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).
Right now we have what looks like a topping formation. We shall see.
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This week the 30-Year Fixed Rate changed from 6.72 to 6.85.
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
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: Price was mostly stagnant on this day of very light trading.
SPY Daily Chart: Price held above support today. The RSI is in positive territory and the PMO is rising.
The VIX is hugging its moving average, but did close above it on our inverted scale which is a small sign of internal strength. Stochastics are also looking bullish as they rise toward 80.
Here is the latest recording from 12/23. Click HERE to get to our video list.:
S&P 500 New 52-Week Highs/Lows: New Highs are making an appearance again and the High-Low Differential is decelerating its decline. We only saw one New Low.
Climax* Analysis: Today there were no climax readings. Net A-D was positive, but Net A-D Volume came in negative. Not surprise given today's thin trading and little price movement.
*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) rocketed into positive territory today. They are almost getting overbought already. Not surprisingly we didn't see much expansion in stocks above their 20-day EMAs. We are seeing more rising momentum within the index, but it is still reading below our 50% bullish threshold.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERSOLD.
Both the ITBM and ITVM are creeping their way up out of oversold territory. This does currently confirm the rising STOs. %PMO Xover BUY Signals bottomed today.
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.
Yesterday's comments still apply:
"The market bias is BEARISH in the intermediate and long term timeframes.
Participation is starting to see marked improvement, but readings are still anemic overall. The Silver Cross Index decelerated, but still saw a decline today. It is reading below our 50% bullish threshold and given so few are above their 20/50-day EMAs, it will continue to fall. It is below its signal line so the IT Bias is BEARISH. The Golden Cross Index is picking up speed to the downside and is below its signal line so the LT Bias is also 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 Assessment table above hasn't changed for two trading days. This is very unusual because it is always percolating and even one day of no change is rare. This is a very short-term indicator, but it shows that the negative bias is sticky. STOs and the ITBM/ITVM are rising again which is encouraging. Holiday trading does carry favorable seasonality and with indicators looking fairly bullish and on the rise, we should expect the market to hold together for now. Participation is still anemic so the market isn't completely healthy. January is likely to pose a problem.
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 rounding off, but ultimately is holding support at recent lows. This appears to be a consolidation of the election rally. Price hasn't lost much ground considering the PMO has been in decline since late November. This is a sign of internal strength so we should expect another leg up after this consolidation phase has concluded.
BITCOIN ETFs
INTEREST RATES
Yields were mostly lower on the day providing Bond funds some much needed relief from their persistent rise. Although long-term rates did rise somewhat putting pressure on long bonds.
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 has topped and it has afforded us the opportunity to annotate the top of a bearish rising wedge. We are still bullish on $TNX, but this does tell us a pullback is possible that could take it back to the bottom of the wedge for a possible breakdown there. We'll monitor it. For now the PMO is rising and Stochastics are holding above 80 so the picture is still mostly bullish here.
BONDS (TLT)
IT Trend Model: NEUTRAL as of 11/10/2024
LT Trend Model: SELL as of 12/13/2024
TLT Daily Chart: Price dropped below support and is currently in a longer-term declining trend. We could see yields take a breather, but overall TLT looks very bearish with the break of support. The RSI is very negative and the PMO is falling. Stochastics are camped out below 20.
This was the last area of strong support left for TLT and it has been broken. We expect the 2024 low to be challenged but we could see a few pauses on the way down.
DOLLAR (UUP)
IT Trend Model: BUY as of 10/9/2024
LT Trend Model: BUY as of 5/25/2023
UUP Daily Chart: We're monitoring a large bearish rising wedge on the Dollar. Other than the chart pattern, the indicators do look bullish. The PMO is still on the rise and the RSI is positive and not overbought. Stochastics are rising above 80. We should stay alert for a breakdown nonetheless.
GOLD
IT Trend Model: NEUTRAL as of 12/23/2024
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold managed a small rally today but overall it is consolidating sideways. At this point we should watch for a rally back toward prior tops given Stochastics are rising again and the PMO is trying to turn back up. If the Dollar's rising wedge executes, that will put the wind at the back of Gold.
GOLD MINERS (GDX) Daily Chart: Yesterday's comments still apply:
"Gold is in a holding pattern so we expect Gold Miners won't be doing much. Price is holding support, but internals are still incredibly weak. The strongest area of support lies at 32. GDX is vulnerable to further decline. The PMO is still sinking and the Silver Cross Index is in the basement. We suspect they will make their way lower toward stronger support."
CRUDE OIL (USO)
IT Trend Model: BUY as of 12/24/2024
LT Trend Model: SELL as of 9/10/2024
USO Daily Chart: Crude formed a bearish engulfing candlestick today. It is winnowing its way into a tighter and tighter trading range. Indicators are completely neutral so we would expect more sideways movement within the range. We did get a Silver Cross yesterday so there is a chance we will see the November high tested. Overall, don't expect much out of Crude.
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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