SPY 10-Minute Chart: The market opened down and stayed down, but not by very much. We think it is waiting for the employment report tomorrow morning. Investors will be eyeing results closely as this is now where the Fed is focusing their efforts.
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 Daily Chart: Price held support again today and formed a bullish hollow red candlestick. The PMO continues to decline. Total Volume was fairly low today as investors go into a "wait and see" mode.
Stochastics look terrible right now as they fall vertically. The VIX did penetrate the lower Bollinger Band on our inverted scale and many times that will lead to some upside. We suspect it will mean churn.
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S&P 500 New 52-Week Highs/Lows: New Highs fell as we would expect and we did see some New Lows. The High-Low Differential is still a problem as it declines. Negative divergences have essentially played out with this latest 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 NEUTRAL.
The Swenlin Trading Oscillators (STOs) continue to travel in different directions, a sign of neutrality within the market. However, we are losing participation quickly, it won't be long before %Stocks > 20EMA move below our bullish 50% threshold. Rising momentum continues to be bled away. We now only have about a quarter of stocks with rising momentum.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT.
The ITBM and ITVM are still dropping but remain in overbought territory. They have much further to fall. We now have less than 50% of stocks holding PMO Crossover BUY Signals as momentum continues to deteriorate.
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.
The Silver Cross Index is in decline and given there are fewer stocks above their 50-day EMAs, it should continue in that direction. It is above its moving average so the IT Bias is read as BULLISH. The Golden Cross Index did reverse higher today which is likely due to there being about the same amount of stocks above their 200-day EMA. We see participation leaving the market and therefore we should see the Golden Cross Index falling again soon. It is still above its moving average so we read the LT Bias as BULLISH still.
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: With the latest market top in the books, all of our negative divergences played out as expected with a decline. We don't think this decline is over though. Participation is bleeding off and momentum remains a big problem within the index as more stocks lose their rising momentum and PMO BUY Signals. We did see the VIX penetrate its lower Bollinger Band and we did get a bullish hollow red candlestick, but ultimately we aren't looking for a market bottom just yet. These bullish indications (VIX and hollow red candlestick) are incredibly short-term in nature so a strong upside reversal is highly unlikely. The market is turning over.
Erin is 60% long, 0% short. (This is intended as information, not a recommendation.)
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CALENDAR
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BITCOIN
Today saw a PMO Crossover SELL Signal on Bitcoin. It is holding above the 200-day EMA, but given the dive in Stochastics and the new SELL Signal, we continue to look for Bitcoin to test prior lows at 54,000.
BITCOIN ETFs
INTEREST RATES
Yields continue to make their way higher. We are looking for this rising trend to continue. Bond funds are going to continue suffering as yields rise.
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 popped out of the consolidation zone. They have formed a new rising trend a low above a low and a high above previous highs. The RSI is not overbought so we could see it rise further. Stochastics are above 80 again and the PMO is showing new strength as it comes out of the prior flat line below the zero line. We should expect $TNX to continue rising.
BONDS (TLT)
IT Trend Model: BUY as of 6/5/2024
LT Trend Model: BUY as of 7/17/2024
TLT Daily Chart: TLT dropped beneath support at the 50-day EMA in spite of yesterday's bullish hollow red candlestick. We would look for the prior rising bottoms trendline to be tested or possibly the 200-day EMA. Stochastics just dipped below 20 again indicating weakness and the PMO continues to fall. The RSI is not oversold yet so more decline seems likely.
This is starting to look like a head and shoulders top.
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 is off to the races since breaking out of its consolidation zone. The chart is very bullish and does suggest it will rise further. This rally has run hot though so a pause would do it some good. Still, the RSI is not overbought yet so more upside can certainly be accommodated.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: The Dollar soared yesterday and today, but it hasn't hit Gold very hard yet. We do see a very short-term double top forming and the PMO is in decline. Stochastics do look bullish as does the RSI, but given that relative strength is fading against the Dollar, we aren't expecting a rally here.
The correlation with the Dollar is easing which explains why Gold isn't falling in concert with a rising Dollar. The relative strength line is becoming a problem though.
GOLD MINERS (GDX): Miners have formed a short-term head and shoulders on top of support. The PMO had a new Crossover SELL Signal today and we can see participation fading on stocks above their 20-day EMA. Gold looks bearish right now so GDX is likely to continue its decline, executing the head and shoulders with a drop below support.
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 continues to rally on Middle East tensions. We saw this as a temporary condition, but investors are solidifying this rally with a breakout above resistance and above the 200-day EMA. $OVX has penetrated its lower Bollinger Band on the inverted scale and that usually leads to more upside. We would look for USO to stumble at overhead resistance.
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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