Earnings were received well as Disney (DIS) reported that its entertainment division was boosting earnings. It also had well received forward guidance. The stock gapped up and advanced more than 6%. DIS was already building a nice base on a rally out of the August lows. Price is now thoroughly overbought and is going to be in need of a digestion phase. Stochastics did top today, but overall they are holding above 80.
DIS Weekly Chart: DIS is still traveling within a sideways trading range on the weekly chart. Strong overhead resistance is looming.
DIS Monthly Chart: The weekly chart shows a bullish double bottom formation that would imply a breakout from this trading range. The monthly PMO has surged above the signal line.
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
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 now have a clearly defined declining trend on the 10-minute bar chart. Price slid all day long. It dropped below support at the 12-Nov low.
SPY Daily Chart: Price almost formed a bearish engulfing candlestick today. This top does look credible so we are expecting downside followthrough. The PMO held steady today. It has decelerated and could top as soon as tomorrow if the decline continues.
We're not seeing an increase in the VIX reading despite this turn over in price. Investors don't seem concerned at all. Stochastics are falling but remain above 80 so internal strength is still somewhat visible.
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S&P 500 New 52-Week Highs/Lows: New Highs are angling downward now that price is on the decline. We have New Lows visible again. It is hard to tell, but the High-Low Differential topped today.
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.
Swenlin Trading Oscillators (STOs) declined again today with the STO-V hitting negative territory. Participation is being bled out of the market and we are seeing a big decline in the number of rising PMOs. That indicator topped in near-term overbought territory.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
We now have both the ITBM and ITVM declining, essentially confirming already declining short-term indicators. We now have clear negative divergences on both indicators. %PMO Xover BUY Signals topped today and will likely continue to head lower since only 46% of stocks have rising PMOs.
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.
Negative divergences remain a problem on %Stocks > 20/50/200EMAs. While readings are still somewhat healthy, the decline in the Silver Cross Index tells us there are problems under the surface. The Silver Cross Index remains below its signal line so the IT Bias is BEARISH. The Golden Cross Index is very close to a BULLISH SHIFT across the signal line. We're somewhat surprised by its rise given we have fewer stocks above their 200-day EMA. This condition is likely temporary. For now it is below its signal line so we read the LT Bias as 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.
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CONCLUSION: The market has begun taking back gains from the election euphoria rally. PMOs are now turning downward and we are starting to see fewer PMO BUY Signals. STOs and ITBM/ITVM are in decline. Negative divergences may be coming home to roost now so we would be prepared for more downside ahead. Participation is bleeding off, but remains at satisfactory levels for now. We should still be on alert that this decline could turn into something more serious.
Erin is 70% long, 0% short. (This is intended as information, not a recommendation.)
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CALENDAR
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BITCOIN
We've been concerned about a possible parabolic breakdown on the Bitcoin chart, but price is starting to digest the rally without sustaining any serious damage. Stochastics have turned down so we would look for more consolidation at this time, but we can't overlook that parabolic move completely. There is still risk based on that pattern.
Bitcoin Weekly Chart: This breakout from a bull flag is executing as expected with a big rally. The minimum upside target based on the pattern would take Bitcoin to 135,000. We're not so sure that is out of the question. The weekly PMO looks especially bullish.
BITCOIN ETFs
INTEREST RATES
Yields were mixed again today with most longer-term yields falling and shorter-term yields rising. We still are looking for yields to test 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 fell on the day but remains in a strongly rising trend channel. Given the PMO surged (bottomed) above the signal line, we should look for it to move higher from here. Stochastics are now above 80. We've been looking for a pause in the rally and it still could, but the RSI isn't overbought and can accommodate even more upside.
10-Year Bond Yield Weekly Chart: The declining trend on the weekly chart was broken. The weekly PMO has just entered positive territory. We should see some upside followthrough.
BONDS (TLT)
IT Trend Model: NEUTRAL as of 11/10/2024
LT Trend Model: BUY as of 7/17/2024
TLT Daily Chart: TLT managed a small rally, but the decline trend remains firmly intact and we don't expect it to be compromised anytime soon given the strong rising trend in yields. The PMO is flat beneath the signal line and that implies pure weakness in the move. Stochastics are tumbling lower. Yields are due for a pause, but that would likely keep TLT below resistance anyway. Today's filled black candlestick suggests a decline tomorrow.
DOLLAR (UUP)
IT Trend Model: BUY as of 10/9/2024
LT Trend Model: BUY as of 5/25/2023
UUP Daily Chart: Yesterday's comments still apply:
"The RSI on the Dollar is now overbought suggesting it might be time for a pause in the rally. Of course we have seen these overbought conditions persist before. The PMO is rising strongly and Stochastics are above 80. The table is set for higher prices to continue, but as noted, it does seem time for a cooling off period."
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold is in trouble and the strongly rising Dollar is only making matters worse. Support is arriving at 230 so we'll look for a pause in the decline there. Discounts have gotten very bearish given the decline. This condition can sometimes lead to a new leg up. However, given the diving PMO we are not likely to see an upside reversal until support is reached.
GLD Weekly Chart: Yesterday's comments still apply:
"For weeks we have been concerned about the parabolic nature of GLD's advance from the 2022 low. The parabolic arc was broken last week, and the decline accelerated today. We think the weekly chart gives the best context for estimating the likely downside target for the current decline. The first obvious support is at 225 (-13%) and the next is at 210 (-18%). Beyond that is 195 (-25%), which is painful to contemplate."
GOLD MINERS (GDX) Daily Chart: GDX managed a small rally today, but it still compromised support. It closed above it, but given the declining PMO and Silver Cross Index, we would expect the decline isn't over yet. Participation is near zero for %Stocks > 20/50EMAs. The next level of credible support is at 32.00. Weakness in Gold suggests we could see that level tested.
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 rallied but formed a bearish filled black candlestick suggesting a decline ahead tomorrow. At this time we believe we'll see another test of overhead resistance as the PMO is beginning to decelerate and Stochastics tipped upward. Overall we expect this trading range to hold firm.
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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