Today NVIDIA finally broke out of the five-month trading range to new, all-time highs. The PMO continues to rise and the OBV is confirming the rally with its own rising trend.
The weekly chart shows NVDA breaking down from a parabolic advance in July, followed by a hasty consolidation, which attenuated the vertical ascent somewhat. The weekly PMO is back on the rise. It appears that the parabolic advance is resuming, and it could be that it will go much higher.
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 market suffered a minor collapse shortly after the open, then it clawed back most of the loss by the close. This latency could be in anticipation of the Jobs report later this week.
SPY Daily Chart: Price is churning sideways as price looks a bit toppy. The RSI is not overbought so technically the SPY is not overbought at this level. The PMO continues to make its way higher on a Crossover BUY Signal.
The VIX is above its moving average on the inverted scale and Stochastics are oscillating above 80. Both are signs of internal price strength.
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S&P 500 New 52-Week Highs/Lows: New Highs were still visible on the decline. We only logged a few New Lows. We are now monitoring the High-Low Differential closely as it has reached overbought territory.
Climax* Analysis: Of the four relevant indicators, two had climax readings today, so we have a downside initiation climax. SPX Total Volume contracted and did not confirm. While this makes for a rather weak climax day, we should be wary of more downside to follow.
*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) have dropped out of overbought territory as their decline continues from Friday. Participation was leeched out on today's mild decline. We saw a big decline in the number of rising PMOs within the index.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT.
Both the ITBM and ITVM topped in overbought territory. While we don't see it on the ITVM, there is a negative divergence on the ITBM. There is also a clear negative divergence on %PMO Xover BUY Signals. That indicator topped today. Considering we are at all-time highs, we should have more PMO BUY Signals within the index.
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 term timeframes.
It is important to note the new negative divergences with price that we have on participation indicators for stocks above their key moving averages. This does suggest we could see a decline catch hold. For now the Silver Cross Index is above its signal line (for the moment) so the IT Bias is BULLISH. The Golden Cross Index looks healthy on its rise, but with fewer stocks above their 50/200-day EMAs, it is likely to reverse soon. It remains 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: The market has been churning and we don't think that will subside. In fact, we are very vulnerable to a downside move for a number of reasons. Our primary concern is the topping STOs and ITBM/ITVM. The ITBM and ITVM have been rising for some time and today's decline caught our attention. We saw a downside initiation climax today that suggests at a minimum we'll see more churn. However, with the negative divergences appearing again, we suspect we will finally see a more concerted decline by the index. We reviewed Magnificent Seven stocks this morning in the trading room and we see some weakness there so we don't think the mega-caps will swoop in to prevent a 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 was down on the day as it struggles to hold the breakout above the declining tops trendline. The rally has been strong and we suspect this it is taking a moment to pause. It has brought the RSI out of overbought territory in preparation for more upside. We will monitor the PMO closely as it does look a little toppy already.
BITCOIN ETFs
INTEREST RATES
Yields soared higher today putting downside pressure on all of the Bond funds. We are expecting them to move higher from here toward overhead resistance at 2024 highs.
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 leapt higher, pushing it above the 200-day EMA and horizontal resistance. The RSI is getting overbought, but given the accelerating PMO and Stochastics rising above 80, we do expect the yield to continue higher. We would start looking for a move to 4.5%.
BONDS (TLT)
IT Trend Model: NEUTRAL as of 11/10/2024
LT Trend Model: BUY as of 7/17/2024
TLT Daily Chart: The bottom dropped out of support today as the 20-year yield rallied strongly, pushing TLT well below the 200-day EMA. The PMO is falling below the zero line and Stochastics are below 20 after topping in very negative territory. Rates look very bullish right now so we are expecting TLT and other Bond funds to continue lower.
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 is not stopping its rally, but it has met with overhead resistance at the June top. This would be a good place to see it at least pause the rally. The RSI is very overbought and needs to be relieved with a decline or even consolidation. The indicators tell us that any weakness here would likely be temporary.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold set another all-time high today, but finished lower by day's end. The rising Dollar hasn't really affected Gold prices which have continued to move higher. This speaks to Gold's strength right now. Notice the relative strength line to the Dollar is showing Gold outperforming.
We have a new PMO Crossover BUY Signal today and Stochastics are holding above 80 so we have to look for Gold to move even higher from here. We did a study today in the trading room comparing Gold to the SPY. Gold is outperforming the SPY by a mile.
GOLD MINERS (GDX) Daily Chart: Gold Miners cooled a bit today likely on weaker Gold prices. They are now overbought based on the RSI, but the internals look fantastic and suggest we will see them move even higher. Gold is making all-time highs and GDX will benefit. Participation is very strong and the PMO is rising on a Crossover BUY Signal. They are certainly due for a pause. If Gold decides to consolidate here, we could see a small pullback in 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 Oil has formed a small island that could portend a possible reverse island resolution that would imply an upcoming gap up. Based on the new PMO Crossover SELL Signal, we don't think that is likely right now, but we know if Middle East tensions flare, we will see a rally. Stochastics are dropping so that adds to the negativity of the PMO SELL Signal. Technicals do suggest decline not 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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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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