Every Friday DecisionPoint Diamond members have access to the Diamond Mine trading room. As part of the trading room Erin picks a Sector to Watch and an Industry Group to Watch. Today the winning sector was Materials (XLB) which broke out today on a new PMO Crossover BUY Signal. We did a review of the Industry Groups within Materials and Erin found this very interesting Steel chart.
Here we have a bullish reverse head and shoulders that has been confirmed by a breakout above the 200-day EMA. We have a Silver Cross of the 20/50-day EMAs and a PMO that is accelerating higher. Stochastics are back above 80 and rising further. Diamond members received some stock symbols within the group for review. If you'd like to add Diamonds to your subscription, be sure to email us at support@decisionpoint.com so we can give you a discount!
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: We expect low volatility associated with options expiration, and we certainly got it this time around. The trading range on Thursday and Friday was less than one percent. The rally today was attributed to good earnings report by the old FAANG member Netflix (NFLX).
SPY Daily Chart: It wasn't a surprise to see an inside trading day given low volatility. The short-term rising trend is holding up. The PMO continues to rise. It is flat above the signal line so that does imply pure strength as far as momentum is concerned. The RSI is positive and not overbought so more upside could be absorbed.
The VIX popped above its moving average on the inverted scale which is a sign of strength. Stochastics turned back up which is also a sign of internal price strength.
Here is the latest recording from 10/14. Click HERE to get the link to video library.
SPY Weekly Chart: Price is marching higher within a bearish rising wedge which implies we will see a breakdown out of the wedge. At this point, it does appear that price wants to tap the top of the pattern. The weekly PMO triggered a Crossover BUY Signal last week and that is still intact.
New 52-Week Highs/Lows: New Highs pared back on today's rally but the High-Low Differential is rising nicely. We do note that it is getting overbought now.
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 OVERBOUGHT.
The Swenlin Trading Oscillators (STOs) have topped together in overbought territory. This could mean we'll see a pullback or at least some consolidation or churn. Participation did expand as it should have today. We saw slightly more rising PMOs.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT.
The ITBM and ITVM continue higher which leaves us less concerned about the rally in the intermediate term. However, the ITVM is now overbought and is due for a downturn. We have a negative divergence on the ITBM as current readings are below the last top. PMO BUY Signals are expanding, but remain very low considering we are at all-time highs.
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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), Erin's Sector to Watch, holds the highest IT Bias as we see the Silver Cross Index gaining strength.
The lowest IT Bias belongs to Semiconductors (SMH). This group was beat down on their correction but it didn't take the Golden Cross Index down as far as the Silver Cross Index, hence we have that 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 killing it so it isn't surprising to see them at the top of the Silver Cross Index list. Good Bank earnings have pushed this sector higher.
The lowest reading goes to Semiconductors (SMH). They also didn't see an improvement on the Silver Cross Index. They are poised to move higher, but internals aren't necessarily in line so be careful with this group for now.
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) which had an incredible run, began to pull back. They have since righted the ship, but you can see that the Silver Cross Index did see some damage on the pullback.
Energy (XLE) holds the lowest Golden Cross Index reading and it lost ground this week. The sector was getting hot, but the pullback in Crude Oil caused some damage.
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 terms.
The Silver Cross Index reversed higher today, but it isn't likely to continue in this direction if we don't see more stocks get above their 50-day EMAs. Currently that percentage is lower than the Silver Cross Index. It is above its signal line so the IT Bias is BULLISH.
The Golden Cross Index is shooting higher and it could continue in that direction given there are more stocks above their 200-day EMA than stocks holding a Golden Cross. It is holding 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: Primary indicators like the PMO and Stochastics are very positive for the market right now. The problems we see are the now declining Swenlin Trading Oscillators and a low amount of PMO Crossover BUY Signals. Is this enough to look for a major reversal? Not at this point, but it does have us applying caution. We see some weakness with those indicators, but overall readings are robust for participation of stocks above their key moving averages and the Silver/Golden Cross Indexes are at very bullish levels. However, we often say that things are as good as they can get before they start getting as bad as they can get. We will enjoy this rally, but we should be on the lookout for some weakness ahead based on falling Swenlin Trading Oscillators.
Erin is 70% 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 broke out of the declining trend and is now headed to resistance at the June top. Given the positive configuration of the indicators that seems highly likely. But the picture gets even better for Bitcoin on the weekly chart.
Bitcoin Weekly Chart: We finally have a breakout from the large flag formation that implies we will see a lengthy rally above all-time highs. The weekly PMO reversed higher this week.
BITCOIN ETFs
Today:
This Week:
INTEREST RATES
Yields were mixed today as they continue to build flag formations. This implies they will see more upside, possibly back to prior highs. Maybe at that time we will start to see the short-term rates move back below longer-term rates and fix some of the inversions on the yield curve.
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
We see a flag formation on $TNX. It appeared ready to breakout, but instead pulled back slightly today. We may need to see more of this flag develop before we get the breakout. A breakout certainly seems likely given reversing Stochastics.
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 6.32 to 6.44.
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: Bonds so far are avoiding a drop beneath support, but we think this is temporary. The RSI is negative and the PMO is falling. Stochastics look particularly bearish as they topped in very negative territory.
There is a rising bottoms trendline drawn from the November 2023 low that is still holding up. We would look for a test at 92.00 with a high likelihood of a breakdown.
TLT Weekly Chart: The reverse head and shoulders on the weekly chart may've been completed with the last top, but given the long-term rising trend is holding out of the November 2023 low, we think the pattern isn't necessarily dead yet. Still, with the weekly PMO topping and yields looking very bullish, we will likely see the pattern closed out. Strong support is available at 85.00.
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 finally took a breather with a decline today. We had a feeling it would start to stumble near overhead resistance. The rally has been straight up and needs to be digested and this is a good place for that to happen. The indicators are still very strong so we do expect a breakout at that level of resistance after a pause to refresh.
UUP Weekly Chart: Technically we have a bearish rising wedge on the weekly chart that implies an ultimate breakdown from the pattern. It doesn't look like that will occur anytime soon. More likely we will see a test of the top of the pattern first. The weekly PMO seems to confirm that given its rise toward a Crossover BUY Signal.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold is very bullish right now. We were a bit too cautious going into this breakout mainly because the PMO has been so flat, but we may've forgotten that a flat PMO above the zero line is a sign of pure strength. The PMO is now crossing over its signal line. Stochastics are above 80. We don't see anything in Gold's way right now. Even the Dollar looks like it will pause its rally.
The correlation has moved positive between Gold and the Dollar so they can travel together. We note that the last time the correlation was positive, Gold went on a nice rally before consolidating sideways so we see this as a favorable condition for now.
GLD Weekly Chart: In the longer-term we are very bullish on Gold. It is holding a strong rising trend and the weekly PMO is moving higher. Discounts have pared back somewhat and that tells us that investors are getting bullish. They aren't overly bullish so we don't see a downside reversal based on sentiment ahead. At this point, it is very overbought based on the weekly RSI so a pause in the rally is needed. Not sure we'll get it given how bullish it looks right now.
GOLD MINERS Daily Chart: Gold Miners are off to the races with Gold rallying so strongly. They usually see big gains on Gold rallies. The only issue we have with the chart right now is that the RSI is overbought. However, with today's thrust higher and bullish Gold charts, we don't think the rally is over yet. Participation is very strong and Stochastics just moved above 80.
GDX Weekly Chart: Price has been in a sideways trading range and has now hit the top of it, making it vulnerable to a pullback. However, with Gold looking so bullish and participation holding strong within the group, we would look for a breakout from this trading range. The weekly PMO is accelerating higher.
CRUDE OIL (USO)
IT Trend Model: BUY as of 8/10/2024
LT Trend Model: SELL as of 9/10/2024
USO Daily Chart: There's good news and bad news on the Crude Oil chart. The bad news is that price has broken the rising bottoms trendline. The good news is that it formed a bullish hammer candlestick. Unfortunately there is far more negative forces than bullish forces on the chart. Besides the breakdown, we have a new PMO Crossover SELL Signal and Stochastics dropping in negative territory. This week's Dark Cross of the 20/50-day EMAs is also bearish. For now we will look for a test of support at 68.00.
USO/$WTIC Weekly Chart: Crude Oil has been in a trading range for years. The weekly PMO is above the zero line but it topped below its signal line this week. More evidence that we will likely see more decline on Crude moving forward.
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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