NVDA has been sliding quickly lower and the Price Momentum Oscillator (PMO) has felt the pain. Today it crossed below its signal line for a Crossover SELL Signal. On the bright side, strong support is arriving and today we saw a bullish hollow red candlestick. However, the rest of the chart is breaking down. The RSI is negative and Stochastics are diving lower in negative territory. Relative strength for the group is falling and NVDA is not showing leadership among the group as the relative strength line of NVDA to the group is trending lower. NVDA, as we would expect, is underperforming the SPY. Support is definitely vulnerable at this level.
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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: It didn't look good for the market on the open today and price spent most of the day in negative territory. However, losses were ultimately cleared by the last 10 minutes of trading. The 10-minute PMO is on the rise and could mean higher prices tomorrow.
SPY Daily Chart: The double bottom was busted with today's drop beneath the confirmation line. We also believe that a bullish triple bottom is going away with the decline we saw today. We have a bearish rounded top. The PMO has entered negative territory.
Stochastics are almost in their weakest territory below 20 and the VIX is below its moving average on our inverted scale. There is still internal weakness visible. Notice also that mega-caps are beginning to underperform the broad market. That will make it difficult for this price level to be held, particularly if the broad market doesn't come on board.
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S&P 500 New 52-Week Highs/Lows: New Lows are still rather high and New Highs contracted. The High-Low Differential looks particularly bearish as it has topped beneath the zero line and is still in decline.
Climax* Analysis: There were no climax readings today. After Friday's downside initiation climax, we got some downside follow through at today's open; however, the market (minus the Nasdaq) managed to claw back up by the close.
*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 back in decline and in negative territory. Considering the market was down most of the day, it is good to see some expansion in %Stocks > 20EMA. We even saw more rising PMOs.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERSOLD.
The ITBM turned back up today, but the ITVM is still declining. We saw a hair more PMO BUY Signals, but nothing exciting. The rising ITBM does give us some hope that an upside reversal could be nearing.
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 did inch higher on today's trading despite the market spending most of its time in negative territory. Readings are still far from healthy and are not robust enough to turn the Silver Cross Index and Golden Cross Index back up. If anything, they will continue to move lower. Both the Silver Cross Index and Golden Cross Index are below their signal lines so the IT and LT Biases are still 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 market managed a positive close and we did see participation expand very slightly. We saw slightly more rising PMOs and PMO BUY Signals. However, both the PMO and Stochastics on the SPY look bearish. We also have declining STOs. Mega-caps like NVDA are losing sway based on the decline of the relative strength line to equal-weight RSP and unless the broad market can swoop in, the market is likely to struggle to move higher. Today's reversal was certainly encouraging and with slightly more participation, it isn't out of the question that the market could push higher, however be ready, PPI is released tomorrow and now that economic reports seem to be at the forefront again, the market could see turbulence. Stay nimble.
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 broke support today but managed to close above it. The rounded top does suggest that we will see more downside ahead. The PMO is topping beneath the signal line which is especially bearish so we should prepare for more downside.
BITCOIN ETFs
INTEREST RATES
The Bond market certainly believes inflation will be sticky as yields continue to rise strongly. Long-term yields have overcome 2024 highs in some cases 2023 highs. We are expecting them to continue to rise. Very short-term yields will likely stagnate on the rate cuts already seen by the FOMC.
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
It was especially bullish to see $TNX bust out of the bearish rising wedge. It has established a steeper rising trend and based on the PMO and Stochastics, it should continue to move higher from here. The one thing that could hold it up would be that is very overbought based on the RSI. There is a clear need for a pause, but on the recent breakout above the 2024 high, it seems likely that it will ultimately keep rising from here. A small decline or even consolidation would help clear the RSI's overbought condition.
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 is angling higher and that is punishing TLT. We don't see any relief ahead given the bullish setup on yields in general. Bond funds are likely to continue moving lower. Indicators are highly negative, particularly Stochastics which have taken up residence below 20 indicating extreme internal weakness.
Support is arriving at 84.50, but it doesn't seem likely that it will hold that level given how bullish yields look.
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 attempting to break out above the bearish rising wedge. We had a bearish wedge previously and it saw an upside breakout, now it is happening again. The Dollar is extremely bullish. The PMO has been flat above the zero line for some time indicating pure strength. Stochastics are well above 80, but the RSI is overbought again. This is where we would expect to see a pause, but we don't see any indication of weakness on the chart right now.
GOLD
IT Trend Model: NEUTRAL as of 12/23/2024
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold is moving sideways with a melt up. With the Dollar looking so bullish, Gold will continue to move sluggishly and could see a break back down to support. The PMO is now above the zero line and currently the RSI is positive so we will look for more upside to test prior highs.
Discounts are beginning to pare back somewhat. They are still elevated, but the fact that they are moving lower tells us that investors are getting a bit bullish on Gold. That could help push it higher.
GOLD MINERS (GDX) Daily Chart: Today's decline in Gold hit Gold Miners hard. We are still cautiously bullish on Gold, but we don't like how participation is thinning again. The declining trend out of the October high is still intact. The Silver Cross Index had a recent Bull Shift across its signal line and with Gold still somewhat bullish, we will look for GDX to attempt to rally higher.
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 is off to the races. We thought we might see a pullback today given Friday's bearish filled black candlestick, but in bullish fashion, it exploded today. The indicators are very bullish. Where is the next line of resistance?
It is nearing the April high, but what is left after that? We have to look at the weekly chart.
Weekly Chart: This is very strong resistance that it is heading into, but there is room for it to move higher and push toward 93. However, this is the area where we would expect Crude to run into some trouble given such strong overhead resistance. We'll look for a breakout here for now, but wouldn't be surprised if it begins moving sideways or pulling back at this level.
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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