Today the Materials Sector ETF (XLB) 20-day EMA crossed down through the 50-day EMA (Dark Cross), above the 200-day EMA, generating an IT Trend Model NEUTRAL Signal. This nullifies the positive action of the prior two weeks, but the recent trading range makes us question if a new falling trend has been started. We have a PMO Crossover SELL Signal below the zero line which is especially bearish.
The weekly chart shows XLB testing the bottom of a bearish rising wedge formation, a chart pattern that normally resolves downward. The weekly PMO does not inspire confidence as it declines on a Crossover SELL Signal.
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/SPX SECTOR/INDUSTRY GROUP INDEXES
Change Today: 
Change for the Week:
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: Trading was somewhat jagged today with a strong open going into a declining trend, but ultimately finishing the day breaking the declining trend.
SPY Daily Chart: The market notched a new all-time high to finish the week. The RSI is starting to get overbought so a small decline is in order or some sideways consolidation. The PMO is still rising. The OBV is clearly confirming the rising trend.
The VIX came very close to puncturing the upper Bollinger Band on our inverted scale. We are watchful for punctures as they can often see trend reversals. Stochastics still look bullish but they are beginning to turn over. Mega-caps continue to hold the market captive as we see the rising relative strength line against equal-weight RSP.
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SPY Weekly Chart: Price is trying to push out of the top of a bearish rising wedge. An upside resolution to a bearish chart pattern is especially bullish, but we'd say it is still mostly within the wedge still. Currently there is a negative divergence with the PMO so we could see the bottom of the wedge tested again.
New 52-Week Highs/Lows: New Highs were lower on a rally day which is a slight negative divergence. New Lows really made an appearance today suggesting that internals are indeed weakening within the index. The High-Low Differential is in decline which suggests we should see at least some consolidation if not a market decline.
Climax Analysis: There were no climax readings today. Net A-D was quite negative on a rally day.
*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.
The Swenlin Trading Oscillators (STOs) are on their way lower with the STO-V finally reaching negative territory. We are listing these indicators as oversold, but we have certainly seen much lower readings. This is good news as they will be ripe for an upside reversal and that would bode well for the market. For now, they are in decline and participation is falling based on %Stocks > 20EMA. We saw fewer rising PMOs on a rally day as well.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
The ITBM and ITVM topped this week, confirming already declining STOs. We now have less than 50% of stocks with PMO BUY Signals and that is just going to get worse given only 29% show rising PMOs.
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PARTICIPATION TABLES: The following tables summarize participation for the major market indexes and sectors. The 1-Week Change columns inject a dynamic aspect to the presentation. There are three groups: Major Market Indexes, Miscellaneous Industry Groups, and the 11 S&P 500 Sectors.
The highest IT Bias is held by Energy (XLE). Don't let this convince you to get into this ailing sector. Notice the amount of Silver Cross Index percentage points it lost! It was the most of any of the 26 we follow.
The lowest IT Bias belongs to Utilities (XLU). Utilities built a strong foundation with the Golden Cross Index, but now it is flailing in the intermediate term based on the low Silver Cross Index reading. This sector is slipping.
This table is sorted by SCI values. This gives a clear picture of strongest to weakest index/sector in terms of intermediate-term participation.
Regional Banks (KRE) hold the top spot on the Silver Cross Index. No losses were logged so this group is still showing internal strength. We would be careful of this group as Financials are beginning to pull back. They lost a few percentage points on the SCI.
The biggest gainer of the 26 was Retail (XRT). The group is beginning to look very interesting as it bides its time for a likely breakout.
This table is sorted by GCI values. This gives a clear picture of strongest to weakest index/sector in terms of long-term participation.
Note that on the GCIs, the majority of holding above our bullish 50% threshold. Those that are lagging are Energy (XLE), Biotechs (IBB) and Semiconductors (SMH).
SMH is the least healthy of all 26 entities we cover. While Technology is looking good on a recent breakout, SMH is stagnating and not making big gains. There is certainly room for improvement, but we aren't looking for much right now.
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.
Big news today! The Silver Cross Index saw a "Bearish Shift" across its signal line. This has moved the IT Bias to BEARISH. The Golden Cross Index did tick upward today, but we aren't expecting it to continue on that path given there are fewer stocks above their 200-day EMA in comparison to the Golden Cross Index. It is below its signal line so the LT Bias is still BEARISH.
Participation continues to leach out of the market. We are sitting at new all-time highs and half of the index are below 20-day EMAs. We've been experiencing a rising trend and yet participation is slimming. All of this points to a likely decline in the future (eventually).
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 deterioration under the surface is all over our indicator charts. We are at all-time highs and yet we have participation disintegrating. STOs and ITBM/ITVM continue to decline. Other than the PMO all of our other indicators are falling too. The market should have already seen some decline, but it hasn't. A major reason is that the bullish Magnificent Seven are keeping prices up. Only NVDA looks suspect, the rest are quite bullish. Gotta love cap-weighting. Another reason we have thought of is that Santa Claus generally appears in December and keeps the market bullish. December should continue to be a good month unless all of this internal weakness finally comes home to roost. Beware of January.
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 Daily Chart: Bitcoin looks ready to rally again. It had a period of consolidation to digest the strong rally and now it is likely to push higher. The PMO is still in decline but it is well above the zero line so we see it as diminishing strength not new weakness. We do need to be aware of a slight negative divergence with the OBV. We wouldn't be surprised if we saw a little more sideways movement.
Bitcoin Weekly Chart: This chart deserves a "wow". The rally out of the bullish flag formation has been stunning on the back of the election. Vertical rallies do not hold up however so we should be on the look out for some more consolidation. It is nearly impossible to hold a rising trend like this for very long.
BITCOIN ETFs
Today:
This Week:
INTEREST RATES
Yields moved lower in concert today. The declining trends are very much intact. We would look for more weakness from yields and strength from Bond funds.
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 lost horizontal support, but has found a new level. It managed to close just above the 200-day EMA. We don't expect a rebound off this level however given the very bearish indicators. The RSI is negative and falling. The PMO is tumbling and Stochastics have topped well below 20. We'll watch 4% as the next strong level of support. Maybe it will be ready to rebound once that level is tested.
10-Year Bond Yield Weekly Chart: The declining trend is intact on the weekly chart and does suggest we will see more downside. The falling weekly PMO is in agreement.
MORTGAGE INTEREST RATES (30-Yr)**
**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).
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This week the 30-Year Fixed Rate changed from 6.81 to 6.69.
Here is a 50-year chart for better perspective.
BONDS (TLT)
IT Trend Model: NEUTRAL as of 11/10/2024
LT Trend Model: BUY as of 12/4/2024
TLT Daily Chart: TLT looks quite bullish. It has now hit an area of strong overhead resistance. We don't think it will have trouble overcoming it. The RSI is positive and not overbought. The PMO just entered positive territory and Stochastics are rising well above 80. The 20-year yield is in a declining trend so we do expect more upside out of TLT. We do note that we saw a bearish filled black candlestick today so it may find a little difficulty breaking out.
TLT Weekly Chart: Just in the nick of time, TLT reversed and rallied. It was about to bust the bullish reverse head and shoulders pattern. Instead it is rallying toward overhead resistance at about 102.50. The weekly PMO has turned up so at this point we should expect more rally in the intermediate term.
DOLLAR (UUP)
IT Trend Model: BUY as of 10/9/2024
LT Trend Model: BUY as of 5/25/2023
UUP Daily Chart: This week the Dollar completed forming a bearish head and shoulders pattern that suggests we will see prices drop from here. The neckline has not been broken so technically the pattern has not been confirmed yet, but we think it is only a matter of time. The PMO is falling on a Crossover SELL Signal. We do note that it is still well above the zero line so if nothing else, we have diminishing strength. Stochastics are very weak below 20. The ball is in your court, Dollar.
The rising trend has not been broken yet...keyword "yet".
UUP Weekly Chart: We had a bullish breakout from a bearish rising wedge which was especially bullish. Price held there for a bit, but as we see on the daily chart it is beginning to top out. More than likely price will find itself back within the wedge. The weekly chart is definitely not as bearish as the daily chart given the rising weekly PMO so let's look for a short-term decline not an intermediate-term one.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold has done nothing this week and neither have the indicators. We are starting to see some deterioration on Stochastics, but the PMO and RSI are neutral. Carl and Erin have differing opinions on Gold right now. Carl is looking at this as a shelf that Gold is getting ready to step off and fall. Erin suspects this consolidation is in preparation for a new leg up based on the weakness in the Dollar. Erin is willing to call that bet off should the Dollar rebound instead of decline out of the head and shoulders pattern.
GLD Weekly Chart: Gold is now consolidating the parabolic rally that ensued at the end of 2022. Price is still holding above the 17-week EMA, but the weekly PMO looks bad. Still, it is well above the zero line so think diminishing strength not necessarily weakness. The rally needed to be digested.
GOLD MINERS Daily Chart: With Gold in a holding pattern, GDX is showing some weakness. Price is still holding above the 200-day EMA and we do see the PMO has given us a new Crossover BUY Signal. However, note that the PMO is flat beneath the zero line right now. That is an indication of pure weakness. Of course, if Gold gets going, so will Gold Miners. The Silver Cross Index is above the signal line so the IT Bias is BULLISH here.
GDX Weekly Chart: Ultimately price is in a rising trend and it is now consolidating above strong support at the 2023 high. This is a good jumping off point, but the weekly PMO is still in decline. It really comes down to Gold's direction and it is hinting it could go either way.
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 slipped today. It is in a trading range right now and it isn't likely to leave it. OPEC+ is leaving production levels the same but they do want to increase production next year. With production staying the same, we will likely see more sideways movement out of Crude. Indicators are leaning bearish right now so we'll look for another test of the bottom of the current range.
USO/$WTIC Weekly Chart: The weekly chart is very neutral as price has been in a trading range for years now. The weekly PMO is pretty much on the zero line. $WTIC is hugging the bottom of its trading range. It opens up a slight possibility that prices could begin to rise from here, but there is still room for both to decline first.
Good Luck & Good Trading!
Erin Swenlin and Carl Swenlin
Technical Analysis is a windsock, not a crystal ball. --Carl Swenlin
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