Erin has been montoring Retail (XRT) closely as the Consumer Discretionary sector has been on fire. We haven't seen the same rising trend on Retail as we have on Consumer Discretionary. Today XRT broke out of a longer-term trading range that has been in place all year long. This breakout is encouraging as we see that participation for the group has improved greatly with the Silver Cross Index rising strongly. The PMO is rising on a Crossover BUY Signal and unlike most stocks and ETFs, it is not overbought.
This breakout looks good on the weekly chart as well. The weekly PMO is about to give us a Crossover BUY Signal. The group is poised to move higher.
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: Since last week's breakaway up gap the market's advance has been decelerating. That is not to say that it can't go higher, but it may be time for a pullback. Basically, it is possible that the effect the election is having on the market is abating and that we may need to get back to dealing with some of the issues that existed before the election.
SPY Daily Chart: Today we had a bearish filled black candlestick that would imply a down day for tomorrow's trading. The RSI is getting close to overbought territory so it does seem a good place to look for a pause.
The VIX shows that market participants are somewhat complacent given the low reading. It continues to puncture the upper Bollinger Band on the inverted scale and that often times leads to a downside reversal. Stochastics and the PMO look very bullish so while a decline or digestion period is needed, it shouldn't be devastating.
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S&P 500 New 52-Week Highs/Lows: New Highs continue to be logged which is good news for the rally. The High-Low Differential looks especially bullish as it rises nearly vertically. This rally appears broad.
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.
Swenlin Trading Oscillators (STOs) are clearly overbought which could signal an upcoming pause or pullback. We didn't see much improvement to %Stocks > 20EMA and %PMOs Rising is leveling off somewhat. Still, both readings can be considered healthy.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
The ITBM and ITVM are confirming rising STOs as they are themselves rising in concert. They are only sitting in neutral territory so they have plenty of room to accommodate more rally in the intermediate term. We have more PMO BUY Signals arriving within the index, but the reading is still somewhat muted considering we are making all-time highs.
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 are still a problem as %Stocks > 20/50/200EMAs have declining tops while price has rising tops. Rallies to new all-time highs should be accompanied with a high percentage of stocks above key moving averages.
The Silver Cross Index topped today beneath the signal line which is especially bearish. It could see some improvement if we get improvement on the number of stocks above the 50-day EMA. It is slightly higher than the Silver Cross Index and if it can expand tomorrow, it could turn the Silver Cross Index back up. The Golden Cross Index is trying to top beneath its signal line as well. Both are 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.
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CONCLUSION: The Trump Rally is beginning to lose some steam and now it is time to reevaluate indicators to see if the technicals are holding up. At this point, they are holding up. STOs and ITBM/ITVM are on the rise alongside a PMO BUY Signal. The High-Low Differential looks especially bullish. Our concern would be the declining Silver Cross Index and the negative divergences in play on our Bias chart. The rally is certainly broad if you look at the performance of small-caps, but it is also beginning to show signs of exhaustion as price has begun to level off. The rally seems healthy enough to continue, but we wouldn't be surprised if we see a pause or some consolidation soon.
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 off to the races and we suspect that it will continue to expand higher. It had been moving mostly sideways for months, but the Trump election seems to be the catalyst to higher prices given his pro-crypto stance. We would look for it to move higher from here despite overbought conditions.
BITCOIN ETFs
INTEREST RATES
The bond market was closed today.
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
We didn't see much movement on $TNX given the Bond market was closed today. At this point it is sitting just to the outside of a bearish rising wedge. The expectation would be for a decline ahead. Stochastics are diving lower so we do expect it to decline 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: TLT is holding below resistance, but yields do look ready to pause or pullback somewhat so we will look for a little more upside out of TLT. There is a new PMO Crossover BUY Signal, but it is well below the zero line so it is a sign of diminishing weakness not new strength. Still we are going to look for a small breakout here, we just don't think it will get legs at this point.
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 is back on the rise out of a large bull flag formation. The flag suggests there is far more upside to go on this rally. The PMO looks very strong after bottoming twice above the signal line.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: GLD broke down through a rising trend line last week, but it managed to recapture it by Friday. Unfortunately, that was to no avail, and it made a convincing down gap today. Let's look at the weekly chart for better context.
GLD Weekly Chart: 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: With the correction in Gold on, Gold Miners are going to struggle mightily. This is a good level of support along the 200-day EMA, but given the bearish outlook on Gold, we have to expect more downside for GDX. Participation looks terrible and should drag down the Silver Cross Index from here.
CRUDE OIL (USO)
IT Trend Model: SELL as of 10/17/2024
LT Trend Model: SELL as of 9/10/2024
USO Daily Chart: Overhead resistance held strong and Crude is back on the decline. It is essentially traveling sideways within a trading range and at this time we aren't looking for it to change course. It's time for a test of the bottom of the range. Stochastics and the PMO are negative and suggest more downside from here.
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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