The market had a great day, but small-caps won the day with an over 2% gain today. Price is still below overhead resistance and is trading sideways right now. We are seeing an improvement in participation numbers so there is a chance we'll see follow through to the upside and possible test of that resistance level. Stochastics have turned up and so has the PMO. We can also see that relative strength is rising somewhat.
IJR is struggling with overhead resistance, but notice that the weekly PMO surged (bottomed) above the signal line. This bodes well for an eventual breakout.
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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 rally began at the start of the day, but by lunch price began to consolidate. We did see a nice upward thrust to end the day.
SPY Daily Chart: Price got back above resistance at horizontal support and the 20-day EMA. The bounce also came off the 50-day EMA. The PMO has decelerated, but it still declining.
The VIX eased pushing it back above its moving average on the inverted scale which is bullish. Compared to early 2024, the VIX is still somewhat elevated. The RSI pushed above net neutral (50) and Stochastics have tilted upward. All of this leads us to believe there is some internal strength coming back into the market.
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S&P 500 New 52-Week Highs/Lows: New Highs expanded as expected on a rally day although they do remain in a declining trend for now. The High-Low Differential turned up today.
Climax* Analysis: Today there were unanimous, strong climax readings on the four relevant indicators, giving us an upside initiation climax. SPX Total Volume was slightly under the average and did not confirm. While overall we have to interpret this as a bullish sign, election results that the market doesn't like could turn price down.
*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 DOWN and the condition is NEUTRAL.
The Swenlin Trading Oscillators (STOs) both turned up today moving higher quickly. Participation did expand and is sitting above our bullish 50% threshold. Rising momentum really improved on today's rally, but we aren't quite above our bullish 50% threshold.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
Today the ITBM bottomed, but the ITVM did not. This is a wishy washy confirmation of the rising STOs. We did see some more PMO BUY Signals, but the reading is still relatively low. Given the improvement in rising PMOs above, this indicator should see some good upside movement soon.
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 decelerated its decline today, but given we have fewer stocks above the 20/50-day EMAs, it should continue to contract. The Golden Cross Index is falling fast. Both the Silver Cross Index and Golden Cross Index are below their signal lines so the IT and LT Biases are BEARISH for now.
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 did an about face today and that triggered many of our indicators to reverse higher or decelerate declines. The STOs reversed and jumped higher on the rally today. The ITBM turned back up as did the High-Low Differential. We also saw a possible upside initiation climax that would imply higher prices to come. While all of this is good, there is still work to do as far as the Silver and Golden Cross Indexes which continue to decline. We also need to see more rising PMOs and PMO BUY Signals. For now we will look for some follow-through, however, as noted earlier, if election results (or lack thereof) don't please investors, the market could see a decline.
Erin is 55% long, 0% short. (This is intended as information, not a recommendation.)
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CALENDAR
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BITCOIN
Bitcoin is holding its rising trend with today's bottom. Note also that the rebound occurred off the declining tops trendline. The RSI remains in positive territory and the PMO is already trying to reverse higher while situated well above the zero line. Stochastics turned higher. We think the rally is back on.
BITCOIN ETFs
INTEREST RATES
After pulling back significantly yesterday, most longer-term yields managed to reverse higher. It is time for a pause in the rally, but rising trends haven't really been compromised.
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've adjusted the annotations to encompass $TNX in a new bearish rising wedge. The expectation is a breakdown. The PMO has topped, but Stochastics remain comfortably above 80. We suspect that yields will pause their move up, but ultimately we would look for the 2024 high to be tested again.
BONDS (TLT)
IT Trend Model: NEUTRAL as of 11/10/2024
LT Trend Model: BUY as of 7/17/2024
TLT Daily Chart: Yesterday's comments still apply:
"TLT is consolidating beneath support. The intermediate-term rising trend was broken bearishly and price hasn't done much since then. We are looking for a possible melt up while yields calm down. We doubt the rising bottoms trendline will be recaptured anytime soon."
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 has topped and is beginning to fade. The PMO is nearing a Crossover SELL Signal and Stochastics are diving lower. We expect more decline ahead.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold took advantage of the decline in the Dollar and had a small rally day. The rising bottoms trendline is intact. The PMO is on a Crossover SELL Signal and Stochastics are in decline. We would look for a test of the rising trend and horizontal support at the September top.
GOLD MINERS (GDX) Daily Chart: The rising trend is holding up and we saw two days of rally. This looks like a good reversal point for GDX. We acknowledge that the PMO is in decline and Stochastics are below 20, but the high readings on the Silver and Golden Cross Index suggest there is enough internal strength to turn the group around. It's a bit of a risk right now as it is early and the PMO is in decline.
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 broke above resistance today which does imply we'll see some upside follow through. The PMO and Stochastics are in agreement. We'll look for a test of the October high.
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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