SPY 10-Minute Chart: The market opened with a bang this morning, but spent the rest of the day erasing most of the gains made. It did finish up, but not at all near the highs for the day. We have a trading range that has developed over the past two days. This is the definition of churn.
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 Daily Chart: The market did not make up much of the losses that were absorbed yesterday. The 50-day EMA is still holding as support so we could see the market consolidate sideways atop this support. However, we are inclined to believe that the market has further to fall based on the falling PMO and negative RSI.
The VIX did portend that we might see higher prices today as it had punctured the lower Bollinger Band on the inverted scale. It is below its moving average which implies weakness. Stochastics look terrible and are getting close to extreme weakness below 20. We see a slight rising trend on the relative strength line between SPY and equal-weight RSP which suggests that mega-caps are leading the market's direction right now.
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SPY Weekly Chart: We have a bearish rising wedge on the weekly chart that has been telling us to expect a breakdown. This week though it was down, it wasn't enough to execute the pattern. It is one of the reasons we are looking for more decline. The weekly PMO triggered a Crossover SELL Signal this week which also adds to the bearish picture.
SPY Monthly Chart: The monthly chart also suggests we could be in for a decline. We have a parabolic arc on price. Parabolic formations generally breakdown quickly and painfully so we need to stay alert. At this point the monthly PMO is still on the rise so this pattern may take a bit longer to resolve.
New 52-Week Highs/Lows: It was a rally day but New Highs dropped. On the bright side we saw fewer New Lows. The High-Low Differential is declining quickly and is already beginning to reach oversold territory. We could see it fall further in spite of oversold conditions given market weakness.
Climax Analysis: Today there was only one climax reading, and price movement was in line with the churn we were expecting. It's not a climax day.
*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) were mixed today. We had expected that both might rise on the day given the strong rally this morning, but as the rally cooled, it likely prevented the STO-V from reversing higher. Participation is still weak, but it is oversold. We do expect it to drop further though. We did see a few more rising PMOs on today's rally, but we still only have 21% with rising momentum which is far from healthy.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
The ITBM hit negative territory today and both the ITBM and ITVM continued to decline. They are far from oversold territory and can accommodate far more downside. We have less than a quarter of the index holding PMO BUY Signals. There isn't much here to fuel a rally.
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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.
Regional Banking (KRE) holds the highest IT Bias, but the group isn't looking all that bullish on the chart. It even lost a percentage point on the Golden Cross Index (GCI). It looks like it wants to get bullish as we did see some percentage points added to the Silver Cross Index (SCI). Still, we would be careful with this group. The SCI and GCI readings are still quite low.
Semiconductors (SMH) hold the lowest IT Bias. This group is really struggling based on the continued loss of SCI percentage points.
This table is sorted by SCI values. This gives a clear picture of strongest to weakest index/sector in terms of intermediate-term participation.
Communication Services (XLC) saw an incredible 22 point increase on its SCI value. The sector has been enjoying a rally and is currently the only sector with a positive PMO.
Real Estate (XLRE) lost 19 percentage points on the SCI suggesting this sector should likely be avoided for 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.
Regional Banks (KRE) hold the highest GCI value and saw an increase this week as well. This group is very healthy as it holds the highest SCI and GCI values.
Energy (XLE) and IBB hold the lowest GCI values. Their foundations are very weak and the SCI values are still quite low as well. XLE does have an opportunity to move higher on Middle East tensions, but IBB is still suspect.
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 big news is that the Golden Cross Index saw a Bearish Shift across its signal line. This moved the LT Bias to BEARISH. The Silver Cross Index has been in a swift decline and based on participation numbers which are lower than both the Silver Cross Index and Golden Cross Index, both should continue to move lower. Negative divergences have been our primary concern and they did indeed lead us into this period of weakness. While participation has sunk, it has not sunk into truly oversold territory. They have further to fall.
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 rallied strongly to open the day but spent most of the day moving lower. We are in a period of churn. We do see more decline as likely based on weak internals. The PMO internals are terrible. It will be very hard to get a good rally started when so many stocks have declining PMOs and PMO SELL Signals. Participation continues to slip with very little ground being made on today's rally. The Golden Cross Index had a Bearish Shift today and the PMO continues to decline. There are indications on all of our charts that market is in trouble. However, mega-caps could keep the index itself together leading to more churn. At this point we wouldn't look for a new leg up.
Erin is 65% 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 nearly made new all-time highs this week, but after reaching those heights, it started to pull back. The rising trend established in October is so far holding up, but we do note that the PMO has topped and Stochastics are headed lower. We are still bullish on Bitcoin primarily due to the weekly chart.
Bitcoin Weekly Chart: Bitcoin broke out of a flag formation on the weekly chart and that suggests we'll see much higher prices. The weekly PMO is flat and not very responsive right now so it may take a bit more time to get to all-time highs.
BITCOIN ETFs
Today:
This Week:
INTEREST RATES
Yields popped higher today. They are in strong rising trends and we do believe they will continue to move higher toward 2024 highs. We are on the lookout for a pause as they are running very hot right now.
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
For most of this week the 10-Year Yield has been trying to break out of the rising wedge formation. There have been three breakouts in different directions, but the closes were still inside of the wedge. Despite any pullbacks, we believe that the trend will continue up.
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 6.54 to 6.72.
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: Today TLT formed a bearish engulfing candlestick that implies a decline will happen on Monday. Price broke down from an intermediate-term rising bottoms trendline. It has continued to struggle but of late it is moving mostly sideways. However, it will likely continue to be under pressure given the strong showing of the 20-year yield. We expect TLT will break down below this current level of support.
TLT Weekly Chart: We have some bullish indications on the weekly chart as far as chart patterns go. The bullish falling wedge technically executed with the upside breakout. The bullish reverse head and shoulders is about to be busted with a drop below the down sloping neckline. The weekly PMO has just given us a Crossover SELL Signal so we would look for the pattern to be busted with more downside.
TLT Monthly Chart: The monthly chart looks okay, not great. Price is consolidating the deep decline and the weekly PMO is still technically rising. This does look like a bottoming formation, but that rising trend is about to be compromised.
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 rallied off support today. It spent the week churning around support. The PMO is looking toppy, but Stochastics have turned up again. For now we will look for more sideways price movement.
UUP Weekly Chart: The weekly chart shows a large bearish rising wedge, but it appears price wants to tap the top before it makes its way lower. The weekly PMO is on a new Crossover BUY Signal, so a decline may not happen for some time.
UUP Monthly Chart: The monthly chart is very favorable showing a strong rising bottoms trendline. The weekly PMO has turned back up.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold is following its pattern of a breakout to new all-time highs and then consolidation or retracement. This time around we are seeing a retracement. The rising trend looks solid so we don't expect the decline to go very far. The PMO has topped, but is currently holding onto its Crossover BUY Signal. Stochastics unfortunately have turned down. Look for a test of the rising bottoms trendline.
The correlation between Gold and the Dollar remains positive so they can travel in concert. Typically this is a good condition for both Gold and the Dollar.
GLD Weekly Chart: We do see that Gold is now traveling in a parabolic rise. These patterns will usually breakdown quickly and painfully so we have to be attentive. The rally has not gone vertical yet so we likely have time before this formation breaks down.
$GOLD Monthly Chart: The rally is more vertical on the monthly chart, but it is holding this strong rising trend for now. It is very overbought at this level based on the monthly RSI. We do need to lookout for a correction in the long-term timeframe, but so far we don't see any major weakness in Gold. The monthly PMO is still on the rise so we likely have more time before we see a correction.
GOLD MINERS Daily Chart: Gold Miners are correcting but currently the rising trend is holding up. We don't think that will last as the PMO is falling on a Crossover SELL Signal and the RSI is in negative territory. Participation is sliding lower as weakness permeates the group right now. Stochastics have moved below 20. We are looking for this decline to take price back to 38.00 before we get an upside reversal. With Gold pulling back right now it makes sense that this group would suffer.
GDX Weekly Chart: GDX is on a beautiful rising trend, but hit overhead resistance at the 2020 top and retreated. The weekly chart tells us that the next line of strong support is at 36.00. We'd like to see the rising trend preserved, but the weekly PMO has topped suggesting it may be compromised soon as we expect on the daily chart.
CRUDE OIL (USO)
IT Trend Model: BUY as of 8/10/2024
LT Trend Model: SELL as of 9/10/2024
USO Daily Chart: Crude took a hit today at overhead resistance. The RSI is still negative and the PMO is flat. Stochastics do suggest we'll get a breakout. Middle East tensions are rising again with Iran telegraphing it will hit Israel again and that could get us a breakout here.
USO/$WTIC Weekly Chart: Crude has been in a trading range for years now and we don't see anything to suggest that won't continue. The weekly PMO is flat denoting a lack of momentum that will likely lead to the range holding firm.
WTIC Monthly Chart: The monthly chart isn't very bullish. We have a declining trend. Price is holding above support, but the declining monthly PMO suggests that will be broken eventually.
Good Luck & Good Trading!
Erin Swenlin and Carl Swenlin
Technical Analysis is a windsock, not a crystal ball. --Carl Swenlin
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