The market has responded to the Trump win with a monster rally. Stocks are up, gold and bonds are down. A sector that is taking it especially well is Banking. We're showing the Regional Banking (KRE) chart, but the major banks are also experiencing big rallies. News stories imply that the banks are anticipating a big reduction in regulations.
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: Price gapped up on the open as investors celebrated the Trump victory. Price continued to climb into the close. We did see some high volume selling to end the day.
SPY Daily Chart: Price gapped up to new all-time highs today. This turned the PMO up. Good news is that even at this level, the RSI is not overbought.
The VIX reading gapped lower, pushing it above the upper Bollinger Band on our inverted scale. This can often times lead to a pause or decline. Stochastics powered upward and have already reached positive territory. Internal strength was evident today.
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S&P 500 New 52-Week Highs/Lows: New Highs were off the chart today as the broad market kicked into gear. We do note we had a few more New Lows. The High-Low Differential is moving higher quickly now out of oversold territory.
Climax* Analysis: We need at least two of the four relevant indicators with climax readings to declare a climax day, but we only have one climax reading and one "almost." SPX Total Volume was climactic at 165% of the one-year daily average volume. While it is not technically a climax day, it is close enough to anticipate exhaustion behavior tomorrow, which could be a few days of churn. As usual, regardless of expectations, take your lead from tomorrow's open.
*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) not surprisingly continued to rise higher. Participation has zoomed higher, but most importantly we saw a huge turnaround in the number of rising PMOs.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
The ITVM has joined the ITBM in rising, confirming our rising short-term indicators. We saw a number of new PMO BUY Signals with %PMO Xover BUY Signals crossing above the signal line.
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 term timeframes.
The Silver Cross Index continued to decline, but has decelerated. Participation of stocks above their 20/50-day EMAs is rising to levels that could provide support to the Silver Cross Index. The Golden Cross Index held steady, but still is reading higher than %Stocks > 200EMA so it could conceivably decline further. Both Indexes are below their signal lines so the IT and LT Biases are still 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 soared today on news of a Donald Trump win. It wasn't surprising to see a positive day, but I think many were surprised by the forcefulness. Indicators look very bullish right now suggesting we will see more followthrough on today's move in the near term. However, we would also say that in the very short term a rally hangover is not out of the question. We wouldn't be surprised if we saw more muted trading over the next day or two as the market digests today's incredible rally higher. Tomorrow is the Fed rate decision. It is widely expected that we will see 0.25 rate reduction.
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 surged on news of the crypto-friendly Trump being elected. It put price at new all-time highs. The rising trend remains intact and the PMO has triggered a Crossover BUY Signal. Stochastics are now rising again. We expect to see more rally out of Bitcoin, but a pause may be in order given the now overbought RSI.
BITCOIN ETFs
INTEREST RATES
So much for the pause in yields. They are back on the rise toward 2024 highs. Notice that short-term rates have begun to fall below some of the longer-term rates. The yield curve is correcting slowly.
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 rallied out of a bearish rising wedge which is especially bullish. The RSI is overbought right now, but it has been staying in this area without trouble. The PMO is accelerating higher and Stochastics are holding above 80 signaling internal strength. It's time for a pause, but this breakout leads us to believe it will continue to climb from here.
BONDS (TLT)
IT Trend Model: NEUTRAL as of 11/10/2024
LT Trend Model: BUY as of 7/17/2024
TLT Daily Chart: The rise in yields put a damper on the rounded bottom that was just starting to develop on TLT. Now we have a breakdown below support and a PMO top beneath the signal line. Interestingly Stochastics are still rising, but given the bullish 20-year yield, we expect TLT will continue to weaken.
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 gapped up today which tells us we are probably looking at a breakout from a bullish flag formation. That would imply a rally the height of the flagpole. We do see a bearish filled black candlestick today so we could see a pause or decline tomorrow, but overall the Dollar looks very bullish as the PMO has begun to rise again.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold unsuccessfully tested the rising bottoms trendline. A strong move on the Dollar and optimism on a new government pushed Gold prices much lower. They are already testing the 50-day EMA as support. We foresee more upside for the Dollar so we expect Gold will have a hard time turning around.
GOLD MINERS (GDX) Daily Chart: We were looking for a possible upside reversal on Gold Miners but the beating Gold took translated to much lower prices for Gold Miners. Gold looks very weak right now and this will mean continued weakness for GDX. Participation is tumbling. We would look for a test of the 200-day EMA and 36.00.
CRUDE OIL (USO)
IT Trend Model: BUY as of 8/10/2024
LT Trend Model: SELL as of 9/10/2024
USO Daily Chart: Crude Oil was down today and given Trump's stance on energy independence, we could see prices push even lower as many foresee an increase in production and supply. The PMO is still technically rising and Stochastics are above 80, but we sense we will see more weakness here barring a skirmish in the Middle East.
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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