Gold (GLD) closed at a new, all-time high today. More comments in the GOLD section below.
Today the Health Care Sector (XLV) 20-day EMA crossed up through the 50-day EMA (Silver Cross), generating an IT Trend Model BUY Signal. Price has hit overhead resistance, but it appears it will break out. The Golden Cross Index just had a Bull Shift across the signal line. Participation is robust with the Silver Cross Index rising. Stochastics are above 80 and the PMO is rising strongly.
The XLV weekly chart shows the weekly PMO turning up from what has proven in the last five years to be very oversold levels. We got a rally above resistance. If price turns down here we would have a head and shoulders, but it does look like it will attempt to recapture all-time highs.
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 churned today, but did finish with a nice close to end the day. The 10-minute PMO did just have a negative crossover so we could see lower prices at the open.
SPY Daily Chart: Price is still essentially churning, but we do have a slight rising trend off the 50-day EMA. The PMO is still rising. We had solid volume behind the rally.
The VIX is back above its moving average on the inverted scale implying that investors are comfortable with market conditions. Stochastics tipped back up and are back above 80.
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S&P 500 New 52-Week Highs/Lows: New Highs expanded a great deal today which is very positive, but we did see quite an expansion in New Lows as well. The High-Low Differential is rising and is not at all overbought.
Climax* Analysis: There were two climax readings (and two "almosts") on the four relevant indicators today, which assess as being an upside exhaustion climax. SPX Total Volume was solid and confirming.
*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) were mixed today. The STO-B turned back up which is very positive, but the STO-V is not confirming yet. Participation expanded as we would like and we saw more rising PMOs within the index.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
The ITBM and ITVM rose strongly today. They are definitely beginning to get overbought. We had the same amount of PMO BUY Signals today as we did yesterday. 81% is a good number, but it is overbought.
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 inched higher as we would expect on a rally day. The Silver Cross Index managed to reverse higher. It should continue to rise given we have so many more stocks above their 20/50-day EMAs versus the percentage of stocks with a Silver Cross. The Golden Cross Index also managed to turn back up today, but its upside potential is limited given the amount of stocks above their 200-day EMA is very close to the Golden Cross Index reading. The Silver Cross Index is above its signal line so the IT Bias is BULLISH. The Golden Cross Index 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: We saw the STO-B turn up today which is good news, but it is tempered by the upside exhaustion climax that triggered. Participation is staying healthy and the Bias Table above looks bullish so the market could certainly get back up to all-time highs again, but given today's climax, we think we'll see more churn first. Price could continue to melt up in the process. Apple (AAPL) reported after the bell today and is currently up +2.89% in after hours trading. This could goose the market tomorrow as more earnings come in. Ultimately the trend is up and the condition is neutral based on our primary indicators.
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 is tightening up its trading range. We could be seeing accumulation so we are looking for an upside breakout. The PMO is still on a BUY Signal and has flattened out so we could get a PMO bottom above the signal line which would be very bullish. Stochastics have turned up in positive territory. For now we expect more sideways action, but are waiting for a breakout.
BITCOIN ETFs
INTEREST RATES
Yields pulled back and are likely to continue losing ground and new declining trends have set in.
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 has now reached the rising bottoms trendline. Given the drop beneath the neckline of the head and shoulders pattern, we would expect a breakdown here not a breakout. The RSI is negative and the PMO is declining rapidly. Stochastics did turn back up, but they are well below 20 indicating internal weakness.
BONDS (TLT)
IT Trend Model: NEUTRAL as of 11/10/2024
LT Trend Model: SELL as of 12/13/2024
TLT Daily Chart: Yesterday's comments still apply:
"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: We've been looking for a correction of some sort on the Dollar but it is just too strong right now. We are now considering a bull flag formation that would imply this rally will get legs. The PMO isn't on board yet, but Stochastics have begun to rise.
GOLD
IT Trend Model: BUY as of 1/10/2025
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold hit a new all-time high today. We thought it might take more effort, but instead we got a nice gap up move. This does leave us vulnerable to a reverse island formation that would imply we'd get a gap down move, but for now the chart is very bullish. We especially like Stochastics which have turned up above 80.
The relative strength line to the Dollar is rising so a stronger Dollar may not hurt Gold as much as it normally would, but the correlation is back to inverse so we'd prefer to see the Dollar weaken not gather strength on its possible bull flag formation.
GOLD MINERS (GDX) Daily Chart: The recent Silver Cross BUY Signal suggests we will see followthrough on today's rally. With Gold making a new all-time high, it wasn't surprising to see a strong rally out of Gold Miners. Participation can't get much better than it already is. The Silver and Golden Cross Indexes are rising above their signal lines so we have BULLISH Bias in the IT and the LT. Stochastics are bottomed above 80. Today's breakout should see more upside. But, we do need to monitor the Dollar closely as it could spoil the party.
CRUDE OIL (USO)
IT Trend Model: BUY as of 12/24/2024
LT Trend Model: BUY as of 1/10/2025
USO Daily Chart: Yesterday's comments still apply:
"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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