SPY 10-Minute Chart: It has been a kind of lazy week. Even with Wednesday's gap up, the range for the week is only one percent wide. We will say that it does look a little toppy given today's decline into the close. The 10-minute PMO is in decline and is headed to negative territory. Stochastics are rising, but overall it looks weak with the negative RSI. We often discuss in trading rooms the use of the 5-minute/10-minute charts for entries and exits. Based on that criteria of a PMO Crossover SELL and a negative RSI, price hit a sell point.
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
Today's Results:
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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 Daily Chart: We saw a decline but it didn't compromise the current rising trend at all. Total volume was on average. The market is now technically overbought based on the RSI moving above 70.
The VIX is still above its moving average on the inverted scale and Stochastics are holding above 80 indicating internal price strength. Notice that the relative strength line against equal-weight RSP continues to rise, telling us that mega-caps are leading the market's direction.
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S&P 500 New 52-Week Highs/Lows: New Highs expanded on a decline which is good, but remember these are intraday readings, many of those New Highs may've been erased by day's end. The High-Low Differential has now topped.
Climax* Analysis: There were no climax readings today. Despite the rising trend, Net A-D and Net A-D Volume have been negative for four days.
*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.
Swenlin Trading Oscillators (STOs) are in neutral territory, but we could say that the STO-B is getting a tiny bit near-term oversold. The STO-V is still reading in positive territory. Participation slipped as we would expect and notice it has set up a negative divergence with price as it moves lower. Only 1/3rd of the index hold rising momentum.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
The ITBM and ITVM have sealed in negative divergences with their recent top. Notice their tops are in decline while price tops continue to rise. Only half of the index hold PMO Crossover BUY Signals. That will continue to fall unless we get more stocks with rising PMOs.
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 BULLISH in the intermediate term.
The market bias is BEARISH in the long term.
Participation is shrinking while price continues higher. These negative divergence are a big problem considering we are sitting near all-time highs. The Silver Cross Index paused its decline, but should continue lower given there are fewer stocks above their 50-day EMA. Price must hold above the 50-day EMA in order to preserve Silver Crosses within the index. The Silver Cross Index is above its signal line so the IT Bias is still BULLISH for the time being. The Golden Cross Index topped today and is likely to continue lower given there are fewer stocks above their 200-day EMA. A Golden Cross can only be preserved with price holds above the 200-day EMA. The Golden Cross Index is below its signal line so the LT Bias is 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 market finally saw a decline. It wasn't particularly impressive. Indicators were already flagging and are continuing to get worse. The High-Low Differential has topped and primary indicators (STOs and ITBM/ITVM) are moving lower. In the very short term, the PMO and Stochastics are still positive and could mean that the index has more rally in it. As we noted yesterday, mega-caps are in charge right now and many of the Mag 7 charts look bullish. This could sway the index to move higher despite poor technicals. However, if they start to weaken, there is no support from others to keep it moving higher. It will turn over. As bad as the indicators look, it hasn't affected the rally, but we should remain cautious as those indicators are warning flags.
Erin is 60% long, 0% short. (This is intended as information, not a recommendation.)
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CALENDAR
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BITCOIN
Crazy trading day for Bitcoin which saw quite a large trading range. The consolidation phase doesn't appear to be over yet. Bitcoin did hit an all-time high during the day, pushing past 100,000, but it was too much apparently. We still expect Bitcoin's consolidation to resolve with a rally higher, but given the PMO is still headed lower, we'll look for more sideways movement for now. The last time price broke below the 20-day EMA it was the catalyst to a new leg up.
BITCOIN ETFs
INTEREST RATES
Yields were mixed today with many midterm yields rising with the longer-term yields dropping. We continue to look for them to move lower from here.
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 clinging to support at the 200-day EMA and horizontal support. We see all yields as bearish right now and do expect more decline ahead. The RSI is negative and the PMO is in decline. Stochastics look terrible below 20.
BONDS (TLT)
IT Trend Model: NEUTRAL as of 11/10/2024
LT Trend Model: SELL as of 11/21/2024
TLT Daily Chart: TLT took advantage of the drop in the 20-year yield and rallied nicely. It is now headed toward overhead resistance at 95.00. We do expect it to get there and likely break out given the very positive indicators.
DOLLAR (UUP)
IT Trend Model: BUY as of 10/9/2024
LT Trend Model: BUY as of 5/25/2023
UUP Daily Chart: We would say we now have a bearish head and shoulders top on the Dollar. We do have a down sloping neckline so it hasn't actually penetrated it, but we think it is close enough. Price closed below the 20-day EMA for the first time since the rally began. The PMO is on a Crossover SELL Signal and Stochastics are nearing territory below 20. This is very weak and does suggest the head and shoulders will execute as expected with a decline. The minimum downside target of the pattern would take it to about 29.25.
So far the rising bottoms trendline is holding up.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: There really isn't much to report on the Gold chart. Price continues to trade sideways in a very tight trading range between the 20-day EMA and horizontal support. Indicators continue to be useless as they are as neutral as they can be. The RSI is near net neutral (50), the PMO is directionless sitting at the zero line and Stochastics are holding on net neutral (50). Given the Dollar is looking weak, we will go ahead and look for an upside resolution here.
Discounts are still elevated so investors are still very bearish on Gold. These are close to extremes in negative sentiment. Sentiment is contrarian so this does give us a slightly bullish spin. We do note that the correlation between Gold and the Dollar is getting closer to zero. If the Dollar weakens, it may not necessarily help Gold as we'd like since they aren't as closely tied to each other.
GOLD MINERS (GDX) Daily Chart: Like Gold, GDX is in a holding pattern, moving sideways as it tries to get a rally going. The PMO is rising on a Crossover BUY Signal but we have to temper expectations as it is so far below the zero line. Participation is mediocre but we do see the Silver Cross Index had a Bullish Shift across its signal line so maybe we will see an upward resolution. We're mildly bullish on Gold so we would have to say the same about GDX.
CRUDE OIL (USO)
IT Trend Model: SELL as of 10/17/2024
LT Trend Model: SELL as of 9/10/2024
USO Daily Chart: OPEC+ has decided to keep production at current levels so we could see more sideways action continue. The PMO just had a Crossover SELL Signal below the zero line. The RSI is slightly negative and Stochastics are neutral. Add it all together and we should see prices wane or continue to move sideways. $OVX, the Crude Volatility Index, did puncture the upper Bollinger Band and many times when a volatility index punctures the upper Band we see price move lower.
The declining tops trendline is still holding price down. It is trading in a symmetrical triangle. These are continuation patterns that should see the prior trend hold. In the case of Crude, we can't really detect a clear prior trend so it could resolve in either direction at this point.
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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