Today the Materials Sector ETF (XLB) 50-day EMA crossed down through the 200-day EMA (Death Cross), generating an LT Trend Model SELL Signal. Price lost support at the April/July/August bottoms and while it could find support at this level, the declining trend is still intact leaving XLB vulnerable to more downside. Participation is barely there and the Silver Cross Index is at a weak 14%.
The weekly chart shows that XLB has broken down from a rising wedge formation, and it is now approaching the support of a rising trend line. The weekly PMO is falling and is near the zero line, so there is no sign that price will find support.
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Also today, the Dow Junes Industrial Average ETF (DIA) 20-day EMA crossed down through the 50-day EMA (Dark Cross), above the 200-day EMA, generating an IT Trend Model NEUTRAL Signal. Price is finding support and has formed a bullish double bottom. Participation is still pretty thin and it is underperforming the SPY. The PMO is still in decline. While this looks encouraging, there is still more work to do to improve indicators.
The weekly chart shows DIA being comfortably above a rising trend line. The weekly PMO is problematic, but this rising trend should be preserved a bit longer.
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: The market opened with bang on a big gap up move. However, we do see that excitement lulled at lunchtime and price spent the rest of the day in decline.
SPY Daily Chart: We are now monitoring a bullish double bottom pattern. The PMO has turned up and does seem to suggest we will see some followthrough. We also have rising bottoms on the OBV.
Stochastics look very favorable on their upside reversal. The VIX still remains weak as it is mostly staying below its moving average on the inverted scale. We also still see a rounded top on price for the moment, but this rally should take care of that soon.
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S&P 500 New 52-Week Highs/Lows: New Highs made an appearance, but we still saw some New Lows. Good news is that the High-Low Differential has turned back up in oversold territory.
Climax* Analysis: There were no climax readings today. It should be noted that Net A-D was negative on a rally 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 OVERSOLD.
It was very positive to finally see Swenlin Trading Oscillators (STOs) turn up today. We would have liked to have seen more expansion in %Stocks > 20EMA, but at least it did expand; whereas, %PMOs Rising actually contracted on today's rally.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERSOLD.
It is very bullish to see both the ITBM and ITVM on the rise out of oversold territory. They do confirm the upside reversal in the STOs today. We saw a slight expansion in the number of PMO Crossover BUY Signals which was good given we saw fewer rising PMOs today.
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.
We may be near all-time highs, but internals are weak. We do have oversold conditions that could mean a good rally ahead should the rest of the index begin to rally with the mega-caps. The Silver Cross Index is still in decline along with the Golden Cross Index so internals are still technically breaking down. Both the Silver Cross Index and Golden Cross Index are below their signal lines which is why the IT and LT Biases are still reading as BEARISH. This doesn't mean we are in a bear market, only that the 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: Mega-caps are at it again, pushing the indexes higher with little improvement in participation for the broader market. Still this may be time to pivot given the last two days of rally, but we have to admit the market's finish to the trading day was not inspiring. Internals are weak and aren't seeing great improvement. In fact, we saw negative Net A-D and fewer rising PMOs. However, given the upside reversal in our STOs and currently oversold indicator conditions, we are going to look for some followthrough with a cautiously bullish stance. Should the market fail to keep the rally going, stops should be set for protection.
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 ready to test new all-time highs. The PMO has turned back up and Stochastics are above 80 again. The RSI is also positive and not yet overbought. Today's breakout is compelling.
BITCOIN ETFs
INTEREST RATES
Long-term rates are decoupling somewhat from short-term rates. Shorter-term rates are beginning to consolidate sideways, while longer-term rates are back on the rise. This is partly due to the Fed lowering its short-term funds rate.
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 bouncing off support and is hugging the top of a bearish rising wedge. While the pattern is bearish, we have to admit that $TNX doesn't look bearish on this move off support. The PMO is still technically rising and Stochastics turned back up above 80 so we are looking for the yield to continue to inch higher.
BONDS (TLT)
IT Trend Model: NEUTRAL as of 11/10/2024
LT Trend Model: SELL as of 12/13/2024
TLT Daily Chart: With long-term yields back on the rise, Bond funds are going to struggle and TLT is no exception. Support has been lost from the tight sideways move. The PMO is still in decline and the RSI is very negative. Stochastics are flat below 20 signifying strong internal price weakness.
The next level of strong support doesn't arrive until 84.50.
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 has dropped back within the rising wedge formation. If we redraw the top of the wedge using the last price top, it would still be a bearish rising wedge. We are looking for weakness in the Dollar. The PMO has topped suggesting we may finally see the Dollar break its rising trend.
GOLD
IT Trend Model: NEUTRAL as of 12/23/2024
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: The Dollar was down and so was Gold. It did not take advantage of the Dollar's strong decline. Instead it remains in a sideways trading range. The indicators are getting bullish again with a new PMO Crossover BUY Signal in the making and rising Stochastics. We are bullish on Gold given the indicators so we will look for a test of the top of the trading range. A breakout from there? We don't want to get ahead of ourselves.
The sentiment ground is fertile as we see very large discounts suggesting investors are still very bearish on Gold. Sentiment is contrarian so we continue to look for this condition to produce a good rally.
GOLD MINERS (GDX) Daily Chart: Gold Miners pulled back with Gold today. We are bullish on Gold so we have to be bullish on Gold Miners. It is still very early and we did see participation sucked out of the group on today's decline. The declining trend is still intact as well. We will be cautiously bullish on GDX, but think it is probably too early to bank on a big rally right now given the declining trend.
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 formed a bearish engulfing candlestick today which implies we could see another decline. The hope is that more demand from AI processors will continue to push Oil prices higher. At the same time we have a president-elect set on drilling domestically. For now price is reaching a strong resistance zone, but given the rising PMO and strong Stochastics, we believe it will be able to push through.
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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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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