While today's rally wasn't particularly impressive on large-cap indexes, the rally in mid- and small-caps was substantial. These areas of the market are likely continue to experience higher prices off the back of the election and simply because investors are branching out.
SP400 (MDY) saw a big rally today taking price to new all-time highs. The PMO is rising strongly and participation is angling higher with very robust readings above 70% and 80%. The Silver Cross Index just had a Bullish Shift across its signal line today and the Golden Cross Index is holding steady. Stochastics are nearly above 80 suggesting internal price strength.
The weekly chart is very favorable with price breaking out of a trading range on a strong rising trend. The weekly PMO is rising above the zero line on a Crossover BUY Signal.
SP600 (IJR) also experienced a strong rally today. One thing to notice is that neither MDY or IJR are overbought based on the RSI which is still reading below 70. More upside can be accommodated. The PMO has surged above the signal line as has the Silver Cross Index. The Golden Cross Index is on the rise. Participation readings are robust with more stocks vaulting their key moving averages. Stochastics are rising. We should continue to see outperformance.
IJR has also broken away from a long-term trading range with a nice rising trend. The weekly PMO is accelerating higher on a Crossover BUY Signal above the zero line.
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: The market was up today, but it didn't go anywhere after the initial up move. Price basically consolidated sideways.
SPY Daily Chart: This is a nice rally off support. The PMO turned up today but is avoiding a Crossover BUY Signal for now. The OBV is rising strongly with price. Total Volume was on average.
The VIX is holding above its moving average on the inverted scale signaling internal strength. Stochastics are also rising and should get above 80 very soon. Note that the RSI is not overbought yet so more upside can be accommodated.
Here is the latest recording from 11/18. Click HERE to get the link to video library.
SPY Weekly Chart: We have redrawn the rising wedge on the weekly chart. We originally saw a drop beneath the prior wedge, but it has since formed a new one. These patterns imply we will see a break of the rising trend. We have a negative divergence on the weekly PMO to contend with in the intermediate term.
New 52-Week Highs/Lows: New Highs expanded nicely suggesting the rally is broadening out. The High-Low Differential turned up this week. There was only one New Low.
Climax Analysis: There were two climax readings on the four relevant indicators, so we have an upside exhaustion climax. This leads us to expect a day or two of churn, but we are so close to all-time highs that a downside reversal is not out of the question. Note: We thought that the TRIN chart might be useful in the Climax Assessment context, so we've added it and will be watching it for a while.
*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 NEUTRAL.
We're listing the Swenlin Trading Oscillators (STOs) as "neutral" but they are getting very close to overbought territory. It was a major thrust higher for these indicators suggesting we could see some upside followthrough. Participation is expanding and we have a healthy amount of rising PMOs.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
The ITBM/ITVM reversed upward yesterday and today leapt higher. We also see that more PMO BUY Signals are appearing within the index.
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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.
Energy (XLE) is on fire as can be seen by its monster +23 IT Bias. Interestingly the GCI lost ground, but we saw a huge improvement to the SCI.
Gold Miners (GDX) hold a -43 IT Bias as they tumbled and lost a number of Silver Crosses. We do admit that the chart is looking more bullish now.
This table is sorted by SCI values. This gives a clear picture of strongest to weakest index/sector in terms of intermediate-term participation.
Regional Banks (KRE) continue to hold the top spot on our SCI table and they saw a one percentage point improvement this week as well. This group has incredible internal strength right now. The question is when will it start to see some distress.
Semiconductors (SMH) holds the lowest reading on the SCI and it lost even more ground this week. This group was overdue for a pullback and given weak internals, we wouldn't be fishing in this group right now.
This table is sorted by GCI values. This gives a clear picture of strongest to weakest index/sector in terms of long-term participation.
Communications (XLC) saw the greatest improvement to the GCI, but the chart is looking weak in our opinion. Aggressive sectors seem to be cooling somewhat.
Biotechnology (IBB) holds the lowest GCI value, but we are seeing some price improvement on its chart. It's probably too early to fish in this group, but for the less risk averse, it could be interesting and a possibility that you could get in early. With the Kennedy Jr. nomination though this group could be under pressure for some time to come.
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 IT and LT timeframes.
Participation is starting to improve with new rising trends on %Stocks > 20/50EMAs. Readings are higher than the Silver Cross Index which is why it has turned back up. The Golden Cross Index's decline has stalled. It unfortunately is reading higher than %Stocks > 200EMA so it could resume its decline. Both the Silver Cross Index and Golden Cross Index are below their signal lines so the IT and LT Biases remain 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 Bias Table above is starting to flip to Bullish. The small- and mid-cap indexes are seeing huge rallies. Participation readings are expanding and are at healthy levels around 70%. It is clear that this rally is broadening out. The SPY didn't have the rally that IJR and MDY saw and this is likely due to mega-cap stocks like NVDA and GOOGL struggling. The SPY could continue to see more muted gains. The STOs and ITBM/ITVM rocketed higher on the rally, but we have to temper our bullish expectations somewhat due to the upside exhaustion climax that we saw today. We aren't really looking for a big decline, more likely some churn or consolidation above support.
Erin is 60% 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 has set its sights on 100,000 and we don't think it will have trouble getting there. Crypto is looking very bullish across the board. The only problem with the chart is the overbought RSI, but that will be a condition that is likely to persist. It does suggest that Bitcoin is due for another consolidation phase, but with sentiment so bullish, it could continue to run higher. Of course sentiment is contrarian and extreme bullishness is a recipe for a decline. We will be looking for some consolidation soon.
Bitcoin Weekly Chart: The rally is completely vertical on the weekly chart. This could be signaling a possible pullback or even correction ahead. However, as noted above the charts are so bullish that it isn't likely we'll see a big decline, more likely some consolidation eventually.
BITCOIN ETFs
Today:
This Week:
INTEREST RATES
Long-term interest rates are pulling back right now while shorter-term rates are continuing to fly higher with the exception of 1-month and 3-month rates which are in declining trends likely due to the Fed rate cuts. We should expect challenges of 2024 highs for longer-term rates.
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 is basically consolidating sideways since dropping out of the bearish rising wedge. The PMO has topped and is on a new Crossover SELL Signal. However, this is occurring well above the zero line so it is likely a sign of diminishing strength not new weakness. We would look for some sideways movement between 4.3% and 4.5%.
10-Year Bond Yield Weekly Chart: The weekly chart does show a breakout from the declining trend. After some consolidation, this chart tells us to expect the rate to continue higher. The weekly PMO has now reached positive territory on a Crossover BUY Signal.
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 6.78 to 6.84.
Here is a 50-year chart for better perspective.
BONDS (TLT)
IT Trend Model: NEUTRAL as of 11/10/2024
LT Trend Model: SELL as of 11/21/2024
TLT Daily Chart: TLT remains in a declining trend. It has found support along a support zone, but note that the PMO is flat beneath the zero line. This implies pure weakness. Long-term rates are beginning to consolidate so we will probably see more sideways movement along support, but ultimately rates are likely to resume to their rise and that will spell trouble for Bond funds.
The strongest level of support lies at 88.50.
TLT Weekly Chart: We have a bullish reverse head and shoulders on the weekly chart which would imply we should see some upside. However, the pattern is about to bust. A drop beneath the neckline would nullify the pattern and we are very close. The weekly PMO is in decline on a Crossover SELL Signal and that does not bode well for the chart pattern.
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 continued its rally out of two flag formations. It appears we are forming another flagpole. It is overdue for a real decline as the RSI is overbought and has been for days. The PMO and Stochastics still look very bullish so for now we will look for more rally ahead, but we are on the lookout for a reversal as it has run far too hot for too long.
UUP Weekly Chart: The Dollar has rallied up and out of a bearish rising wedge. Bullish conclusions to bearish chart patterns are especially bullish and suggest more upside ahead for the Dollar. The weekly PMO is rising on a Crossover BUY Signal above the zero line. Still we are thinking this vertical rally needs to see some consolidation at a minimum.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold broke from its declining trend this week as it heads to test all-time highs once again. We thought there was more decline in store, but instead we have a nice rally. We have a strong number of buyers as we are seeing Gold moving higher even as the Dollar soars. At this point we are looking for price to recapture the rising bottoms trendline given the rising PMO and Stochastics. The RSI is not at all overbought so we could see more rally without Gold getting too overbought.
GLD Weekly Chart: We saw a breakdown from the parabolic move higher last week. We would've expected more followthrough before seeing price rebound as strongly as it has. The weekly PMO is so far avoiding a Crossover SELL Signal. Notice that discounts were at a very high level before this week's rally. High discounts mean bearish investors. Sentiment seems to have gotten too bearish and that led to this rally.
GOLD MINERS Daily Chart: Gold Miners are rebounding on the new rally in Gold. We see the potential for even more upside given the improvement in participation readings under the hood. The Silver Cross Index is rising and the Golden Cross Index sits at a high reading of 93%. We think Gold has further to go on its rally and that will mean higher prices for GDX.
GDX Weekly Chart: We still essentially have a rising trend on GDX. It was technically broken last week but given this rally and it holding above support this week, we think there is more upside available. We do want to see that weekly PMO turn back up.
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 essentially in a trading range and we don't see price moving out of it anytime soon. We do see that we have a new PMO Crossover BUY Signal and Stochastics are rising so we think there is a good opportunity for Crude to test the October top. It managed to climb above the 200-day EMA today. This has been where we've seen failure so we wouldn't be surprised if it did begin making its way lower. For now the indicators suggest a possible breakout in the future.
USO/$WTIC Weekly Chart: The trading range extends back a few years and as with the daily chart, we don't see it breaking away from it in either direction barring Middle East tensions/production pushing price up high enough for a breakout. At this point it doesn't seem likely. The weekly PMO is on the zero line which is sign of the neutrality of price in its 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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