Today the Gold Miners ETF (GDX) 20-day EMA crossed down through the 50-day EMA (Dark Cross), above the 200-day EMA, generating an IT Trend Model NEUTRAL Signal. With gold being in correction mode, it is reasonable to expect the Gold Miners to correct as well. We'll discuss the under the hood indicators in the section on Gold Miners.
GDX Weekly Chart: It looks as if 33 might be a support level but if the correction in Gold continues that level will be vulnerable. The weekly PMO is diving lower after the breakdown of the rising trend.
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 10-Minute Chart: The market spent the morning on the rise, but lost steam midday. Of note is the decline on the closing bell. The market barely managed a positive close.
SPY Daily Chart: Price is beginning to top. The PMO is still on the rise and the OBV shows rising bottoms confirming the current uptrend.
The VIX reading was lower again today, pushing it very near the upper Bollinger Band on the inverted scale. Market participants don't seem to be concerned with this recent market top. Stochastics are comfortably above 80 so there is still internal strength visible. We see a slight rising trend on relative strength to equal-weight RSP so mega caps are providing stability for now.
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S&P 500 New 52-Week Highs/Lows: New Highs increased slightly on the rally and we did see fewer New Lows. The High-Low Differential is rising strongly.
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) are continuing to move lower suggesting a decline is likely. They have left overbought conditions already. Participation did move slightly higher with 62% of stocks holding above their 20-day EMAs. Rising momentum also saw slight improvement and is reading at a healthy 61%.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
The ITBM and ITVM are still mixed with the ITBM rising and the ITVM falling. It is a mixed confirmation of lowering short-term indicators. We have 60% of stocks holding PMO BUY Signals which is healthy.
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.
The Silver Cross Index topped for the second time beneath its signal line and it could continue to decline given there are fewer stocks above their 50-day EMA than have Silver Crosses. It is below its signal line so the IT Bias remains BEARISH. The Golden Cross Index looks pretty healthy on its rise. It could see a Bullish Shift across the signal line soon which would change the LT Bias to BULLISH. Unfortunately with fewer stocks beneath their 200-day EMA, it will be difficult for the Golden Cross Index to advance much further. Negative divergences remain a problem for participation of stocks above their 20/50/200-day EMAs.
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 began a digestion process yesterday, but today managed a positive close. The STOs continue to decline and the Silver Cross Index is showing a BEARISH IT Bias. On the other hand, participation readings, PMOs Rising and %PMO Xover BUY Signals look fairly healthy. The PMO continues to rise and Stochastics are well above 80. We believe the market is still in need of a pullback, but elevated participation readings could continue to hold prices near all-time highs. Overall we expect to see some churn or a possible melt lower as the election exhale continues. Jobless claims and PPI are released tomorrow. This could cause some turbulence if readings are not as expected.
Erin is 75% long, 0% short. (This is intended as information, not a recommendation.)
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CALENDAR
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BITCOIN
Bitcoin is still on the move higher. It pulled back from earlier highs, but still finished on the positive side. This parabolic rise out of the October low is getting concerning. The RSI is very overbought. It may be time for a pullback soon that could be swift and very uncomfortable for Bitcoin investors. For now it is still riding high on the election.
BITCOIN ETFs
INTEREST RATES
Yields were mixed today with long-term rates rising higher and shorter-term rates moving lower. Inversions are slowly beginning to right themselves. We still expect yields to continue higher.
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 flying higher within a rising trend channel. At first we saw a bearish rising wedge, but that has morphed into a rising trend channel. The PMO has surged (bottomed) above the signal line, well above the zero line and that suggests pure strength. We are looking for 2024 highs to be tested.
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: Yields are back on the move higher and that means we won't see TLT breakout. It is going to experience more downside and indicators are in agreement. The RSI is negative and the PMO is on a new Crossover SELL Signal. Stochastics are dropping quickly. The next level of strong support lies at 88.50, but we would look for a test of 87.00.
DOLLAR (UUP)
IT Trend Model: BUY as of 10/9/2024
LT Trend Model: BUY as of 5/25/2023
UUP Daily Chart: The 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's pullback is likely to turn into a correction. The rising Dollar is hurting it, but it is down further than the Dollar was up suggesting plenty of sellers of the metal. We are about to hit horizontal support at the August tops where we could see a pause in the decline. Indicators are very negative so we aren't looking for a credible rally anytime soon.
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: Today's Dark Cross punctuates the already dastardly decline. Gold is likely to continue to correct so Miners are likely to continue to be hurt. The 200-day EMA has been compromised and participation of stocks above their 20/50-day EMAs has plummeted. Stochastics have topped in negative territory and they are reading below 20. Look for more downside.
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 managed a rally today. This is a good area to look for an upside reversal, but given the negative indicators, we do think support still has to be tested at 68.00.
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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