Investors weren't surprised that the FOMC is going to leave rates unchanged. What was somewhat of a concern was indications that inflation isn't under control (they omitted that they were making progress on inflation) leaving a hawkish tone that was unwelcome.
Today the Gold Miners ETF (GDX) 20-day EMA crossed up through the 50-day EMA (Silver Cross), generating an IT Trend Model BUY Signal. We'll discuss this chart in more detail in its section, but we can say that we are bullish.
GDX is near the top of a years-long trading range. Price is making its way higher from a support zone. The weekly PMO has turned back up.
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: Price was already on its way down before the FOMC rate decision. Volatility was added after the announcement that rates would stay the same, but as noted in the opening, comments did appear somewhat hawkish.
SPY Daily Chart: The PMO is still managing to rise, but price is essentially churning since the big gap down Monday. NVDA's loss of over 4% contributed to today's decline. We have declining tops on the OBV which does confirm this small declining trend.
The Bollinger Bands on the VIX have contracted quite a bit and now it leaves it open for a puncture in either direction. It closed above its moving average on the inverted scale which is positive. Stochastics however have now left territory above 80 and are still in decline suggesting the market is still vulnerable to decline.
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S&P 500 New 52-Week Highs/Lows: New Highs were still very visible on a decline. They did contract, but not by much. New Lows have made an appearance. The High-Low Differential is still rising, but did decelerate slightly today.
Climax* Analysis: There were no climax readings today.
*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 NEUTRAL.
The Swenlin Trading Oscillators (STOs) declined yet again today which definitely suggests there are problems. Participation shrank and we saw fewer rising PMOs. The broad market may be fading.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
The ITBM and ITVM did rise today, but just barely. We continue to see fewer PMO Crossover BUY Signals. These indicators look ready to top.
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 BULLISH in the intermediate term.
The market bias is BEARISH in the long term.
Participation continued to shrink across the board. The Silver Cross Index held the same value today. It wants to top, but we still have more stocks above their 20/50-day EMAs versus those with Silver Crosses, so we wouldn't be surprised if it resumes its rise. It is above its signal line so the IT Bias is BULLISH. The Golden Cross Index continued lower and will likely continue to given there are fewer stocks above their 200-day EMA versus Golden Crosses. It is beneath 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: The Bias Table above is showing mostly "Bull" statuses so there is still some strength visible. Participation however is slipping and Stochastics are dropping. The STOs continue to be a problem as they move lower close to negative territory. We are seeing the market churn right now. Big earnings were released after the close today. MSFT is down -4.92% in after hours trading. META is up very slightly and TSLA is up over +4.9%. With mixed readings here, it is anybody's guess on how the market will react tomorrow. We would look for more churn ahead as the market finds its footing on earnings. AAPL and AMZN report after the bell tomorrow. We should mention that AAPL showed up in one of the DP Diamonds scans today so it is configured positively.
Erin is 50% long, 0% short. (This is intended as information, not a recommendation.)
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CALENDAR
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BITCOIN
Bitcoin may be tightening its trading range as price did rebound of near-term support. The PMO is still in decline and is nearing a Crossover SELL Signal so this support level is tenuous at best. Stochastics have dropped into negative territory.
BITCOIN ETFs
INTEREST RATES
Yields were mixed again today. Only long-term yields saw a decline while others managed small gains. Rising trends are still intact on the 20/30-year yields, but they could come under fire soon.
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 monitoring the large bearish head and shoulders pattern on $TNX that tells us to expect a breakdown. If the pattern has technically been confirmed because the neckline is rising on the pattern. Stochastics are below 20 and the PMO is dropping. We should expect the rising trend to be compromised soon.
BONDS (TLT)
IT Trend Model: NEUTRAL as of 11/10/2024
LT Trend Model: SELL as of 12/13/2024
TLT Daily Chart: The is a bullish reverse head and shoulders on TLT that does imply we will see more rally out of Bonds. The pattern implies a minimum upside target that would take price to 91 or 92. We would be surprised if price moved much above that level. The indicators are bullish and favor an upside breakout from the current resistance zone.
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 again today and has now broken from the short-term declining trend channel. Stochastics are rising and the RSI just moved into positive territory. We could see more rally despite the falling PMO.
GOLD
IT Trend Model: BUY as of 1/10/2025
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold was down on the Dollar's rally. However, it was down further than the Dollar was up so we saw more sellers today. We're noticing that the relative strength line to the Dollar is declining so it may be slow going as price gets close to all-time highs. We are still bullish given the rising PMO and positive RSI, but are alert to a possible rally ahead for the Dollar.
GOLD MINERS (GDX) Daily Chart: We should expect more upside out of Gold Miners. Gold is still essentially bullish, though it may slow its progress now. The RSI is positive and the PMO is rising. The Silver Cross Index has bottomed above its signal line which is especially bullish. Participation is very strong and Stochastics are comfortably above 80. We expect the rally to continue for GDX, it just may see some hiccups if Gold struggles at all-time highs.
CRUDE OIL (USO)
IT Trend Model: BUY as of 12/24/2024
LT Trend Model: BUY as of 1/10/2025
USO Daily Chart: Crude Oil continues to make its way lower. Support is arriving soon, but given the very negative PMO Crossover SELL Signal and Stochastics dropping below 20, we don't think it will hold. Possible plays on declining Crude would be the inverse Energy ETF (ERY) or the inverse Crude ETF (DRIP). Be aware they are leveraged and hold extra risk.
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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