Today the 20-Year Bond ETF (TLT) 50-day EMA crossed down through the 200-day EMA (Death Cross), generating an LT Trend Model SELL Signal. This was the result of a down trend lasting over two months. We note that the PMO has been running flat below the zero line for a month, which tells us that steady downward pressure has been applied to price.
On the weekly chart we observe a bullish reverse head and shoulders pattern, which executed when price broke above the neckline and rallied for a couple of weeks. Next it performed a technical pullback to the support line. If the support fails, the pattern will abort, and we will assume a bearish outlook in this time frame.
We have been watching this 46-year monthly chart of the 30-Year Bond for a few years now. An extremely long-term (40-year) rising trend line was violated in 2022. At the time we asserted that bonds had turned bearish and that condition would most likely persist for many years. We have not changed our outlook. There may be encouraging rallies from time to time, but we believe they will fail.
Conclusion: The LT Trend Model SELL Signal was triggered by a persistent two-month decline. In the longer-term, bonds appear to be attempting a rally. Our outlook is bearish, but we need to see how far the rally can go. In any case, we believe the ultimate outcome will be bearish.
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/INDUSTRY GROUP/SECTOR INDEXES
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: The market was ragged in the morning, but ultimately turned back up and made its way higher. We have a new rising trend on this chart.
SPY Daily Chart: Price rallying off support and it formed another bullish hammer-like candlestick. The rally wasn't enough to turn the PMO higher, but followthrough will definitely push it back into a Crossover BUY Signal.
The VIX is holding above its moving average on our inverted scale and Stochastics are on the rise so we do detect internal price strength.
Here is the latest recording from 11/18. Click HERE to get to our video list.:
S&P 500 New 52-Week Highs/Lows: New Highs were about the same as yesterday, but we noticed far fewer New Lows. The High-Low Differential has turned back up for the moment.
Climax* Analysis: There were climax readings on all four relevant indicators today, so we have an upside initiation climax. SPX Total Volume was solid and confirms the climax.
*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 DOWN and the condition is OVERSOLD.
Both Swenlin Trading Oscillators (STOs) moved up today and hit positive territory. Participation did expand, but we do note that the current negative divergence on %Stocks > 20EMA is intact. We saw a very nice expansion in the number of rising PMOs yesterday and today.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
The ITBM/ITVM confirmed short-term indicators as they have reversed higher. We have been holding at 50% for PMO Crossover BUY Signals, but would like to see higher readings.
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 BEARISH in the intermediate and long terms.
Participation increased across the board and is currently at levels that could get the Silver Cross Index rising again as it is already turning up. We still don't have enough stocks above their 200-day EMA to get the Golden Cross Index rising, but it is already decelerating. Both the Silver Cross Index and Golden Cross Index remain below their signal lines so the IT and LT Biases are BEARISH.
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.
*****************************************************************************************************
*****************************************************************************************************
CONCLUSION: Today's rally was constructive as it did move our primary indicators (STOs, ITBM/ITVM) higher while before they were in decline. The upside initiation climax adds to the bullish outlook. We would still like to see higher participation readings, but ultimately they are above our bullish 50% threshold. Slim participation hasn't stopped the market from rising and we are seeing more rising PMOs and PMO BUY Signals. Today's charts tell us to look for some upside followthrough.
Erin is 60% long, 0% short. (This is intended as information, not a recommendation.)
*****************************************************************************************************
*****************************************************************************************************
CALENDAR
Have you subscribed the DecisionPoint Diamonds yet? DP does the work for you by providing handpicked stocks/ETFs from exclusive DP scans! Add it with a discount! Contact support@decisionpoint.com for more information!
BITCOIN
Bitcoin has now broken out of the bullish flag formation and is marching higher. The RSI is very overbought and tells us that the rally is running too hot, but given the positive outlook for crypto, we believe it will still move higher. The rally is parabolic and calls for a swift painful decline, but again, the outlook is too bullish on crypto to look for a big decline. More than likely there will be some consolidation again to digest this incredible rally higher.
BITCOIN ETFs
INTEREST RATES
Yields may not be ready to pause just yet as they have resumed their rally higher. Bonds are continuing to feel the downward pressure. We are expecting 2024 highs to eventually be tested.
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 hasn't recaptured the rising trendline, but it is still essentially in a rising trend. We expected to see more consolidation or decline when it broke down from the bearish rising wedge, but no such luck, it is very resilient right now. The PMO has turned back up and the RSI is positive. Stochastics are also turning back up. So much for the consolidation or decline we were expecting.
BONDS (TLT)
IT Trend Model: NEUTRAL as of 11/10/2024
LT Trend Model: SELL as of 11/21/2024
TLT Daily Chart: Today the 20-Year Bond ETF (TLT) 50-day EMA crossed down through the 200-day EMA (Death Cross), generating an LT Trend Model SELL Signal. Details at the top of this report.
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 of a second bull flag. The expectation is a rally the height of the flagpole from the breakout point. The RSI is overbought again, but that hasn't really been a huge problem for the Dollar. Still, it does tell us the Dollar needs some type of digestion phase. With the PMO accelerating higher, it isn't likely to see a big decline.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold again rallied despite a rising Dollar. The declining trendline has been broken suggesting we do have more upside ahead for Gold. The PMO has now turned back up and the RSI is back in positive territory. Stochastics are also rising nicely.
Discounts hit very high levels meaning investors are very bearish on Gold right now. This is generally a recipe for a rally and it appears we are finally getting the expected response to extreme bearish activity. Resistance has been met so we wouldn't be surprised if Gold halts its rally to consolidate sideways.
GOLD MINERS (GDX) Daily Chart: Participation is moving in the right direction and the PMO has turned up. Gold does look like it wants to rally back to all-time highs and that will pave the way for GDX to move higher from here. Resistance is arriving at the 50-day EMA and 40.00 so maybe that is where we look for a pause in this current rally.
CRUDE OIL (USO)
IT Trend Model: SELL as of 10/17/2024
LT Trend Model: SELL as of 9/10/2024
USO Daily Chart: Crude is making its way toward the top of its current trading range. The PMO is nearing a Crossover BUY Signal and Stochastics are making their way back up. The RSI has also entered positive territory. We should see resistance met. This set up is familiar as we saw similar indicator readings on the last rally so we aren't going to get exceedingly bullish. We have a strong feeling that resistance will hold again.
Good Luck & Good Trading!
Erin Swenlin and Carl Swenlin
Technical Analysis is a windsock, not a crystal ball. --Carl Swenlin
(c) Copyright 2024 DecisionPoint.com
Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
DecisionPoint is not a registered investment advisor. Investment and trading decisions are solely your responsibility. DecisionPoint newsletters, blogs or website materials should NOT be interpreted as a recommendation or solicitation to buy or sell any security or to take any specific action.
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.
Helpful DecisionPoint Links:
DecisionPoint Alert Chart List
DecisionPoint Golden Cross/Silver Cross Index Chart List
DecisionPoint Sector Chart List
Price Momentum Oscillator (PMO)