SPY 10-Minute Chart: We thought we would see some churn and we suppose this could be part of it, but it was a rather steep down day. We do see a reverse head and shoulders on the 10-minute bar chart below so we could see price recuperate.
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 Daily Chart: Price had just gotten above support, but quickly failed on today's decline. The 50-day EMA is available for support, but the PMO has below the signal line suggesting we could see followthrough on today's decline. The RSI has also entered negative territory below net neutral (50).
The VIX is back below its moving average and Stochastics are trying to top which implies new weakness. Notice that mega-caps are losing a little bit of ground in relation to equal-weight RSP. Their weakness could bring the market completely down as they are primarily what is holding it up.
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SPY Weekly Chart: Price is toying with dropping below the current rising trend. It is in a bearish rising wedge which does imply an eventual breakdown. The weekly PMO triggered a new Crossover SELL Signal.
SPY Monthly Chart: We are monitoring a parabolic formation on the monthly chart. These patterns beg for correction and this month price did begin to leave the parabolic arch. We could be in for some high level consolidation that would include more breakdown. The monthly PMO is currently healthy.
New 52-Week Highs/Lows: New Highs and New Lows were negligible. The High-Low Differential is trying to bottom but currently remains in decline. It is definitely oversold near-term.
Climax Analysis: Today there were unanimous climax readings on the four relevant indicators, giving us a downside initiation climax. SPX Total Volume at only 71% of the one-year daily average volume did not confirm, but we think we can ignore that due to it being holiday week volume.
*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 DOWN and the condition is NEUTRAL.
Swenlin Trading Oscillators (STOs) are already getting close to overbought territory and would at that time imply a likely decline ahead. Participation shrank on the decline and is an anemic 18%. Only one quarter of the index hold rising momentum.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERSOLD.
Oddly enough the ITBM and ITVM did top below the zero line somewhat unexpectedly. We did see a pretty good decline today, but this does seem a bit unusual. The short-term indicators are no longer being confirmed. %PMO Xover BUY Signals stagnated today so the bottom is still in effect. With 25% of the index holding rising PMOs, there is now a chance that the indicator will continue to rise.
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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.
Only one of the 26 entities that we cover has a bullish IT Bias. Retail (XRT) is losing ground on the Silver Cross Index so it is a barely there bullish 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.
Absolutely none of the 26 saw increases in the Silver Cross Index. This is short-term bearish.
This table is sorted by GCI values. This gives a clear picture of strongest to weakest index/sector in terms of long-term participation.
Only the NDX (QQQ) saw an increase to the Golden Cross Index. However, it lost ground on the Silver Cross Index so this isn't necessarily a healthy index, just healthier than the others 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.
Participation had begun to expand on this last bit of rally, but today we saw damage done. The Silver Cross Index and the Golden Cross Index are in decline and that should continue given they are reading higher than participation numbers. They are both below their signal lines so the IT and LT Biases are 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: We didn't expect to see a decline of this magnitude today, but it doesn't really surprise us. Internal weakness has been prevalent and we have been calling for a decline in price. We thought we wouldn't see the weakness until January, but it is slowly seeping in. Holiday trading could still mean churn next week, but today's decline puts us on alert. We saw a downside initiation climax today which does imply we have more decline in our future, but it could also mark a period of churn. The market has now established a short-term declining trend highlighting weakness. We also saw the weekly PMO generate a Crossover SELL Signal. The market is highly vulnerable, but holiday trading could still prevent a more serious decline.
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 Daily Chart: Bitcoin is consolidating the rally out of the election run up. this does look very toppy right now, but support is still holding. The PMO is in decline but is holding above the zero line for now. Stochastics did top in negative territory today so support is vulnerable at the recent lows. We also have support at the 50-day EMA that could hold price up, but we do think it could see a decline to strong support at 85,000 given the top in Stochastics.
Bitcoin Weekly Chart: It looks like we have a second flag pole with price starting to roll over into high level consolidation that could serve as the next flag. The weekly PMO is still on the rise, but it has decelerated.
BITCOIN ETFs
Today:
This Week:
INTEREST RATES
Most interest rates were higher on the day. Shorter-term yields kept up the decline which is partly due to the Fed lowering its rate. We are looking for long-term yields to continue rising toward 2024 highs out of bull flag formations.
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
We are still bullish on $TNX despite the large bearish rising wedge. Indicators have not broken down yet and the current rising trend doesn't seem that vulnerable yet. We should consider that it may be time for another pullback, but for now it doesn't look that vulnerable outside of the chart pattern.
10-Year Bond Yield Weekly Chart: The intermediate-term declining trend was broken and the weekly PMO is on the rise above the zero line. We don't see weakness here yet.
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 6.72 to 6.85.
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: Bonds are struggling as the long-term yields continue to rise. This chart is full of weakness. We have a broken support zone, a declining PMO and Stochastics holding well below 20.
It is sitting on longer-term support, but we doubt it will hold given the bullish look of long-term yields.
TLT Weekly Chart: The reverse head and shoulders pattern was officially busted with the price drop below the declining tops line of the bullish falling wedge. The weekly PMO just entered negative territory. The picture remains bearish in the intermediate term.
TLT Monthly Chart: The monthly chart shows strong support at 75 with near-term support at 85. The monthly PMO is still rising, but has decelerated. This does look like a possible bottoming formation, but we think there is more downside to absorb. The rising trend out of the 2023 low is being compromised.
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 is finally starting to show some weakness as it is retreating from the top of a bearish rising wedge. The expectation of the pattern is a breakdown. The PMO is flat right now. Stochastics are still holding above 80 so there is still some residual strength for the moment.
UUP Weekly Chart: The weekly chart is very bullish. We have an upside breakout from a bearish rising wedge and a rising weekly PMO. The weekly RSI is overbought so a decline would be welcome to alleviate that condition.
UUP Monthly Chart: We have a very bullish monthly chart right now minus the overbought monthly RSI. The monthly PMO is rising strongly and we have another upside breakout from a bearish rising wedge. Longer-term the Dollar looks quite healthy but we do detect a little near-term weakness.
GOLD
IT Trend Model: NEUTRAL as of 12/23/2024
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold is in a holding pattern, consolidating sideways. It was unable to get above the 20/50-day EMAs so it is still somewhat weak. The PMO and Stochastics are flat. At least we see that Gold is starting to see a small rise in relative strength. The indicators are very flat and unresponsive right now which does imply we have more sideways movement ahead.
GLD Weekly Chart: Gold is now in high level consolidation after the parabolic arch was broken. It does look toppy in this timeframe and the weekly PMO is in decline so we aren't looking for a big rally, likely more churn.
GLD Monthly Chart: The parabolic arch was broken on the monthly chart as we would expect. This isn't much of a correction so we are likely to see some more decline or at the very least sideways consolidation. The monthly PMO is on the rise, but the breakdown takes away from that.
GOLD MINERS Daily Chart: With Gold in a holding pattern, so are the Gold Miners. Gold doesn't look ready to break out in a big way so we don't expect much from the miners. Support is currently holding, but given participation is so weak, there aren't any stocks to propel the group higher. Stochastics are below 20 indicating internal weakness as well.
GDX Weekly Chart: The rising trend was broken and price continues to head lower. The weekly PMO is declining sharply. At least we see that support isn't too far away at 32.
CRUDE OIL (USO)
IT Trend Model: BUY as of 12/24/2024
LT Trend Model: SELL as of 9/10/2024
USO Daily Chart: Gold is in a holding pattern and Crude Oil also is. It is in a tight little trading range. Today saw a bearish filled black candlestick. Price has struggled with the 200-day EMA. The indicators are slightly bullish with the RSI positive and Stochastics near 80. The PMO is also technically rising so maybe we'll see a test of resistance at 76.
USO/$WTIC Weekly Chart: Price has been in a trading range for years now. Likely many investors are waiting to see if we have "drill, baby, drill" for US production. That would likely take Crude down to the bottom of the range. For now we expect this sideways movement to continue.
WTIC Monthly Chart: Price is holding support on the $WTIC monthly chart. The monthly PMO is in decline so it is definitely vulnerable to a drop beneath support. If supply is increased, that will cause price to break support. Given the neutral daily and weekly charts, we are just waiting along with everyone else to see what happens to US production after inauguration day.
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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