Today the Semiconductor ETF (SMH) 20-day EMA crossed down through the 50-day EMA (Dark Cross), above the 200-day EMA, generating an IT Trend Model NEUTRAL Signal. Price has been in a ragged trading range for nearly five months, and this is the third signal change during that time; however, price violated short-term support today so lower prices are probable.
The weekly chart shows a broken parabolic with SMH potentially entering a high-level consolidation, but the recent rally failed to reach resistance at 280, so we'll be looking for support at 200 to be tested. The weekly PMO is bearish, falling below the signal line.
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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 started the day moving lower but found support and moved mostly sideways into the close. Low volatility and lower volume can be attributed to holiday trading
SPY Daily Chart: It was overdue for a decline and we finally saw one. Mild, but a decline nonetheless. It is really early to speak of this, but we will want to monitor this as we could end up seeing a bearish double top. For now we expect churn, but we'll be on the lookout.
The VIX is easily holding above its moving average on the inverted scale indicating some complacency among investors. Stochastics are healthy above 80. Total volume was more inline with holiday trading.
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S&P 500 New 52-Week Highs/Lows: New Highs expanded on the decline which is bullish. We also didn't see any New Lows on today's decline which is encouraging. The High-Low Differential is rising again.
Climax* Analysis: There were no climax readings today. However, in a bullish turn of events, we did see positive Net Advances-Declines.
*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) are overbought, but haven't hit overbought extremes yet. Their rise on a decline is good, but these overbought conditions suggest we could see some turbulence ahead. Participation was about the same as yesterday, but did see a slight loss. We continue to lose rising PMOs within the index.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
The ITBM and ITVM continue to confirm rising short-term indicators. We also see that there continue to be more PMO BUY Signals within the index. Nearly 3/4ths hold PMO BUY Signals which is very 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 BULLISH in the intermediate term.
The market bias is BEARISH in the long term.
We didn't see any expansion in participation of stocks above key moving averages, but ultimately readings in the 70th percentile are very good. The Silver Cross Index looks very healthy on its rise. It is above its signal line so the IT Bias is BULLISH for now. The Golden Cross Index has flattened. It remains below its signal line so the LT Bias is still reading as BEARISH. Remember the Golden Cross Index is at a healthy level despite the BEARISH bias.
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 finally declined. We are now on the lookout for a bearish double top. It's extremely early, but worth noting. Participation is at healthy levels and we have a solid amount of PMOs rising and PMO BUY Signals within the index. Short-term indicators are getting overbought so we could see some decline--although we can see those indicators contract on consolidation or churn. For now we aren't looking for a big decline, just some more sideways churn with a possible melt lower. At this juncture we could set stops and let the market take us out should it see a more serious decline.
Erin is 60% long, 0% short. (This is intended as information, not a recommendation.)
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CALENDAR
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BITCOIN
Hmmm, maybe this is all the digestion we're going to get on Bitcoin as it is headed higher. The PMO is already trying to turn back up. Stochastics aren't behind the rally yet so we could see it decline a little bit further, but this rally looks pretty solid.
BITCOIN ETFs
INTEREST RATES
Yields were mostly lower on the day. It appears they are ready to digest the rally out of the previous lows.
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 lost support today and is now sitting on the 50-day EMA. We are expecting yields to continue lower to digest rallies out of the September lows. The PMO looks very bearish and Stochastics are dropping vertically. Expect more decline.
BONDS (TLT)
IT Trend Model: NEUTRAL as of 11/10/2024
LT Trend Model: SELL as of 11/21/2024
TLT Daily Chart: Bonds finally broke above resistance and broke the declining trend. Yields are likely to continue falling so we are expecting more rally out of Bond funds. The PMO is looking like we have new strength coming in. Stochastics are very bullish above 80.
DOLLAR (UUP)
IT Trend Model: BUY as of 10/9/2024
LT Trend Model: BUY as of 5/25/2023
UUP Daily Chart: We mentioned yesterday that it was time for the Dollar to move lower and that is exactly what it did today. It has run far too hot on this rally. The PMO is nearing a Crossover SELL Signal and Stochastics are falling so we do expect more decline.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold saw a small rally today. It was not up as far as the Dollar was down so it did show weakness today despite the rally. We notice that we have a bearish filled black candlestick that implies a decline on Friday. However, with the Dollar really starting to show signs of weakness, Gold could make its way higher.
The PMO top beneath the signal line is a big problem and Stochastics are falling. The ground is fertile for Gold while the Dollar declines now we'll see if it takes advantage.
GOLD MINERS (GDX) Daily Chart: Gold Miners were up on the day given Gold's rally. A falling Dollar could help this group find its footing, but we need to see much better participation before we look for a strong rally. The PMO is flat and Stochastics are falling so we don't think this group is out of the woods yet.
CRUDE OIL (USO)
IT Trend Model: SELL as of 10/17/2024
LT Trend Model: SELL as of 9/10/2024
USO Daily Chart: Yesterday's comments still apply:
"A cease fire has been reached in the Middle East so many of the fears that were pushing Crude prices higher are no longer a factor. The chart was already looking more bearish as we got another top at the 200-day EMA. Now the PMO is nearing a Crossover SELL Signal beneath the zero line. We would look for price to move lower and test the bottom of the current trading range."
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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