Today, the Biotechnology ETF (IBB) 20-day EMA crossed down through the 50-day EMA (Dark Cross), above the 200-day EMA, generating an IT Trend Model NEUTRAL Signal. IBB recently switched to a BUY Signal on Friday November 8 and we said at the time, "IBB is approaching the top of a four-month trading range (resistance), so this BUY Signal doesn't look very juicy at this time." This emphasizes why we consider Trend Model signals to be information flags, not action commands. Always check the chart.
Part of the reason Biotechs fell apart was the nomination of Robert F. Kennedy Jr. to the Health and Human Services department. He is known to be anti-COVID vaccines and just generally not a fan of chemicals for the body. This doesn't necessarily bode well for this industry.
Participation has been plummeting as more and more stocks lose support at key moving averages. This drop below the 200-day EMA is perilous and given the negative indicators, the decline isn't likely over yet. The PMO is dropping below the zero line on a Crossover SELL Signal and Stochastics are below 20 signaling extreme weakness. Support is arriving around 130.00, but it doesn't look good.
The weekly chart shows the breakdown from the rising wedge formation, which is the normal resolution from this formation. The weekly PMO is tumbling lower. Support on the weekly chart is around 123.00. That would be a painful decline added to this already deep decline.
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Also today, the Materials Sector ETF (XLB) 20-day EMA crossed down through the 50-day EMA (Dark Cross), above the 200-day EMA, generating an IT Trend Model NEUTRAL Signal. A double top has executed, and the minimum downside target is about 89.50, this matches pretty closely to the 200-day EMA so the target will likely be met soon. However, remember it is a "minimum" downside target. It isn't a sure thing that it will be able to hold support at the 200-day EMA.
On the weekly chart XLB is hitting the bottom of a bearish rising wedge pattern, which is most likely to resolve downward. The weekly PMO is on a new Crossover SELL Signal.
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.
Watch the latest episode of DecisionPoint on our YouTube channel here!
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: On options expiration week we expect low volatility on the last two days of the week, but Chairman Powell torpedoed that expectation by making a comment about not being in too much of a hurry to lower rates. The market didn't like it, but it did try to right the ship to finish the day.
SPY Daily Chart: The decline is beginning to accelerate lower. The PMO has now turned down. Price did not hold support at the 20-day EMA so we are watching for it to move to the 50-day EMA and horizontal support at the September tops.
The VIX finally showed signs of distress as the reading popped higher. It puts the VIX very near its moving average on the inverted scale. Investors are finally showing concern. Stochastics have now dropped below 80 suggesting lower prices ahead.
Here is the latest recording from 11/11. Click HERE to get the link to video library.
SPY Weekly Chart: Last week's breakout from the rising wedge formation, has proven to be an outlier, as price dropped back into the wedge this week. Even if we were to redraw the rising tops line to accommodate the new price top, it would still be a bearish rising wedge with the expectation of a breakdown. This upcoming week could see that breakdown.
New 52-Week Highs/Lows: New Lows are really making an appearance now. Technically they are now in near-term oversold territory. However, we believe we'll see even more next week. The High-Low Differential turned down this week which doesn't bode well in the short term.
Climax Analysis: There were no climax readings today. We saw a downside initiation climax this week and it seemed to be right on the money. Total Volume was very high but that could be explained by options expiration.
*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.
We are going to list declining Swenlin Trading Oscillators (STOs) as "neutral", but they are already getting near-term oversold. However, a strong decline could send them much lower. Participation is fading but we do still have more than 50% above their 20-day EMA. The biggest problem is the rising momentum that is being sucked away. That indicator is not oversold yet.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
The ITBM and ITVM are firmly within neutral territory and can accommodate far more downside. They currently show a negative divergence with price that does suggest that this decline could get ugly. More PMO BUY Signals are being lost, but so far remain above our bullish 50% threshold. It's barely above 50% so it isn't saying much.
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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.
You'll note that the majority of our table hold negative IT Biases. This is due to the Golden Cross Indexes being higher than the Silver Cross Indexes. We have a nice foundation as far as Golden Crosses given the rally to new all-time highs, but we have deterioration on Silver Crosses and that is causing the negative IT Biases.
This table is sorted by SCI values. This gives a clear picture of strongest to weakest index/sector in terms of intermediate-term participation.
Energy (XLE) saw a nice uptick in Silver Crosses as the sector begins to rally higher.
Gold Miners (GDX) and Materials (XLB) lost over 13 SCI percentage points this week as both continue to move lower quickly.
This table is sorted by GCI values. This gives a clear picture of strongest to weakest index/sector in terms of long-term participation.
Regional Banks (KRE) are showing the most strength as they are at the top of both the SCI and GCI tables. Remember things are as good as they're going to get before they get as bad as they can get. This group is ready for a pullback.
Biotechs (IBB) hold the lowest GCI value and given their giant decline, they are likely to take up residence at the bottom of both the GCI and SCI tables.
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.
The Silver Cross Index continues to make its way lower after bearishly topping beneath its signal line. As more participation is lost as far as stocks above their 20/50EMAs, the Silver Cross Index is likely to continue lower. It is below its signal line so the IT Bias is listed as BEARISH. The Golden Cross Index has topped today and with gusto. We've been waiting for this given we have much fewer stocks above their 200-day EMA versus the Golden Cross Index value. It never crossed above its signal line so the LT Bias is BEARISH.
Participation continues to concern us as we have negative divergences on %Stocks > 20/50/200EMAs.
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 rally euphoria surrounding the election of Donald Trump finally failed. It is now time to deal with the problem technicals like falling STOs and ITBM/ITVM. Negative divergences are another problem that has to be dealt with. The decline is accelerating and support hasn't quite been met so we would expect to see price fall further next week. Powell didn't help the market's cause as he suggested the Fed is in "no hurry" to lower rates. Investors don't want to hear that. The bias remains BEARISH in both the IT and LT. This week we'll be watching the rising wedge on the weekly chart. We may finally see it resolve to the downside.
Erin is 70% 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 began to consolidate its strong rally this week. We still have a parabolic rise and that could resolve with a swift and painful decline, but this consolidation could be enough to prevent that. The RSI is still very overbought so more consolidation is needed. The PMO is very bullish, as are Stochastics. We are looking for sideways movement before a resumption of the rally.
Bitcoin Weekly Chart: The flag formation has delivered on its bullish promise. It has executed with an upside breakout, and our minimum upside target is about 116,000. With an administration favorable to crypto, it is probably going to go much higher than that.
BITCOIN ETFs
Today:
This Week:
INTEREST RATES
Yields were again mixed today with long-term yields rising today and shorter-term yields falling. The rising trend is steep, but it is being maintained. We are still looking for 2024 highs to be met.
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
It's hard to determine if we have a rising trend channel or bearish rising wedge. The trend is clearly up and while $TNX could use some consolidation, it seems quite healthy on its rise. The PMO is still rising and despite this lengthy rally, the RSI is not overbought. We could see it move even higher from here. We're thinking it could make it back to the 2024 high before too long.
10-Year Bond Yield Weekly Chart: The long-term declining tops trendline has been broken, also suggesting we will see the yield rise further. The weekly PMO is rising on a Crossover BUY Signal as confirmation. It just hit positive territory.
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 6.79 to 6.78.
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: The declining trend is intact and we don't see any indication that it will be broken. The RSI is negative and falling, the PMO is falling on Crossover SELL Signal well below the zero line and Stochastics just dipped below 20. Yields look awfully bullish right now so we expect Bond funds to continue to slide lower.
Support is arriving at 88.50 so maybe we'll get a possible dead cat bounce there. Yields are just too bullish right now.
TLT Weekly Chart: The reverse head and shoulders pattern is about to be busted with a drop below the neckline. It doesn't appear it will be heading to the upside target of the pattern which is at about 115. More likely we will see price drop back inside the falling wedge. The falling wedge essentially executed with the breakout above the declining tops trendline and isn't really in play anymore.
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 took a moment to pause today, but we think it will move even higher from here. It is overdue for a pullback or consolidation given the RSI is still overbought. At this point we see a breakout from a flag formation and the upside target of the pattern is around 30.8. The Dollar has been running very hot, but we don't see anything that would spell trouble except for the RSI.
UUP Weekly Chart: The Dollar up and out of a bearish rising wedge. This is especially bullish for the Dollar. We another overbought RSI with the weekly RSI moving above 70. Overbought conditions on the weekly chart do tend to spell trouble so we will be on the look out for a digestion phase in the intermediate 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 in correction mode. It has not quite hit official "correction" territory as it is down a little over 8% from its all-time high. A correction is considered 10% plus. We do think that correction will materialize soon. We are about to reach support at 235 so we could see some sideways consolidation there, but we would be prepared for that level to be taken out.
Discounts have really spiked as more investors get bearish on Gold's decline. They are definitely reading in reversal territory based on sentiment. However, we can see from early 2024, those conditions can persist. $GOLD has lost support whereas GLD is clinging to it.
GLD Weekly Chart: As with most parabolic patterns, we saw a swift and painful decline on the weekly chart. The strongest area of support is clearly at 225, but as we've discussed previously, that level may not hold in which case we'll be looking for support to be found at 210. We don't think it will decline past that level.
GOLD MINERS Daily Chart: Gold Miners are struggling with the decline in Gold weighing heavy on them. Support was lost at the 200-day EMA and horizontal support is waning. Participation is now at zero for stocks above their 20-day EMA and only 4% for stocks above their 50-day EMA. The Silver Cross Index has plummeted this week. We are looking for price to possibly find support at 32.00. It looks strong, but a continued decline in Gold would be a problem.
GDX Weekly Chart: The breakdown looks dastardly on the weekly chart. The intermediate-term rising bottoms trendline has been completely obliterated on this breakdown. The weekly PMO is on a new Crossover SELL Signal suggesting the decline is not yet over for this group.
CRUDE OIL (USO)
IT Trend Model: SELL as of 10/17/2024
LT Trend Model: SELL as of 9/10/2024
USO Daily Chart: Crude Oil remains within an intermediate-term trading range on the daily chart and we see no reason that it won't continue to stay there. There is a support zone between 66 and 68 that should keep price afloat, but indicators are getting bearish with the PMO in decline and Stochastics moving lower in negative territory. For now we will look for this support zone to be held.
USO/$WTIC Weekly Chart: Price is also traveling in a trading range on the weekly chart. If the support zone between 66 and 68 does not hold up, we could look for price to move even lower and still remain in the current trading range. The weekly PMO is no help. We don't see any indication that this trading range will be compromised in the near future. After January with "Drill, Baby, Drill" on the agenda, then we will look for a possible breakdown.
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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