Today on Silver (SLV), the 20-day EMA crossed above the 50-day EMA (Silver Cross) generating an IT Trend Model BUY Signal. SLV has been in a nice rising trend for some time. The PMO is on a new Crossover BUY Signal as well. Notice the heavy volume coming in as investors get more interested in the metal. It is correlating close to Gold and that is good since we are bullish on Gold right now. Discounts are rather elevated so there is still quite a bit of bearish sentiment on Silver. One thing we should be alert to is a possible reverse island setting up which would imply a gap down in the future.
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.
Watch the latest episode of DecisionPoint on our YouTube channel here!
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: The CPI today was up 2.7% year-over-year. This reinforced the belief that the Fed will cut rates another 25 basis points next week. Hence the gap up on the open.
SPY Daily Chart: We are seeing a bull flag on the daily chart and technically today's rally confirmed it. With market internals weak, we think the chance of building another flagpole isn't great, but we could certainly see some upside followthrough. It's an eye test, but the PMO did turn back up today. That set up a "surge" (bottom) above the signal line.
The VIX is moving higher on our inverted scale as investors get more comfortable with the rally. Stochastics are already trying to turn back up. If there was any doubt, mega-caps are leading the charge based on the rising relative strength line against equal-weight RSP.
Here is the latest recording from 12/9. Click HERE to get to our video playlist.:
S&P 500 New 52-Week Highs/Lows: New Highs are showing a negative divergence with price right now and the High-Low Differential is falling fast. We can at least say that there are very few New Lows within the index.
Climax* Analysis: There were no climax readings today. Note that for a fairly strong up day, SPX Net A-D and SPX A-D Volume were both slightly negative.
*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.
Swenlin Trading Oscillators (STOs) are both declining and continue to despite today's strong rally. At least today we didn't lose any participation of stocks above their 20-day EMA. We have the same amount of rising PMOs today as we did yesterday.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
The Intermediate-Term Breadth Momentum and Volume Momentum (ITBM and ITVM) are continuing to confirm the decline in our short-term indicators. We lost some PMO BUY Signals on a strong rally day.
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.
We now have much less than 50% of stocks above their 20-day EMAs. This is a bad situation for our portfolios. We lost more support at 50-day EMAs and it is getting very close to falling below our bullish 50% threshold. Interestingly the Golden Cross Index did manage to turn up today, but it isn't likely to last given we have fewer stocks above their 200-day EMA. It is below its signal line so the LT Bias is BEARISH. The Silver Cross Index continues to tumble. It is below its signal line so the IT 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.
*****************************************************************************************************
CONCLUSION: The picture is getting clearer. Note above that both the SP400 and SP600 saw Bearish Shifts on their Silver Cross Indexes giving them bearish biases in the IT. We can see that mega-caps are gaining strength within the index as the relative strength line to RSP is rising strongly. The SPY is all about the mega-caps right now. They are likely to continue leading the market higher despite the broken internals. Be careful with your portfolios if they aren't positioned in mega-caps. At this point, that is where the strength lies. Weakness abounds among the smaller-cap members.
Erin is 50% long, 0% short. (This is intended as information, not a recommendation.)
*****************************************************************************************************
CALENDAR
Have you subscribed the DecisionPoint Diamonds yet? DP does the work for you by providing handpicked stocks/ETFs from exclusive DP scans! Add it with a discount! Contact support@decisionpoint.com for more information!
BITCOIN
Yesterday's comments still apply:
"Bitcoin is in the process of consolidating the strong gains made after the election. It is still sporting a rising trend despite a declining PMO. Stochastics don't look very good, but they are at least holding in positive territory. We suspect there may be more digestion required, but price is likely to continue to melt up in the process."
BITCOIN ETFs
INTEREST RATES
Yields are in reversal mode and while we still think they will ultimately come down and test support, for now it appears they may be entering a new bullish phase.
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 rallied higher today and we note that the short-term declining tops trendline has now been broken to the upside. The rising trend out of the September low also held. The RSI is back in positive territory and the PMO is turning up. Stochastics look bullish as well. We may be entering a new bull phase for interest rates.
BONDS (TLT)
IT Trend Model: NEUTRAL as of 11/10/2024
LT Trend Model: BUY as of 12/4/2024
TLT Daily Chart: TLT lost support today and we suspect it is now in for a more concerted decline that could take it back to November lows. The PMO has topped and the RSI just entered negative territory. Stochastics look terrible as they decline. You can see that the 20-year yield has bottomed and is ready to begin a new rising trend. That will continue to push Bond prices lower.
The breakdown looks especially bearish on the one-year daily chart below.
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 still is showing a bearish rounded top, but it has begun to rally off support. This topping formation could disintegrate. The PMO is trying to turn back up, but for now is still falling. Stochastics however look bullish on their rise so for now we will look for some sideways movement as it decides whether it will follow through on this rounded top.
The rising bottoms trendline remains intact, but we will be watching for a breakdown.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold is acting very bullish right now. It had a solid rally in spite of a rising Dollar today. We have a nice rising trend that has developed with a bottom above a bottom and now prices higher than the previous top. The PMO is putting distance between it and its signal line while above the zero line. It is on a Crossover BUY Signal. Volume is coming in on this rising trend based on the OBV.
Notice that the relative strength line, Gold is showing some strength with a slight rise. The correlation has moved positive which is why we are seeing Gold rise as the Dollar rises. We'd like to see the Dollar decline to really get this rally going, but it just doesn't want to break down yet.
GOLD MINERS (GDX) Daily Chart: We thought GDX might be in trouble as it was barely up and a strong rally in Gold yesterday. Apparently we shouldn't have concerned ourselves as GDX rallied strongly on today's rally in Gold. This is a breakout move and given our bullish outlook on Gold, it appears it may be time to dip our toes in the water here. Participation has shot back up and both the Silver/Golden Cross Indexes are above their signal lines giving us a bullish bias in both the IT and LT.
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 is making its way higher on a new PMO Crossover BUY Signal. We don't put much confidence in this PMO signal as the PMO is very flat along the zero line which signifies weakness. The Diamond Scans came through with quite a few Crude and Commodity ETFs. It certainly is a nice setup, but we just don't see a high likelihood that Crude would break out of the current trading range. Maybe we'll see a test of the upper part of the channel.
Good Luck & Good Trading!
Erin Swenlin and Carl Swenlin
Technical Analysis is a windsock, not a crystal ball. --Carl Swenlin
(c) Copyright 2024 DecisionPoint.com
Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
DecisionPoint is not a registered investment advisor. Investment and trading decisions are solely your responsibility. DecisionPoint newsletters, blogs or website materials should NOT be interpreted as a recommendation or solicitation to buy or sell any security or to take any specific action.
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.
Helpful DecisionPoint Links:
DecisionPoint Alert Chart List
DecisionPoint Golden Cross/Silver Cross Index Chart List
DecisionPoint Sector Chart List
Price Momentum Oscillator (PMO)