI out of overbought territory. Stochastics are beginning to drop. We would look for weakness in the Dollar.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold broke to new all-time highs yet again. It is due for some consolidation but with the Dollar beginning to weaken, Gold could just continue to move higher from here. The PMO is rising, but the RSI has gotten overbought. We'll be on the lookout for a consolidation period to clear the overbought RSI, but for now it looks like Gold will just continue to make its way higher.
If the Dollar weakens, it may not affect Gold bullishly as usual based on the current positive correlation.
GOLD MINERS (GDX) Daily Chart: Gold Miners were down on the day despite a rally in Gold. They are subject to the winds of the market as they are companies too. We would look for a possible upside reversal at the 50-day EMA. They are weakening even as Gold is strengthening given lower participation readings of stocks above the 20-day EMA and the new PMO Crossover SELL Signal.
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 managed a rally but remains in a declining trend. The PMO is trying to flatten, but it remains below the zero line. Stochastics just moved below 20. $OVX is up above its upper Bollinger Band and typically those punctures lead to some downside. We aren't expecting much out of this rally.
Good Luck & Good Trading!
Erin Swenlin and Carl Swenlin
Technical Analysis is a windsock, not a crystal ball. --Carl Swenlin
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