Today the Biotechnology ETF (IBB) 20-day EMA crossed up through the 50-day EMA (Silver Cross), generating an IT Trend Model BUY Signal. IBB is approaching the top of a four-month trading range (resistance), so this BUY Signal doesn't look very juicy at this time.
Longer-term IBB is currently rising toward the top of a bearish rising wedge formation, so the expected downside resolution may take a while. The weekly PMO has just turned back up.
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: The rising trend continued to run from the election, but price is beginning to drift lower now.
SPY Daily Chart: The rally has pushed price to another new all-time high. The PMO had a new Crossover BUY Signal today. Total Volume was lower, but still above the one-year average. With volume drifting lower, we could finally see some price weakness as investors cool a bit.
The VIX continues to puncture the upper Bollinger Band on our inverted scale. These puncture often lead to a pause or decline. Clearly investors are less fearful and likely a bit complacent given the rally. Stochastics have popped above 80 signaling internal strength.
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SPY Weekly Chart: We saw a big breakout from the bearish rising wedge which is especially bullish. The weekly PMO is on a brand new Crossover BUY Signal. We do note there is a negative divergence between the PMO tops and price tops, but this breakout looks pretty good.
New 52-Week Highs/Lows: New Highs expanded on today's rally and the High-Low Differential is rising nicely. We did see more New Lows however so not everyone is enjoying the post-election rally.
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) are now overbought, including %PMOs Rising. We've seen higher readings on all of these indicators during a strong rally. Participation hasn't really gained much over the past few days. We would have expected more participation by now.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
This week the ITBM and ITVM turned back up and they are continuing to rise bullishly. They are in neutral territory, far from overbought conditions. We now have more than 50% of stocks with PMO BUY Signals.
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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 best IT Bias goes to Biotechnology (IBB) which just got a new Silver Cross BUY Signal today. It is starting to see improvement on both the Golden and Silver Cross Indexes.
Consumer Staples (XLP) hold the worst IT Bias. They have a good foundation based on the Golden Cross Index, but numerous Silver Crosses were lost over time and it put XLP behind the eight ball and caused this strong negative IT Bias. We're not fans of the sector.
This table is sorted by SCI values. This gives a clear picture of strongest to weakest index/sector in terms of intermediate-term participation.
Utilities (XLU) lost 20 percentage points on the Silver Cross Index as the sector has been in pullback mode. Gold Miners (GDX) and Real Estate (XLRE) also saw heavy losses to the Silver Cross Index.
Retail (XRT) and Energy (XLE) gained the most percentage points on the Silver Cross Index. These areas of the market are looking more interesting as they begin to right themselves. Internals look good, but readings are still rather low in the 50th percentile.
This table is sorted by GCI values. This gives a clear picture of strongest to weakest index/sector in terms of long-term participation.
The Dow had a good week as it improved both the GCI and SCI this week. The foundation is getting stronger for this index given the gains to the GCI.
Semiconductors (SMH) interestingly lost the most GCI points this week. The blow was softened by the incredible gains on the SCI. The group is trying to break out but needs more improvement to readings on both the SCI and GCI which are reading at a mere 40 and 52 for the SCI and GCI respectively.
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.
Participation definitely improved this week, but we would've expected a bit more given the voracity of the rally. Negative divergences are still in play on %Stocks > 20/50/200EMAs. Considering we are at all-time highs, participation readings of stocks above their 20/50-day EMAs should be above 70% at least. Both the Silver Cross Index and Golden Cross Index are below their signal lines so we have to read the IT and LT Biases as 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: This week the market got a shot in the arm from the election of Donald Trump. We aren't happy that participation didn't expand to the degree we would've expected on such a strong rally. It keeps negative divergences in play on participation of stocks above key moving averages which leaves the market vulnerable for a decline. At the same time, STOs are rising strongly and we saw a new PMO Crossover BUY Signal. This bodes well for a rally continuation in the short term. We just think there could be a stumble or bump in the road as indexes and the VIX have gotten overbought. If we do get a decline, it may not be that destructive given the strength of this bull market. The Bond market will be closed on Monday for Veteran's Day, but the market will be open.
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 Daily Chart: Bitcoin jumped on the election results and is continuing to move higher. Bitcoin looks very bullish right now given the rising PMO, but it is getting overbought based on the RSI so a pause or digestion phase may be in order.
Bitcoin Weekly Chart: The weekly chart has us very bullish on Bitcoin in the intermediate term. We have a strong breakout confirming the large bull flag on the chart. Flags imply that you'll get a rally the size of the flagpole. We're not so sure that will occur, but it certainly suggests we will see much higher prices. The weekly PMO is nearing a Crossover BUY Signal.
BITCOIN ETFs
Today:
This Week:
INTEREST RATES
Yields were mixed with longer-term yields seeing declines. Inversions are beginning to clear somewhat as extremely short-term rates begin to dip below some of the long-term rates. Another Fed rate cut will likely push them lower. Long-term yields are entering a period of digestion.
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
The rising wedge resolved to the downside, mostly. The final close was within the pattern. It is time for $TNX to better digest the strong rally out of the September low. The PMO is topping and Stochastics are diving lower. Support is holding, but we are looking for more decline 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).
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This week the 30-Year Fixed Rate changed from 6.72 to 6.79.
Here is a 50-year chart for better perspective.
BONDS (TLT)
IT Trend Model: NEUTRAL as of 11/10/2024
LT Trend Model: BUY as of 7/17/2024
TLT Daily Chart: With the 20-year yield pulling back, we are seeing a small rally on TLT. We expect yields to continue to digest their strong rising trends. This will afford Bond funds the opportunity to rally. TLT is still below resistance, but given the diminishing weakness on the PMO, we think it has a chance to break out.
TLT Weekly Chart: Price is about to drop below the declining tops trendline. That is the neckline of the reverse head and shoulders pattern. This bullish pattern will be busted if price drops below the neckline. The weekly PMO is declining on a Crossover SELL Signal. Near-term we could get some more rally, but as we move into the intermediate term, it doesn't look very bullish.
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 was back on the rise. On Wednesday it gapped up and confirmed the bull flag on the chart. We aren't counting on a move the height of the flagpole, but certainly more upside seems imminent. The PMO has surged (bottomed) above the signal line and Stochastics are rising again. We should see the Dollar continue to move higher from here.
UUP Weekly Chart: We've identified a bearish rising wedge on the weekly chart, but it appears we will first make our way to the top of the pattern. With the bullish daily chart, we wouldn't be surprised if we get an upside breakout from this bearish pattern. The weekly PMO is on a Crossover BUY Signal. Given we are reaching the top of the pattern, we should be cautious moving forward in spite of the bull flag on the daily chart.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold is feeling the downside pressure of the Dollar. You'll note that relative strength to the Dollar is fading away. We saw a huge spike in discounts this week suggesting that investors are getting very bearish on the metal. That often times works in its favor so we'll continue to monitor this condition. Price is back above the rising bottoms trendline. We expect it to drop below it next week given the bullish Dollar chart.
Gold is still positively correlated with the Dollar so they could rise (or fall) in concert. Price is on the 50-day EMA and this has been a good reversal point, but with the market's bullish outlook on the election, the Gold safe haven is likely to be abandoned.
GLD Weekly Chart: Note that the parabolic arc has been penetrated to the downside. The weekly PMO has topped. This could be signaling significant turbulence ahead. Let's keep an eye on this.
GOLD MINERS Daily Chart: We think that Gold is going to struggle and that will not help Gold Miners. They are in a declining trend, but have so far held horizontal support. We don't think that will last given Gold's weakness. The PMO is in decline and participation of stocks above their 20/50-day EMAs are malnourished. We do see that Stochastics have turned up, but we are looking for more decline.
GDX Weekly Chart: We have a strong rising trend that is taking price to the top of the trading range. The weekly PMO has topped. We think the rising trend is in jeopardy.
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 is in a trading range. It hit overhead resistance and is headed lower. The PMO hasn't topped yet, but Stochastics have suggesting more downside to absorb. We also note that $OVX has penetrated the upper Bollinger Band on our inverted scale and that will many times lead to decline. Crude looks very weak.
USO/$WTIC Weekly Chart: The trading range on the weekly chart is years long and we don't see any reason to look for it to be compromised. The weekly PMO is flat and the RSI slightly negative. The chart is very neutral. Middle East tensions could push prices higher, but for now they look weak in the short term and neutral in the intermediate term.
Good Luck & Good Trading!
Erin Swenlin and Carl Swenlin
Technical Analysis is a windsock, not a crystal ball. --Carl Swenlin
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