Today the 20+ Year Treasury Bond ETF (TLT) 50-day EMA crossed down through the 200-day EMA (Death Cross), generating an LT Trend Model SELL Signal. Unfortunately, this is another case of whipsaw-- the third LT signal change in four weeks--and it confuses rather than clarifies. We will examine this further in the BONDS section below.
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: The market popped higher on the open but almost immediately collapsed. Price did retrace back to finish just a hair beneath yesterday's close. With the help of Broadcom (AVGO), the Nasdaq and Nasdaq 100 finished up on the day.
SPY Daily Chart: We have a double top formation to contend with. It isn't that interesting for a downside target as the height of the pattern is negligible, but it does indicate a likely price top.
The PMO is on a SELL Signal, but given it has been flat above the zero line, we don't need to put too much emphasis on it. A flat PMO above the zero line indicates strength. Stochastics have dipped below 80 which isn't good for the very short term. The VIX was mostly unchanged this week.
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SPY Weekly Chart: We continue to monitor the bearish rising wedge on the weekly chart. Price could make its way lower to test the bottom of the wedge, but the weekly PMO is still rising so we don't expect a perilous decline.
New 52-Week Highs/Lows: New Lows really made an appearance today. They are already getting near-term oversold. The High-Low Differential is now in oversold territory. It has gotten below the zero line before, so it could fall further. We don't want to count on this "oversold" condition.
Climax Analysis: There were no climax readings today. We had another week with no climax readings. Volatility has been very light. It is interesting to note that we have had ten days with negative Net A-D.
*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) declined quite a bit today which continues to give us a bearish backdrop in the short term. As expected we lost stocks above their 20-day EMAs and we now have a paltry 19% of stocks showing rising momentum. With these internals the market should be declining.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
The ITBM hit negative territory today. As you can see it can move much lower from here. Only 1/4th of the index hold PMO BUY Signals and given only 19% are rising, that number is going to move down.
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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.
You'll note that nearly all entities have bearish IT Biases.
Retail (XRT) has the best IT Bias, but it lost ground this week on both the Silver Cross Index and Golden Cross Index.
The worst IT Bias belongs to Gold Miners (GDX). The foundation was built on the prior intermediate-term rally, but the Silver Cross Index began to slide on this last beg decline. That has set up this very negative IT Bias.
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) is holding at the top of the table for the Silver Cross Index. This group still has quite a bit of internal strength.
Semiconductors (SMH) hold the bottom slot on the table. They were decimated on their last decline and they are having trouble coming out of it. We do note that the Silver Cross Index did gain four percentage points this week.
This table is sorted by GCI values. This gives a clear picture of strongest to weakest index/sector in terms of long-term participation.
Financials (XLF) hold the top Golden Cross Index value. No percentage points were lost on the Golden Cross Index, but deterioration is beginning given the 11 point loss on the Silver Cross Index.
The Dow is feeling some pain as NVDA turns over. It lost the most GCI points this week.
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.
Participation has really been sucked out of the market. Participation readings are actually beginning to look near-term oversold. We've annotated negative divergences on both the Silver Cross Index and Golden Cross Index. You could also say there are negative divergences on %Stocks > 50/200EMAs. The Silver Cross Index continues to decline and is below its signal line so the IT Bias is BEARISH. The Golden Cross Index turned back down today. It 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: A lot is hanging on next week's Fed interest rate announcement. Right now according to CME polls, 97% believe we'll see the 25 bps cut next week. More than likely investors are going to get what they want and that could ease some of the negativity we see in the market right now. Santa could also help out sentiment-wise. If you study just the technicals however, we know that the market is internally weak. The PMO and Stochastics are falling and participation is still being leached out. New Lows are making an appearance and the ITBM hit negative territory. Oh and did we mention negative divergences? The market should move lower from here, but the Fed rate cut could assuage investors and price could continue to hold up. We are short-term bearish, but are watching the Fed for signs of possible strength.
Erin is 45% 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 is making its way higher, but is consolidating a bit on the way up. We've tackled the 100,000 mark, but we think it isn't through with its move higher. Sentiment is just too good and given Bitcoin is sentiment based (it's only worth what people think it's worth), we should see more upside, it just may gyrate on its way up. The PMO is starting to look ready to bottom.
Bitcoin Weekly Chart: Vertical rallies are hard to sustain. Bitcoin is softening its rise slightly, but ultimately it is very steep. This does appear to be another flag pole building and that means we could see a flag which would mean a decline. Maybe not as long or as deep as the last flag, but we should be on the lookout for possible consolidation. The weekly PMO is still rising so momentum is definitely going its way right now.
BITCOIN ETFs
Today:
This Week:
INTEREST RATES
Rates are back on the rise and are establishing new rising trends. We would expect to see them rise even further from here. Rate inversions are clearing somewhat as very short-term rates begin falling below some of the longer-term rates.
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 off to the races on a new steeply rising trend after bouncing off the rising trendline. The PMO has turned up and Stochastics are rising vertically. We expect $TNX and all longer-term yields to continue advancing.
10-Year Bond Yield Weekly Chart: We saw a breakout from the declining tops trendline earlier, but it failed to hold. This week we are back above that declining trendline. We'll see if it sticks this time. The weekly PMO is rising suggesting $TNX will continue advancing.
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: SELL as of 12/13/2024
TLT Daily Chart: As we stated at the beginning, this latest LT Trend Model SELL Signal does not point the way toward any profitable actions we might take. An upside breakout in November ultimately failed this week. That November rally presumably was triggered by rate cut hopes, but yields began to rally this week, and look as though they will continue to do so.
We're getting ready to see a PMO Crossover SELL Signal below the zero line.
TLT Weekly Chart: There was a nice breakout above the reverse head and shoulders neckline, then a technical pullback to the line. From there the rally tried to continue, but it failed. We expect the neckline support will ultimately fail and that will bust the reverse head and shoulders.
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 rallied all week long after it had set up a bearish head and shoulders top. The pattern busted and now we look for higher prices. The PMO is flat right now, but that is due to the steady rising trend. Momentum isn't being gained, nor is it being lost. Stochastics are confirming the current rally.
UUP Weekly Chart: The Dollar broke out above a bearish rising wedge which is especially bullish. It is now bouncing off the top of the wedge. The weekly PMO is accelerating higher so we should expect the Dollar to continue rising.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: After the November pullback, GLD began to rally again. This week, on Wednesday, price exceeded the nearest November top, which made official the new rising trend from the November low. Brief celebration ends the following day as GLD tops, setting the top boundary for a bearish rising wedge formation. Rising wedges are bearish because they normally resolve downward.
GLD has rallied +40% since the February low, so it is entitled to take a break. The correlation is still positive with the Dollar, but more rally strength in the Dollar will still put Gold at a disadvantage.
GLD Weekly Chart: The weekly chart shows the root of the problem, which is the parabolic advance (+71%) from the 2022 low. Parabolic advances beg for correction, which can sometimes be severe. In the case of GLD, we do not expect more than a sideways digestion process to dampen the angle of ascent.
GOLD MINERS Daily Chart: With Gold in trouble, so is GDX. We really thought it was ready to rally again. It is holding above the 200-day EMA, but participation was slashed on today's decline. The Silver Cross Index has dropped beneath its signal line for a Bearish Shift. This shifts the IT Bias from bullish to BEARISH. The same occurred on the Golden Cross Index so the LT Bias is also BEARISH. The PMO has topped. GDX can be relegated to your watch list.
GDX Weekly Chart: After nearing all-time highs, GDX broke below its rising trend channel and fell back to support at the 2023 top. It is currently holding there, but the rising bottoms trendline has been compromised and the weekly PMO is headed lower so the picture leans bearish in the intermediate term as well.
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 is making its way higher but ultimately the chart is very neutral. Price is moving sideways within a trading range that seems to be tightening. We do see that the PMO has reached positive territory again and Stochastics are rising with a positive RSI. It appears we will get a test of overhead resistance at 76 or possibly 79.
USO/$WTIC Weekly Chart: We have a multiyear trading range. The weekly PMO is very neutral as is the weekly RSI so we don't see price leaving the current trading range anytime soon.
Good Luck & Good Trading!
Erin Swenlin and Carl Swenlin
Technical Analysis is a windsock, not a crystal ball. --Carl Swenlin
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