Today the Regional Banking ETF (KRE) 20-day EMA crossed down through the 50-day EMA (Dark Cross), above the 200-day EMA, generating an IT Trend Model NEUTRAL Signal. The PMO had already dropped below the zero line. Participation is almost non-existent. The Silver Cross Index is tumbling lower. We do see support arriving and today's rally was encouraging, but internal weakness could mean a drop beneath that support level.
On the weekly chart, from the 2023 low, we can see a series of rising trend lines with ever-increasing angles of ascent--essentially a parabolic advance. The parabolic has broken down, and a correction is underway. We saw a new weekly PMO Crossover SELL Signal today.
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/SPX SECTOR/INDUSTRY GROUP INDEXES
Change Today:
Change for the Week:
CLICK HERE for Carl's annotated Market Index, Sector, and Industry Group charts.
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 rally that began yesterday saw upside followthrough. Price did top near the end of the day, but finished with a nice rally in the final 10 minutes of trading. The PMO is in decline so we could see some followthrough on the late day decline.
SPY Daily Chart: It hasn't been confirmed, but we do see the possibility of a bullish double bottom in the very short term. The PMO is still technically declining.
Stochastics did tip upward today. The VIX came very close to overcoming its moving average on the inverted scale. These are mildly bullish in the very short term. Notice that the relative strength line to equal-weight RSP is tilting back up. Mega-caps could come in and prevent a breakdown.
Here is the latest recording from 12/30. Click HERE to get the link to video library.
SPY Weekly Chart: The weekly chart shows a breakdown out of the bearish rising wedge. The pattern only calls for a breakdown, not how far it will move after the breakdown. Erin will often calculate the back end of the pattern's height and subtracts it from the breakdown point. That would set up strong support at 540. In the meantime, we do see a rising trend channel on the chart now so the possible decline may not reach that level. It could simply mean a decline to the rising bottoms trendline.
New 52-Week Highs/Lows: New Lows were very prevalent considering we had a more than 1% rally in the SPY. This is a negative divergence. The High-Low Differential turned up this week, but today it held the same reading.
Climax Analysis: There were two climax readings and one "almost" on the four relevant indicators today, which gives us an upside initiation climax. SPX Total Volume did not confirm, so it is a low confidence climax.
*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 OVERSOLD.
Swenlin Trading Oscillators (STOs) remain in decline in spite of today's rally. It could also be considered a negative divergence. We did see very good improvement to %PMOs Rising and some improvement in participation of stocks above their 20-day EMA. Both readings are still below our bullish 50% threshold so we don't want to get too excited.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERSOLD.
The rally was strong enough to push both the ITBM and ITVM higher. This is good news for the intermediate term and suggests if we do see a decline here it won't be overly painful. %PMO Xover BUY Signals finally had a positive crossover its signal line, but the reading is still very low at 18%.
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PARTICIPATION TABLES: The following tables summarize participation for the major market indexes and sectors. The 1-Week Change columns inject a dynamic aspect to the presentation. There are three groups: Major Market Indexes, Miscellaneous Industry Groups, and the 11 S&P 500 Sectors.
All of the IT Biases are now negative with some very negative. The two worst are Gold Miners (GDX) and Utilities (XLU). We must say that both of these entities look more bullish as they are beginning to rally again.
Retail (XRT) holds the best IT Bias, but we note that it lost ground on both the Silver Cross Index and Golden Cross Index.
This table is sorted by SCI values. This gives a clear picture of strongest to weakest index/sector in terms of intermediate-term participation.
The highest Silver Cross Index reading is only 59%. The market internals are still very weak and this is indicative of that.
Only two gained strength on the Silver Cross Index and that was Energy (XLE) which is seeing a resurgence and Gold Miners (GDX) which are also beginning to rally again with Gold.
This table is sorted by GCI values. This gives a clear picture of strongest to weakest index/sector in terms of long-term participation.
Financials (XLF) and Regional Banks (KRE) are at the top of the Golden Cross Index table as these areas saw excellent rallies out of the election. Both lost ground on their Silver Cross Indexes so they are beginning to weaken.
Semiconductors (SMH) holds the lowest Golden Cross Index value as they are in a 'go nowhere' pattern. The Silver Cross Index is also very low so we aren't looking for much to come out of this group.
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 of stocks above their 20/50-day EMAs is oversold and we are starting to see some improvement. It is going in the right direction, but the readings themselves are still very weak. We have negative divergences on both the Silver Cross Index and Golden Cross Index going into the last price top. That does imply we will see more downside from here, but this could be all we get.
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: It took the last day of holiday trading to get a good rally. It was forceful enough to give us a mild upside initiation climax and set up a bullish double bottom in the short term. The ITBM and ITVM turned up and participation is beginning to expand. However, we did see some negative divergences with the rally today. We had quite a few New Lows come in and STOs are still declining. Given the strength of the rally we do see the possibility of another leg up. However, those negative divergences today and declining STOs tell us the market is still vulnerable. We are mostly pessimistic given how overbought the market is and how weak the internals still are, but mega-caps could begin bailing the market out once again. Erin opted to sell into strength today but avoided shorting for now.
Erin is 15% long, 0% short. (This is intended as information, not a recommendation.)
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CALENDAR
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BITCOIN
Bitcoin Daily Chart: Bitcoin still has a bearish topping look, but we are getting a nice bounce off support once again. We will know the veracity of the rally if we get a breakout. The PMO is neutral, but Stochastics look very bullish. We're looking for a breakout.
Bitcoin Weekly Chart: This is working as high level consolidation right now, easing the vertical rally. The weekly PMO is still on the rise so a renewed rally is possible, we just aren't thrilled with the toppy look on price for both the daily and weekly charts.
BITCOIN ETFs
Today:
This Week:
INTEREST RATES
Yields were back on the rise again today. Shorter-term yields are moving sideways again. Long-term yields are still in rising trends. The yield curve is getting back to normal as short-term rates continue to trend lower.
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 monitoring the big bearish rising wedge on $TNX that certainly puts a negative spin on the chart. However, support is still holding and the PMO has bottomed above the signal line. Stochastics tipped upward. We aren't expecting a breakdown here given the indicators. This is also looking like a bull flag.
10-Year Bond Yield Weekly Chart: We have a bullish breakout from a longer-term declining trend that implies more upside to come. The weekly PMO is confirming.
MORTGAGE INTEREST RATES (30-Yr)**
**We watch the 30-Year Fixed Mortgage Interest Rate, because, for the most part, people buy homes based upon the maximum monthly payment they can afford. As rates rise, a fixed monthly payment will carry a smaller mortgage amount, which shuts many buyers out of the market, and potential sellers will experience pressure to lower prices (to no effect so far).
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This week the 30-Year Fixed Rate changed from 6.85 to 6.91.
Here is a 50-year chart for better perspective.
BONDS (TLT)
IT Trend Model: NEUTRAL as of 11/10/2024
LT Trend Model: SELL as of 12/13/2024
TLT Daily Chart: Longer-term rates are beginning to look bullish and that is going to put a strain on TLT. It has been trying very hard to rally, but continues to struggle beneath resistance. The PMO is in decline and Stochastics are firmly below 20, both of which suggest we won't get much upside.
This is turning into a strong support level for TLT, but a strong 20-year yield could mean a breakdown ahead.
TLT Weekly Chart: The weekly PMO is now below zero and the weekly RSI is in negative territory. We have a declining trend on TLT and a rising trend on the 20-year yield. Support is available at 85 and we believe it will be tested.
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 pulled back today, but remains above the bearish rising wedge. The upside breakout yesterday was especially bullish for the Dollar. Today's decline took the RSI out of overbought territory. The PMO is still rising and is flat above the zero line suggesting pure strength. The bearish formation is there, but the rising trend is getting steeper also suggesting strength.
UUP Weekly Chart: The rising trend is rather steep but very bullish right now given the rising weekly PMO. The weekly RSI is the big problem as it is very overbought. So far that hasn't been a problem, but over time that condition will need to be cleared and that would mean a break of the rising trend.
GOLD
IT Trend Model: NEUTRAL as of 12/23/2024
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold did not take advantage of a falling Dollar today. Price is still holding above the 20/50-day EMAs and the PMO is giving us a Crossover BUY Signal. Stochastics just hit positive territory. Gold is still holding its own as far as relative strength to the Dollar as it is running flat.
Price is stuck in a sideways trading range, but it appears ready to challenge the two previous highs. A weaker Dollar would help given the correlation is negative between Gold and the Dollar. Unfortunately the Dollar isn't exhibiting any weakness so it will probably be slow going for Gold.
GLD Weekly Chart: We saw the parabolic breakdown that resulted in a pullback. It may not be through given the declining weekly PMO, but near-term support is available and for now we expect it to hold.
GOLD MINERS Daily Chart: Gold Miners are looking very interesting right now as they attempt to improve internals. Gold looks mildly bullish right now so we should expect to see this rally continue a bit longer. We saw excellent improvement to participation yesterday, but today's decline did take it down a notch. Stochastics are on the rise and the PMO is nearing a Crossover BUY Signal so we see more upside available to Gold Miners. We aren't looking for an extended rally yet given Gold is still ultimately moving sideways in a trading range.
GDX Weekly Chart: The weekly chart shows a breakdown from the bullish rising bottoms trendline. Support is nearing at 32.00, but the weekly PMO is declining in earnest. We need to see the declining trend challenged if not broken soon.
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 was off to the races this week and looks very bullish. We do have a strong resistance zone arriving soon and the RSI is now overbought so consolidation or a pullback could be approaching.
The longer-term declining tops trendline has been broken this week and does suggest we will see a move toward resistance at 82.
USO/$WTIC Weekly Chart: There's not much to see on the weekly chart as we have an extended trading range in effect. Price does look ready to challenge prior tops. The weekly PMO is rising on a Crossover BUY Signal, but admittedly it is sitting very close to the zero line. This seems in line with a neutral trading range, but because it is angling up currently, we'll look for the top of the range to be tested.
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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