The majority of the Magnificent Seven charts are weakening and that will likely spell trouble for the market as a whole. We reviewed the charts and found that at least Apple (AAPL) is reaching a strong support level. The indicators look terrible so we have doubts about the integrity of this support line. The RSI is in negative territory and the PMO is declining rapidly. Stochastics did turn up but they remain in very weak territory below 20 which signifies internal price weakness. The 50-day EMA is also here for support, but we do wonder about the ability of AAPL to avoid a breakdown here.
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: Trading was choppy most of the day with price staying in negative territory for much of the day. However, the large volume positive finish gave the market an opportunity to close higher on the day. The declining trend has been broken, but trading was clearly shaky today.
SPY Daily Chart: The bullish double bottom pattern will be busted if price drops below the bottoms and given the PMO decline, it isn't out of the question. If mega-caps continue to weaken, it is likely that the market will lose that support level.
The VIX is below its moving average on the inverted scale so we do detect weakness. Total volume was on average. We did see Stochastics top in negative territory.
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S&P 500 New 52-Week Highs/Lows: We may've had a positive finish to the day, but much damage was done during the trading day as we saw a large number of New Lows. New Highs were barely there. The High-Low Differential topped beneath the zero line.
Climax* Analysis: There were no climax readings today. Net A-D Volume was negative on a positive trading 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 DOWN (Declining trend has not been broken) and the condition is NEUTRAL.
Considering we have a declining trend and sideways trading, it is somewhat surprising to see Swenlin Trading Oscillators (STOs) still rising. The STO-V even made it to positive territory today. We aren't putting too much emphasis here given other signs of weakness pervading the index. Participation did strengthen a bit and we did see more rising PMOs logged. Almost half of the index have rising PMOs which is encouraging.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERSOLD.
The ITBM and ITVM also rose on the day. It was an almost imperceptible change on the ITVM but it did finish higher not lower. We are seeing more PMO BUY Signals.
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 term timeframes.
Participation is improving. One third of the index are now above their 20-day EMAs. More work needs to be done but at least participation is expanding and not shrinking right now. The Silver Cross Index and Golden Cross Index are below their signal lines so the IT and LT Bias remains BEARISH. While we're seeing participation improving, it isn't enough to reverse either the Silver Cross Index or the Golden Cross Index.
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: Indicators are definitely mixed right now and to us that means the market is vulnerable. It is good to see STOs and the ITBM and ITVM moving higher, but the PMO is in decline as are Stochastics which topped in negative territory today. The High-Low Differential also topped today which is another problem that needs to be dealt with. We may've had a positive close but we saw Net A-D Volume negative. With problems developing on some of the mega-cap charts, the market is very vulnerable to a decline. At best we would expect more choppy trading. Tomorrow the market will be closed for the national day of mourning.
Erin is 30% long, 0% short. (This is intended as information, not a recommendation.)
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CALENDAR
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BITCOIN
Bitcoin is now testing support and looks particularly vulnerable right now given the now negative RSI and PMO top beneath the signal line. Stochastics are diving lower. We'll watch for an upside reversal on support, but suspect 85,000 will be tested before the rally gets going again.
BITCOIN ETFs
INTEREST RATES
Most yields were lower on the day but we did see the 10-year move higher. Longer-term yields look very bullish. Short-term yields are moving mostly sideways.
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 one of the few yields to move higher on the day. It had already broken from a bearish rising wedge which is especially bullish. If it moves much higher, we will see a rising trend channel and not a bearish rising wedge. The RSI is now overbought so it could be time for a breather. The PMO and Stochastics are very bullish so we don't expect a big decline, just a little sideways movement or small decline.
BONDS (TLT)
IT Trend Model: NEUTRAL as of 11/10/2024
LT Trend Model: SELL as of 12/13/2024
TLT Daily Chart: The 20-year yield was lower on the day affording TLT the opportunity to rally. It did nothing to improve the picture. We saw a lower high and a lower low today keeping the declining trend fully intact. The PMO is falling and the RSI is incredibly weak. Stochastics look particularly bad as they have flat lined below 20. We suspect there is more decline ahead.
The next level of strong support will arrive at 84.50 but we think that level is vulnerable.
DOLLAR (UUP)
IT Trend Model: BUY as of 10/9/2024
LT Trend Model: BUY as of 5/25/2023
UUP Daily Chart: We've updated the annotation of the rising wedge. It does put a bearish spin on the Dollar. For now it is looking healthy with a flat PMO above the zero line indicating pure strength. However, we are looking for the Dollar's rally to let up due to the bearish pattern.
GOLD
IT Trend Model: NEUTRAL as of 12/23/2024
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold is inching its way higher. It would probably have a much easier time of it if the Dollar would weaken. We still like Gold here. The new PMO BUY Signal is encouraging and Stochastics continue to rise. We are looking for the prior two tops to be tested.
Discounts are still very high meaning investors are quite bearish on Gold right now. This condition will many times be helpful to Gold, but we aren't seeing much out of it yet.
GOLD MINERS (GDX) Daily Chart: Yesterday's comments still apply:
"We are bullish on Gold so we have to be bullish on Gold Miners. We do have a PMO Crossover BUY Signal and participation is beginning to expand again. The Silver Cross Index is rising toward a Bull Shift across the signal line. Stochastics are also rising. It is very early and the declining trend is still intact so there is still downside risk."
CRUDE OIL (USO)
IT Trend Model: BUY as of 12/24/2024
LT Trend Model: SELL as of 9/10/2024
USO Daily Chart: Crude Oil is has been stopped by overhead resistance which has held strong. We still like the outlook for Crude Oil and we are seeing a nearing Golden Cross of the 50/200-day EMAs. The PMO is still looking pretty good but Stochastics have topped. It may continue to move sideways as it builds momentum for a breakout. It is a bearish engulfing candlestick today so the decline could continue Friday.
The top of the longer-term trading range won't arrive until about 83.
Good Luck & Good Trading!
Erin Swenlin and Carl Swenlin
Technical Analysis is a windsock, not a crystal ball. --Carl Swenlin
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