Today the Price Momentum Oscillator (PMO) crossed above its signal line to give us a new PMO Crossover BUY Signal for Materials (XLB). This signal occurred above the zero line which makes it more bullish. The chart isn't perfect though. Participation hasn't really been increasing on this rally based on stocks above their 20/50-day EMAs. However, that means there is room for improvement as more stocks get on board the rally. Stochastics also look very bullish right now.
The weekly chart is clearly bullish. We have a breakout from a consolidation zone and a strong rising trend. The weekly PMO is also rising on a Crossover BUY Signal.
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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 spent most of the day on a steady rising trend, but by day's end price began to consolidate. The 10-minute PMO is turning over so we could see a continuation of this sideways action.
SPY Daily Chart: The bearish engulfing candlestick did not give us a decline today, but we did set a lower high. The PMO is looking somewhat toppy.
The VIX eased today but still remains below its moving average on the inverted scale so there is some weakness. Stochastics topped yesterday and are still headed lower. For now they remain above 80 so we aren't detecting much weakness.
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S&P 500 New 52-Week Highs/Lows: New Highs pared back considerably today which was unexpected given yesterday's decline produced far more New Highs. We see this as a negative divergence in the very short term. At this time the High-Low Differential is still rising which is positive.
Climax* Analysis: There were two climax readings on the four relevant indicators, so today is an upside exhaustion climax. SPX Total Volume was below the one-year average daily volume, so it does not confirm.
*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) are back to rising in concert. They are somewhat overbought right now. Participation gained very slightly today and we did see a bit more rising PMOs.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
Both the ITBM and ITVM are rising bullishly, but the ITVM is definitely overbought right now. It has seen higher readings so it could conceivably keep rising along with price. We saw a one percentage point gain on %PMO Xover BUY Signals so now we have half of the index with PMO BUY Signals. We need more and should have more given we have been at all-time highs.
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 and Golden Cross Indexes turned up today. The Silver Cross Index is still vulnerable to a decrease given we have fewer stocks above their 20/50-day EMAs. The Golden Cross Index should continue rising given we do have more stocks above their 200-day EMAs. Both Indexes are above their signal lines so the IT and LT Biases are still 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: We saw a rally today but it wasn't backed by strong Total Volume. On the bright side, low Total Volume didn't confirm today's new upside exhaustion climax which takes the sting away from that condition. The STOs are rising again with the ITBM and ITVM but we're still bothered by the lack of PMO BUY Signals given we are near all-time highs. Still, we do have healthy participation with the Silver Cross Index and Golden Cross Index reading at robust levels. Erin's Diamond Scans returned Dividend ETFs and Small-Cap ETFs today so we should look for higher prices. However, with today's climax we may see some churn or a small decline first. Tomorrow we have some economic reports that could add to market turbulence with a jobs report and retail sales report.
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 is off to the races. Today it broke and finished the day above its declining tops trendline. The indicators are very bullish and suggest to us it may be time for a move to fresh all-time highs.
BITCOIN ETFs
INTEREST RATES
Yields continued to pull back today. They were due for a pause in their steep rallies. We expect them to fall further, but only temporarily.
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 fell again today. Stochastics are dropping, but the PMO is still technically rising. For now we are looking for more decline, but as noted in the interest rates section above, we think this is 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 continued to rally after another decline in the 20-year yield. Yields had gotten out of hand with straight up advances. It is time for them to cool and that will afford Bond Funds like TLT the opportunity to cover some losses. The PMO does look ready to turn back up, but we suspect yields will resume their rise soon and we'll see a rally failure.
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 broke out above the late July top today 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 is clearly not as tied to the Dollar as it usually is. Today despite a strong Dollar, Gold had a nice rally. The PMO is still not helpful and given it is so flat, we think there is a high probability that price will remain in this trading range. Although Stochastics do hint at a breakout to new all-time highs. We will say that we are cautiously bullish on Gold in the very short term.
Well looking at the correlation between Gold and the Dollar we see that they are actually positively correlated right now. Not by a lot, but still positive. The last time it got positively correlated to the Dollar it was off to a good rally. More reason to be cautiously bullish.
GOLD MINERS (GDX): Gold Miners rallied but did form a long wick on the OHLC bar which implies a shooting star candlestick. That suggests we will see a decline tomorrow. Given we are cautiously optimistic on Gold, we have to be bullish on Miners. Participation is expanding and we have a nearing PMO Crossover BUY 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 was down on the day. The bearish double top confirmed with yesterday's plunge. We are still looking for a test of 68.00 as that is the downside target of the pattern. The PMO is in decline and the RSI moved into negative territory below net neutral (50). Stochastics have also dropped into negative territory. Unless we get disturbing news from the Middle East, we should look for Crude to continue lower.
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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Price Momentum Oscillator (PMO)