Today the Consumer Discretionary Sector (XLY) 20-day EMA crossed down through the 50-day EMA (Dark Cross), above the 200-day EMA, generating an IT Trend Model NEUTRAL Signal. Tariff talk isn't helping this sector, particularly Retail. Support was lost at the 2025 low. The PMO is falling in negative territory. Participation is below our 50% bullish threshold for %Stocks > 20/50EMAs. New support is arriving and we did see a higher high and higher low today, but ultimately we do expect more downside here.
We have a large bearish double top on the weekly chart that has been confirmed with the drop below the confirmation line. The weekly PMO is declining on a Crossover SELL Signal. This doesn't look good.
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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 was up to start the day, but steadily lost ground. We do have a bullish double bottom on price right now and the 10-minute PMO is crossing its signal line suggesting we could see some followthrough on the late day rally.
SPY Daily Chart: Today we do have a bearish filled black candlestick so the bullish indications on the 10-minute bar chart may only result in churn rather than a sustained rally. It is encouraging to see this support level hold, but the PMO is still in decline and the RSI remains negative.
The VIX penetrated the lower Bollinger Band on the inverted scale again. This does suggest the possibility of a rally, but more than likely it won't catch hold given Stochastics have dropped below 20. Notice that the relative strength line to RSP tipped upward. When mega-caps participate, the market usually rallies given the capitalization of the SPY.
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S&P 500 New 52-Week Highs/Lows: New Highs pulled back on the rally, but conversely we only saw one New Low. The High-Low Differential continues to rise bullishly.
Climax* Analysis: There were no climax readings today. We have been reflecting on yesterday's market action. We had what looks like a bottom on SPY, but there was nothing close to climactic internals. SPX Total Volume was solid, but not at blowout levels that would suggest that a bottom was in. Today we got churn, which we think is just part of a pause before the decline continues. Notice that Net A-D was negative on the rally.
*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 declining in negative territory now. The STO-V is getting near-term oversold. The biggest issue on the chart are the numerous negative divergences with price. As we would expect, we lost some participation and rising PMOs.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
The ITBM and ITVM are also declining which gives us a more bearish outlook in the intermediate term. %PMO Xover BUY Signals dropped below our bullish 50% threshold.
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 intermediate-term market bias is BULLISH.
The long-term market bias is BEARISH.
Participation of stocks above key moving averages show negative divergences with %Stocks > 20/50EMAs reading below the bullish 50% threshold. The Silver Cross Index did turn up, but we aren't expecting that condition to continue given the low readings in participation. It is holding above its signal line for now so the IT Bias is BULLISH. The Golden Cross Index is also rising, but isn't likely to for much longer given there are fewer stocks above their 200-day EMAs versus Golden Crosses. 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 discussed the possibility of a rally in yesterday's DP Alert and we got it. The filled black candlestick today does suggest the rally won't continue tomorrow. We don't like the Bearish Biases on our Bias Table above and key indicators are moving lower not to mention the many negative divergences peppering the charts. Given price is bouncing off support, we suspect we will see some churn as the market attempts to avoid a drop below support. NVDA reported earnings after the bell and is currently down -0.12% in after hours trading so we don't see a shake up heading into trading tomorrow.
Erin is 10% long, 0% short. (This is intended as information, not a recommendation.)
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CALENDAR
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BITCOIN
Bitcoin is correcting out of the bearish double top. Support was lost at 85,000 and the 200-day EMA today which suggests we will see it drop even further from here. The RSI is now in oversold territory which generally leads to upside reversals, but that condition can persist in a lengthy decline which is what we suspect will happen here given the intensity of the breakdown. Stochastics have dropped below 20 adding insult to injury. Next line of support is at 75,000. That would be the minimum downside target of the double top pattern.
BITCOIN ETFs
INTEREST RATES
Yields are declining quickly and at this point we don't expect that to change. Bond funds will continue to enjoy more upside.
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 dropped below another line of support. The indicators are very bearish so we are looking for a drop to 4.1%.
BONDS (TLT)
IT Trend Model: BUY as of 2/25/2025
LT Trend Model: SELL as of 12/13/2024
TLT Daily Chart: TLT is making a nice run toward overhead resistance at 94. We suspect it will get there after the recent Silver Cross of the 20/50-day EMAs. The RSI isn't overbought yet so we see more rally to come. We didn't think it was going to amount to much but with yields looking exceedingly bearish, we have to expect more upside from Bond funds.
We now have a breakout from the longer-term declining trend channel which does imply more upside to go. 92.50 is arriving as overhead resistance, but we would look for price to get back to about 94 before turning back down.
DOLLAR (UUP)
IT Trend Model: BUY as of 10/9/2024
LT Trend Model: BUY as of 5/25/2023
UUP Daily Chart: Yesterday's comments still apply:
"The Dollar refuses to breakdown. Given the large bearish double top and the broken confirmation line of the pattern, we continue to wait for that breakdown. The PMO is now in negative territory and Stochastics are camped out below 20 indicating extreme weakness."
GOLD
IT Trend Model: BUY as of 1/10/2025
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold is on strong horizontal support and is currently holding the rising trend. The Dollar looks very bearish and that will work in Gold's favor. However, we do note that the PMO has topped and is nearing a Crossover SELL Signal so we don't think the pullback in Gold is finished with just one down day. Note that Gold's relative strength to the Dollar is waning.
Discounts continue to pare back. This interestingly means that investors are more bullish on Gold. Sentiment being contrarian, that could be a problem. We expect some more decline on Gold barring the Dollar falling apart.
GOLD MINERS (GDX) Daily Chart: GDX is pulling back. We spot a large bearish double top chart pattern developing. This implies far more downside on Gold Miners. The PMO is on a new Crossover SELL Signal and the Silver Cross Index just had a Bearish Shift across the signal line. Participation is mediocre. We do see strong support arriving at the 50-day EMA and 38. We are thinking we'll see it broken.
CRUDE OIL (USO)
IT Trend Model: BUY as of 12/24/2024
LT Trend Model: BUY as of 1/10/2025
USO Daily Chart: Price lost support yesterday and is continuing to move downward. The PMO is now in negative territory as well as the RSI. Stochastics are below 20. We don't see any near-term support so we'll be looking for further decline.
Good Luck & Good Trading!
Erin Swenlin and Carl Swenlin
Technical Analysis is a windsock, not a crystal ball. --Carl Swenlin
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