Today the Health Care Sector (XLV) 20-day EMA crossed down through the 50-day EMA (Dark Cross), above the 200-day EMA, generating an IT Trend Model NEUTRAL Signal. The sector has been in a declining trend since topping in September. The PMO topped beneath the signal line and moved below the zero line. Participation is thin at best. While the Silver Cross Index is rising, it is at a low reading. The Golden Cross Index is in decline. Both are below their signal lines so the IT and LT Bias is BEARISH.
The weekly chart shows XLV pulling back from all-time highs toward support. This appears to be a technical snapback after a breakout, so the support may well hold, although the weekly PMO Crossover SELL Signal doesn't inspire confidence.
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.
Watch the latest episode of DecisionPoint on our YouTube channel here!
MARKET/SPX SECTOR/INDUSTRY GROUP INDEXES
Change Today: 
Change for the Week:
CLICK HERE for Carl's annotated Market Index, Sector, and Industry Group charts.
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 took off in the morning, but spent the rest of the day erasing profits to finish the day negative. It was said this morning that the rally was due to lower interest rates; however, that changed during the day and they moved higher likely putting a damper on the rally.
SPY Daily Chart: The short-term declining trend was broken, but we have a bearish engulfing candlestick that implies we will see lower prices on Monday. Support is currently holding, but the PMO remains in decline.
The VIX is reading over 20 now suggesting market participants are getting nervous about the rally. Stochastics continue lower and that suggests price too should follow.
Here is the latest recording from 10/21. Click HERE to get the link to video library.
Don't miss today's DP ALERT video! Five minute discussion on PMO SELL Signals.
SPY Weekly Chart: The market continues to make its way higher but it is in the context of a bearish rising wedge that implies we will eventually see a breakdown. The weekly PMO is still holding above the signal line but this week it topped. Maybe we'll finally see that breakdown.
New 52-Week Highs/Lows: New Highs were lower on the day as we would expect, although it is an intraday reading and the market was soaring this morning. The High-Low Differential turned up yesterday but today it reversed lower again.
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) continue to move lower in negative territory. On the bright side they are both oversold. On the dark side, they can move far lower than where they are at right now. Participation continues to thin with less than 50% of stocks above their 20-day EMAs. We now have a paltry 19% of stocks showing rising momentum. This is not supportive of more rally.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
We moved the ITBM and ITVM to Neutral this week, but they are still rather elevated, meaning they have much further to fall. There is a negative divergence on the ITBM and on %PMO Xover BUY Signals. Less than one-third of the index hold PMO BUY Signals. This also isn't much to support prices moving higher from here.
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PARTICIPATION TABLES: The following tables summarize participation for the major market indexes and sectors. The 1-Week Change columns inject a dynamic aspect to the presentation. There are three groups: Major Market Indexes, Miscellaneous Industry Groups, and the 11 S&P 500 Sectors.
Materials (XLB) hold the highest IT Bias but this sector is on the outs right now as it has a bearish double top and falling PMO. We can see a tremendous amount of decline in both the Silver Cross Index and Golden Cross Index.
The lowest IT Bias belongs to Communication Services (XLC). We need more Silver Crosses to move the Silver Cross Index above the Golden Cross Index. That would relieve the negative IT Bias.
This table is sorted by SCI values. This gives a clear picture of strongest to weakest index/sector in terms of intermediate-term participation.
Financials (XLF) have been performing well although it looks a bit toppy right now. It is building a foundation given the increase in the Golden Cross Index. There is still plenty of strength left in this sector based on these high readings.
Semiconductors (SMH) has been struggling somewhat, but it did not lose any Silver Cross Index points or Golden Cross Index points. The group itself looks fairly neutral right now but with market weakness appearing, they may begin to struggle.
This table is sorted by GCI values. This gives a clear picture of strongest to weakest index/sector in terms of long-term participation.
Utilities (XLU) have the highest Golden Cross Index value of 100. The sector is beginning to show signs of weakness, but so far it is holding strong Silver and Golden Cross Index readings so any weakness is likely temporary.
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.
Both the Silver and Golden Cross Indexes are falling now. The percentage of stocks above key moving averages continue to deflate. Readings are all below both the Silver and Golden Cross Indexes and we have negative divergences on all of the %Stocks indicators. The Silver Cross Index will likely continue to fall given we have lower readings on %Stocks > 20/50EMAs. It is below its signal line so the IT Bias is BEARISH. The Golden Cross Index will also likely continue its decline as there are fewer stocks above the 50/200-day EMAs than those with golden crosses. The Golden Cross Index is above its signal line so the LT Bias is 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: In an article and video that Erin produced today she discussed how all of the indexes we follow, with the exception of the Nasdaq, all have PMO SELL Signals. All but one sector (Consumer Discretionary XLY) have falling PMOs. The Bias Table above is getting bearish again. Today's rally was not sustained. All of our indicators are in decline. There is a lack of rising momentum and PMO BUY Signals within the SPY. None of this is positive. It all points to a market decline. This morning mega-caps stoked the early rally, but it wasn't sustained. Mega-caps could prop the market up, but there is no broad market support to really fire it up. Prepare for more decline.
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 Daily Chart: Bitcoin is trying to top again and that could set up a bearish double top. For now price is holding above the declining tops trendline and support. The PMO is acting toppy so we suspect price will jockey around this support level a bit longer.
Bitcoin Weekly Chart: The breakout from the bull flag looks encouraging but we did see a decline this week. The weekly PMO does look ready to rise again so ultimately after we deal with more consolidation, we should see all-time highs again.
BITCOIN ETFs
Today:
This Week:
INTEREST RATES
Rates started the day falling, but ultimately righted themselves to finish higher on the day. We continue to look for the rising trends to remain with a probable test of 2024 highs ahead.
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 continues to make its way higher. It is currently sitting beneath resistance at 4.3%. We have identified a bearish rising wedge so we could see the yield calm down. The RSI is getting overbought and Stochastics did turn down so we could see some consolidation within this tight little trading range. That would essentially bring it out of the rising wedge.
MORTGAGE INTEREST RATES (30-Yr)**
**We watch the 30-Year Fixed Mortgage Interest Rate, because, for the most part, people buy homes based upon the maximum monthly payment they can afford. As rates rise, a fixed monthly payment will carry a smaller mortgage amount, which shuts many buyers out of the market, and potential sellers will experience pressure to lower prices (to no effect so far).
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This week the 30-Year Fixed Rate changed from 6.44 to 6.54.
Here is a 50-year chart for better perspective.
BONDS (TLT)
IT Trend Model: NEUTRAL as of 11/10/2024
LT Trend Model: BUY as of 7/17/2024
TLT Daily Chart: TLT formed a bearish engulfing candlestick today. We should see a decline ahead as the 20-year yield still looks bullish in its rising trend. The declining trend will likely win out here even if it can manage a little upside. In general we are bullish on yields and bearish on Bonds.
The longer-term rising bottoms trendline is now being tested so this could be an area we might see a little upside, but it likely wouldn't last.
TLT Weekly Chart: The reverse head and shoulders pattern is about to be busted. If price falls below the neckline of the pattern, that will be that. The pattern never resulted in a move to the upside target which would've taken price above 105 and then some. This is looking more like a trading range versus bullish chart pattern. The weekly PMO triggered a Crossover SELL Signal and the weekly RSI has moved into negative territory. It doesn't look good for Bonds in the intermediate term either.
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 took one day for a pause this week. Today we rallied off new support. The RSI is overbought again so we do need to see a pause or decline here soon, but the PMO continues to rise strongly and Stochastics have made a home above 80. We wouldn't be surprised if the Dollar marches onward and upward after this week's breakout above the June top. It just needs to take a break.
UUP Weekly Chart: We see a bearish rising wedge on the weekly chart that does imply a breakdown will occur eventually. For now it is headed to the top of the pattern. The weekly PMO triggered a Crossover BUY Signal this week so we'll be on the lookout for an upside breakout out of this bearish pattern.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: The rising Dollar is not posing a problem for Gold. Gold is consolidating sideways after breaking to new all-time highs this week. This is forming a bullish flag formation. The PMO is on a Crossover BUY Signal and has been running flat above the zero line. This implies pure strength. Stochastics are above 80. The RSI is not overbought yet so there is some upside still available.
Discounts are still rather elevated. Bearish sentiment isn't altogether a bad thing until it gets very bullish with premiums or close to premiums. We aren't there yet. The correlation with the Dollar remains positive so if the Dollar doesn't want to slow down that won't be a big problem for Gold which has managed quite well despite the strong rally in the Dollar. There's still a lot of strength here as we see relative strength rising for Gold against the Dollar.
GLD Weekly Chart: We do have a bearish parabolic formation on the weekly chart. These don't end well and they usually execute quickly and painfully. Right now we don't see any real issues with the daily picture and the weekly PMO is rising so we don't expect a breakdown yet. The rally really hasn't gone vertical yet.
GOLD MINERS Daily Chart: Gold Miners are taking a breather, one they really needed given the RSI had gotten overbought. The PMO has topped and we did lose quite a few stocks above their 20-day EMA so we have a sense that weakness will continue. If Gold can continue to make its way higher, the group should reignite, but for now we will look for support to be tested at about 39.00 barring a strong rally by Gold next week.
GDX Weekly Chart: The weekly chart is still very favorable as the rising trend is holding up. Price did hit overhead resistance at the 2020 top so that could also be a reason we are seeing them pull back right now. The weekly PMO is still rising well above the zero line so we expect the rising trend will hold up.
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 rallied today but is still being held back by the 200-day EMA. The PMO has turned back up and is nearing a Crossover BUY Signal. Stochastics are also rising. For that reason we will look for an upside breakout. The rising trend is still holding up.
USO/$WTIC Weekly Chart: Crude Oil remains range bound and we don't see any reason why we'd get a breakout from the range right now. The weekly PMO is flat but on a Crossover SELL Signal. Given the short-term rising trend, we will continue to look for higher prices with a possible move to the top of the range.
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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