Today the Materials Sector (XLB) 20-day EMA crossed up through the 50-day EMA (Silver Cross), generating an IT Trend Model BUY Signal. We note that XLB has experienced about a month of weakness, probably to consolidate the previous advance. The recent rally has broken through a short-term declining tops line, giving us confidence that the rally will continue.
A bearish rising wedge has formed during the process of XLB making all-time highs. We also note that the weekly PMO has turned up. It may be headed to test the top of the pattern.
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/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: Everyone must have been feeling pretty thankful on today's shortened trading day as price moved up consistently all day long before a small drop on the close.
SPY Daily Chart: Price logged a new all-time high on the rally. The PMO has been running flat above the zero line indicating pure strength as price continues to march higher, but we have to wonder when the steam will run out.
The VIX is very healthy above its moving average on the inverted scale. Investors are definitely in the "complacent" zone for readings. Stochastics indicate strength as they continue to rise above 80.
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SPY Weekly Chart: We continue to monitor the bearish rising wedge on the weekly chart. At this point the weekly PMO is rising on a Crossover BUY Signal so a breakdown doesn't seem too likely right now.
SPY Monthly Chart: There is another parabolic advance out of the 2022 low. Parabolic formations are very dangerous. The monthly PMO is still on the rise so we won't look for a breakdown just yet.
New 52-Week Highs/Lows: New Highs pared back on the rally, but were still visible. No New Lows were detected. The High-Low Differential looks very bullish as it rises higher. It isn't overbought, but is working its way there.
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) turned down today on the rally which is sobering. However, they had gotten very overbought and it was time for them to revert back toward zero. We take this as a short-term warning, as it may be time for some decline to digest the recent rally. Participation did expand as we want on a rally day. We now have 83% above their 20-day EMA and a healthy 73% of stocks holding rising momentum.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
One thing that makes the STO tops less daunting is that the ITBM/ITVM are both continuing to rise strongly. We continue to see expansion in PMO Crossover BUY Signals as well.
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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.
The weakest IT Bias belongs to Gold Miners (GDX) due to the Silver Cross Index being hit hard with declines. The group is still struggling.
The highest IT Bias goes to Energy (XLE) which has seen a big expansion on the Silver Cross Index versus the Golden Cross Index.
It should still be noted that the majority of the biases are negative.
This table is sorted by SCI values. This gives a clear picture of strongest to weakest index/sector in terms of intermediate-term participation.
It was a good week as nearly all Silver Cross Indexes saw higher readings.
The biggest gainer was Real Estate (XLRE) which does look like a sector ready to move higher. The biggest loss was GDX which continues to feel the heat from the decline in Gold.
This table is sorted by GCI values. This gives a clear picture of strongest to weakest index/sector in terms of long-term participation.
It is worth noting that Semiconductors lost 8 percentage points on the GCI. It also lost ground on the SCI. Beware of this group.
Communications (XLC) saw the biggest gain on the GCI. This sector is starting to break out again.
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 the intermediate term.
The market bias is BEARISH in the long term.
Participation of stocks above key moving averages saw expansions on the rally as it should have. Readings are at robust levels and do provide a good foundation for the current rally. The Silver Cross Index is rising strongly above its signal line so the IT Bias is BULLISH. The Golden Cross Index reversed higher this week, but still remains below its signal line so the LT Bias is 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 Bias Table is very green in the intermediate term based on Silver Cross Indexes being above their signal lines. This is a good foundation for the current rally. However, a warning shot was fired today as both the STOs turned down in overbought territory. The internals are not that weak right now so we aren't looking for a perilous decline based on their descent. The rally has broadened with small- and mid-caps seeing excellent rallies which generally lifts all boats. We are cautiously bullish, but STOs have us watching closely for a possible decline.
Erin is __% long, __% short. (This is intended as information, not a recommendation.)
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CALENDAR
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BITCOIN
Bitcoin Daily Chart: We starting to see some digestion on the part of Bitcoin. The recent decline could be all we'll see before it makes its way higher. The RSI is no longer overbought and the PMO is already flattening. Stochastics have turned up so we would expect higher prices ahead.
Bitcoin Weekly Chart: We now have a vertical rally. This week saw a slight decline, but not much. It needs more consolidation to soften that ascent. However, with sentiment wildly bullish on Bitcoin and the rising weekly PMO, we will probably see it move higher from here.
BITCOIN ETFs
Today:
This Week:
INTEREST RATES
Yields are finally pulling back and based on the steep declines, we don't think they are done. Bond funds should continue to enjoy rallies.
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 now testing the 200-day EMA, but given the steep descent and plummeting PMO, we should expect the decline to continue. Stochastics are about as weak as they can be, reading near zero. We're looking for support to be found 4%.
10-Year Bond Yield Weekly Chart: We had just seen a breakout from the declining trend but it promptly failed to hold. The weekly PMO is topping right now so we do expect more decline. 3.6% looks to be the strongest level of support ahead.
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).
--
This week the 30-Year Fixed Rate changed from 6.84 to 6.81.
Here is a 50-year chart for better perspective.
BONDS (TLT)
IT Trend Model: NEUTRAL as of 11/10/2024
LT Trend Model: SELL as of 11/21/2024
TLT Daily Chart: With the 20-year yield folding, TLT has had an opportunity to breakout and lose its declining trend. If price holds much longer above the 50/200-day EMAs, a Golden Cross will be generated. The PMO is rising toward the zero line and Stochastics are holding above 80. We are looking for more upside out of Bonds in general.
TLT Weekly Chart: A reverse head and shoulders formed over a year-and-a-half period, and it executed (broke above the neckline) the last week of July. TLT pulled back to test the neckline from the mid-September top, and this week it bounced off support in a very bullish move.
TLT Monthly Chart: We have a bottoming formation on the monthly chart. The monthly PMO is on the rise. The chart tells us to look for higher prices out of this bottom in the long-term timeframe.
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 saw some weakness this week, but price is sitting on support at the 20-day EMA. The 20-day EMA has provided support along the way, but given the bearish Crossover SELL Signal on the PMO, price is weak. Stochastics are not encouraging either, but it isn't time to completely write off the Dollar.
UUP is at a decision point as it comes close to testing the rising trend of this rally.
UUP Weekly Chart: It has run hot on the weekly chart, pushing through the top of a bearish rising wedge. It is holding above it still so we do have support on the daily and weekly charts that could prevent a deep decline.
UUP Monthly Chart: The monthly chart looks very bullish with an upside breakout from a bearish rising wedge. A bullish outcome to a bearish chart pattern is especially bullish. The monthly PMO has reversed higher well above the zero line. The monthly RSI is not overbought so we could see even higher prices in the long term.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold is taking advantage of a weak Dollar right now and is rallying slowly higher. Unfortunately the indicators are very helpful. The PMO is sitting on the zero line, rising slightly. The RSI is sitting on net neutral (50). Stochastics are rising slightly just within positive territory. At this point we are looking for Gold to inch a bit higher.
Investors are very bearish on Gold based on the very high discounts. It is getting overdone and that could mean a rally could get going.
GLD Weekly Chart: The parabolic advance was broken with the big gap down in Gold. It is likely in for some more consolidation to digest that advance. The weekly PMO has generated a Crossover SELL Signal.
$GOLD Monthly Chart: On the monthly chart we see the small breakdown from the parabolic advance. This chart tells us it needs more breakdown to digest this rally. However, the monthly PMO is still on the rise, but the big concern remains the parabolic advance.
GOLD MINERS Daily Chart: Gold Miners look ready to rally further. The PMO is nearing a Crossover BUY Signal and participation readings are beginning to expand somewhat. The problem for GDX is a less than exciting Gold chart. Unless Gold can continue this small rally, GDX will struggle and likely move sideways along the 200-day EMA. A big drop in Gold will hurt GDX greatly.
GDX Weekly Chart: The weekly chart is mixed. We do still have a rising trend on price and support is currently holding at the 43-week EMA. The problem is the falling weekly PMO that suggests this support level may not hold.
CRUDE OIL (USO)
IT Trend Model: SELL as of 10/17/2024
LT Trend Model: SELL as of 9/10/2024
USO Daily Chart: Crude Oil is going nowhere, stuck in a sideways trading range. The PMO is flat along the zero line and the RSI is near 50, so the chart couldn't be more neutral. Even Stochastics are moving sideways. We see nothing here to say we will get a breakout or a breakdown. Expect more sideways movement with a likely melt lower toward support.
USO/$WTIC Weekly Chart: The trading range has been in effect for some time and with the weekly PMO flat along the zero line, we don't expect this to change.
WTIC Monthly Chart: The bottom of this range is very strong based on the weekly chart holding support. Despite a declining monthly PMO, price did not break down.
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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