Semiconductors (SMH) have generally been traveling sideways, but today they rallied strongly. It isn't enough to change the price pattern, but we do see greatly improved participation numbers under the hood. With such pronounced gains in stocks above their 20/50-day EMAs, the Silver Cross Index should begin rising again. This bounce is coming off the 200-day EMA. That seems to be a good area to look for more lengthy rallies.
SMH is in a period of high level consolidation coming out of the bearish parabolic rise. The weekly PMO is still very negative so for now we will should consider SMH short-term bullish and intermediate-term neutral to bearish.
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: It wasn't an exciting trading day but price did advance through most of the day, just mildly so. The 10-minute Stochastics look negative so we could be in for some decline tomorrow.
SPY Daily Chart: New all-time highs were again set on today's rally. The PMO continues to rise nicely. It is flat above the zero line suggesting strength in the short term.
The VIX is making its way higher on our inverted scale as investors stay complacent with the rally. Stochastics are rising above 80 showing internal price strength.
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S&P 500 New 52-Week Highs/Lows: New Highs were lower on the rally and we did see a New Low. Most importantly the High-Low Differential continues to rise bullishly.
Climax* Analysis: There were no climax readings today. Note that SPX Net A-D was negative, while price was up.
*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 OVERBOUGHT.
Swenlin Trading Oscillators (STOs) dropped again today on a rally. Something is going on beneath the surface. We noticed that %Stocks > 20EMA contracted on today's rally. In very negative fashion %PMOs Rising dropped perilously. Both should've moved higher on a rally day.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
Thankfully the ITBM and ITVM are still rising instead of falling like STOs. That takes a little bit of the sting away. %PMO Xover BUY Signals also contracted on a rally day. Given only 55% have rising PMOs, this indicator should continue to lose ground.
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 shrunk on a rally day. Percentages are still in healthy territory reading above 70%. Those percentages are higher than the Silver Cross Index so it should continue rising a bit longer. The Golden Cross Index has stalled and given there are fewer stocks above their 200-day EMA versus the Golden Cross Index, it could continue to move lower. The Silver Cross Index is above its signal line so the IT Bias is BULLISH. 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: Today was a rally day but many of our indicators contracted when they should have expanded. We saw a huge loss of rising PMOs within the index and that is causing the amount of PMO BUY Signals to move lower. Participation of stocks above key moving averages should have seen gains, but instead saw losses. We saw negative Net Advances-Declines on a rally day. And let's not forget that the STOs are moving lower. We won't say that the market is ready for a deep decline as the index has managed to march higher despite depressed internals. More likely it is time to look for a small decline or even some churn/consolidation sideways.
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 is now digesting the last leg of its rally. 100,000 seems to be a psychological resistance level as well as a technical resistance level. This could cause more sideways movement before a breakout. And, yes we expect to see a breakout once this period of digestion is over. The PMO is on a SELL Signal and declining so we may see more sideways consolidation.
BITCOIN ETFs
INTEREST RATES
Today most yields were higher. Yields are on their way lower after extensive rallies brought them toward 2024 highs. It is time to see them back off further. At this point we think annotated support levels are sturdy and should hold should yields make their way down that far.
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 was up slightly today helping it to hold onto support at the 200-day EMA. The PMO is still tumbling and the RSI is negative below net neutral (50). Stochastics look terrible as they fall below 20. We don't think the decline in yields is over.
BONDS (TLT)
IT Trend Model: NEUTRAL as of 11/10/2024
LT Trend Model: SELL as of 11/21/2024
TLT Daily Chart: The rally is on for Bond funds as yields continue to angle lower. This condition will likely persist and give Bonds even more room to run. The RSI is positive and the PMO is rising toward zero. Stochastics look very bullish as they rise above 80. Today's candlestick is bullish engulfing so we should see another advance tomorrow.
The next level of overhead resistance is at 95.
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 managed a rally today pushing price to resistance. Should price decline from here we would have a bearish head and shoulders top. For now it is too early to depend on it, but our indicators do suggest the Dollar will eventually move lower. The PMO is in decline on a Crossover SELL Signal and Stochastics have dropped into negative territory.
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: The Dollar was up and consequently Gold was down. At this point it is essentially moving sideways. The Dollar does seem to be showing some weakness which could get Gold going again, but for now we should look for more sideways movement. The PMO is sitting on the zero line in neutral. Stochastics are flat and the RSI is slightly negative. Neutrality describes this chart.
We do see that on Friday discounts pared back considerably suggesting we may have some bullish investors out there, at least more than we had previously. Discounts are still elevated overall so we haven't lost bearish sentiment yet.
GOLD MINERS (GDX) Daily Chart: With Gold in neutral, Gold Miners have struggled. They topped at the 20-day EMA, but are so far holding above the 200-day EMA. Gold doesn't look wildly bullish by any means so we don't expect much out of this industry group. Participation is shrinking again.
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 continues to move sideways in a trading range. Nothing on the chart suggests this will change and with Middle East settling down somewhat, we shouldn't really see any big rallies. The Energy sector as a whole is pulling back and we expect that won't be helped by Crude which does look more bearish than bullish.
Support is now being tested at the June low.
Good Luck & Good Trading!
Erin Swenlin and Carl Swenlin
Technical Analysis is a windsock, not a crystal ball. --Carl Swenlin
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