Today the Consumer Staples Sector (XLP) 20-day EMA crossed down through the 50-day EMA (Dark Cross), above the 200-day EMA, generating an IT Trend Model NEUTRAL Signal. Price has lost important support at the bottom of a trading range. Participation is very weak and the Silver Cross Index is losing ground. We see more weakness ahead.
On the weekly chart XLP has broken a one-year rising trend line, and the PMO is in a bearish configuration. This also looks like a bearish double top has developed.
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Also today, the Industrial Sector (XLI) 20-day EMA crossed down through the 50-day EMA (Dark Cross), above the 200-day EMA, generating an IT Trend Model NEUTRAL Signal. While price lost near-term support, there is more support available. The bearish double top portended the decline and while the minimum downside target of the pattern has been hit, it is a "minimum" downside target. Participation is very weak and the Silver Cross Index continues to lose ground. The 200-day EMA could provide needed support.
The weekly chart shows XLI approaching horizontal support, as well as rising trend line support. What looks like a rising trend channel is actually a rising wedge which has the expectation of a breakdown ahead. The weekly PMO is falling on a Crossover SELL Signal.
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The signal change for gold will be discussed in the Gold section below.
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/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: Price has formed a constructive basing pattern on the 10-minute bar chart that could provide structure to get prices rising further.
SPY Daily Chart: Price continues to make its way higher off support. The 20-day EMA hasn't been overcome yet. The PMO is still declining despite the rallies from Friday and today.
The RSI is in negative territory for now, but is rising with price. The VIX is calming down a bit, but it remains below its moving average which means weakness. Stochastics tipped upward today, but are still in negative territory below net neutral (50). The relative strength line against equal-weight RSP continues to move higher. This tells us that mega-cap stocks are still having their way with the market.
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S&P 500 New 52-Week Highs/Lows: The trend is a shrinking of New Highs. New Lows are paring back with the rally, but are still very visible. The High-Low Differential is very negative as it has now dropped below the zero line.
Climax* Analysis: There were no climax readings today. We are still operating on Friday's upside initiation climax.
*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 OVERSOLD.
It is bullish seeing the Swenlin Trading Oscillators (STOs) rise out of oversold territory. We even saw a slight increase in participation and in the number of rising PMOs. This chart is encouraging, but we are still staying cautious as this could just be a circumstance of the oscillators getting too oversold and needing to revert back to zero. We think this is a good Santa Rally chart.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERSOLD.
It's hard to see, but the ITVM did bottom today which is a mild confirmation of rising STOs. %PMO Xover BUY Signals actually contracted today in spite of the rally and the addition of more rising PMOs. The reading is very oversold, but as we often say, oversold conditions can persist if we are going to see an ugly decline in January.
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.
Participation is very oversold as far as %Stocks > 20/50EMAs. This means that there aren't many stocks out there ready to pick up the slack if the mega-caps begin to fail (if ever!). Still this does mean there is plenty of opportunity for improvement. For now, the Silver Cross Index is falling and the Golden Cross Index was stagnant. Both 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 short-term bearish given the plethora of "Bear" Biases. It represents internal weakness that is pervading all indexes, sectors and industry groups. PMOs are falling on nearly all sectors and we can see that internals are still very weak. On the bright side, this means that indicators are nearly all oversold. If the bull market still has legs, these oversold conditions could be excellent as it leaves plenty of room for improvement. However, we think the bear is just biding its time until January. Those oversold readings could mean 'thin ice' so caution is still warranted.
Erin is 35% long, 0% short. (This is intended as information, not a recommendation.)
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CALENDAR
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BITCOIN
Bitcoin is in pullback mode as it makes its way back toward support at the August top. The RSI is falling with price and does indicate some weakness, but the PMO is still quite bullish so this pullback may not last very long.
BITCOIN ETFs
INTEREST RATES
Rates were mostly higher on the day. Bull flags have been confirmed so we do expect yields to continue to rise further toward 2024 highs. The yield curve has softened and is almost done with inversions. Many times recessions follow yield curve inversions.
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 rallying strongly and given the very bullish indicators we expect this to continue. It is getting very close to its 2024 highs. That could be an area where we see it struggle, but for now it looks very bullish.
BONDS (TLT)
IT Trend Model: NEUTRAL as of 11/10/2024
LT Trend Model: SELL as of 12/13/2024
TLT Daily Chart: Bonds are at the mercy of yields which have been consistently rising. We don't see that condition changing anytime soon so we should expect to see TLT fall further. The PMO is clearly in agreement.
This was the last area of strong support left for TLT and it has been broken. We expect the 2024 low to be challenged.
DOLLAR (UUP)
IT Trend Model: BUY as of 10/9/2024
LT Trend Model: BUY as of 5/25/2023
UUP Daily Chart: It may be time for the Dollar to finally pull back. We now have a bearish rising wedge formation that suggests the rising trend is in jeopardy. Stochastics did turn down, but they still are residing comfortably above 80. The PMO has flattened, but remains on a Crossover BUY Signal so the chart hasn't broken down yet.
GOLD
IT Trend Model: NEUTRAL as of 12/23/2024
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Today the Gold (GLD) 20-day EMA crossed down through the 50-day EMA (Dark Cross), above the 200-day EMA, generating an IT Trend Model NEUTRAL Signal. So far GLD is in a consolidation phase and given the neutral appearance of most of the indicators, we suspect this range will hold up a bit longer. The RSI is negative and the PMO is falling below the zero line. On the bright side, Stochastics have turned up. The Dollar still has some bullish indications, but it is vulnerable. Until it makes up its mind, we see more sideways movement ahead for Gold.
GLD Weekly Chart: The weekly chart shows GLD departing from the parabolic advance, and it will now be digested with a consolidation or further decline.
GOLD MINERS (GDX) Daily Chart: Gold Miners have hit the brakes on support. Gold doesn't look bullish but it doesn't look terribly bearish either. Participation is terrible and the Silver Cross Index is reading below 7%. We think it is likely too early to start looking for a lasting rally.
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 is getting very close to a Silver Cross of the 20/50-day EMAs. This is good news, but the 20/50-day EMAs have been tightly joined so the veracity of the signal is lacking. If price drops below the 50-day EMA, the Silver Cross won't happen. More than likely we will continue to see Crude move mostly sideways. We do have a very short-term declining trend so it looks ready to test the bottom of the range right now. Indicators are no help at all as they are all flat.
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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