Today both the Golden Cross Index (GCI) and Silver Cross Index (SCI) topped. We'll talk more about this in the Bias section, but as you can see both remain above their signal lines so despite topping, the IT and LT Biases are still BULLISH.
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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: Price opened lower this morning, but managed to right itself. It spent the rest of the day chopping around yesterday's close. It did manage a positive close, but just barely.
SPY Daily Chart: Price formed a lower high and lower low today in spite of a positive close. Price is now perched atop of support at the August high and 20-day EMA. The PMO topped yesterday and continues lower. Total Volume was low on today's advance.
Stochastics have now dropped below 80 so we do detect new weakness. The VIX remains below its moving average on the inverted scale, also showing weakness.
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S&P 500 New 52-Week Highs/Lows: New Highs dropped even with the positive close, but given today's unenthusiastic trading it isn't a surprise. We pointed out two negative divergences on this chart yesterday.
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) were mixed with the STO-B moving higher and the STO-V remaining in decline. These mixed readings suggest neutrality. Negative divergences plague this chart. Participation thinned and we now have only 37% of stocks holding rising PMOs. That isn't enough to keep this rally going.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT.
Both the ITBM and ITVM are still headed lower. %PMO Xover BUY Signals hold a negative divergence and have dropped beneath the signal line. It is barely holding above our bullish 50% threshold.
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 both the intermediate- and long-term timeframes.
As noted in the opening, both the Silver Cross Index (SCI) and Golden Cross Index (GCI) topped. The delimiting factor for the Silver Cross Index is %Stocks > 50EMA and for the Golden Cross Index it is %Stocks > 200EMA. When those percentages move lower than the GCI and SCI, they will usually move lower. %Stocks > 200EMA is still reading higher than the GCI so it could reverse, but we aren't expecting that. %Stocks > 20EMA is lower than the SCI so it should continue to move lower. At this time both the SCI and GCI are 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: Negative divergences now plague all of our indicator charts. The STOs were mixed, but the ITBM and ITVM continue to move lower which suggests to us that we will see price pull back further from all-time highs. Support is here, but it looks particularly vulnerable. With the SCI and GCI topping we have to be prepared for some more decline. It could bleed into the intermediate term as we continue to see a loss of momentum internally with fewer PMO BUY Signals and fewer rising PMOs. We suspect current support will be broken.
Erin is 60% long, 0% short.
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CALENDAR
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BITCOIN
Bitcoin did find support at the 200-day EMA but given the nearing PMO Crossover SELL Signal, it isn't likely to hold. More likely we will see a test of 54,000.
BITCOIN ETFs
INTEREST RATES
Yields are still angling upward off support. Most yields were up on the day. They look bullish so we expect Bond funds to continue to flounder.
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 is consolidating sideways, but given the positive look of the PMO and Stochastics, we are expecting it to break upward not downward. We aren't looking for a big gain given the neutral RSI, but we could see a move above the 50-day EMA.
BONDS (TLT)
IT Trend Model: BUY as of 6/5/2024
LT Trend Model: BUY as of 7/17/2024
TLT Daily Chart: TLT struggled today as the 20-year yield was up. It did form a bullish hollow red candlestick which does imply higher prices tomorrow. Yields are melting upward so we suspect the 50-day EMA will not hold as support. The PMO is in decline, the RSI is negative and Stochastics have topped in negative territory.
DOLLAR (UUP)
IT Trend Model: NEUTRAL as of 8/5/2024
LT Trend Model: BUY as of 5/25/2023
UUP Daily Chart: The Dollar finally broke from the confines of its trading range. We aren't surprised given the margin now being lengthened between the PMO and its signal line. Stochastics are almost above 80 and the RSI is positive and rising so we do expect this rally to continue a bit longer.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Considering the strength of the Dollar today we were pleasantly surprised to see Gold finish in positive territory. It wasn't much of a positive close, but it was positive nonetheless. It does look very toppy here and given the new strength in the Dollar, it is likely to see a top here.
The PMO has topped and Stochastics are pointed lower so we should see price back further off all-time highs.
GOLD MINERS (GDX): Miners look very toppy. It is looking like a head and shoulders top in the very short term. They are still in a rising trend and participation is still quite healthy, but we expect Gold to move lower and that will be a problem for GDX. The PMO is topping and Stochastics are headed lower so look for more decline.
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 rallied again today as Middle East tensions continue to build. This isn't really production related. Production levels suggest we should be seeing a decline. Thus we don't trust this current rally. Today USO formed a bearish filled black candlestick so we should see a decline tomorrow.
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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