The SPY is making new all-time highs, but we can see on the Dow Industrials (DIA) that price is in a declining trend. Participation is still in a declining trend for stocks above their 20-day EMAs and is flat for stocks above their 50-day EMAs. There is improvement on Stochastics, but notice that these mega-cap names are underperforming the SPY. We have a new PMO Crossover SELL Signal in progress.
The long-term picture is still fairly bullish as we see a rising trend channel. However, price is vulnerable to a downturn that could bring price to the bottom of the channel. The weekly PMO is on a Crossover SELL Signal.
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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 stayed on a steady rising trend after opening lower on the day. The 10-minute PMO is back to rising and Stochastics tipped up.
SPY Daily Chart: Another all-time high was reached today. The PMO continues to rise and based on the RSI, price is not overbought. The OBV does need to move higher as it currently shows a negative divergence with price tops.
The VIX is holding steady as we continue to see a lack of volatility. Stochastics look bullish as they are above 80. Mega-caps are still underperforming based on the downtrend of the relative strength line to equal-weight RSP. The index tends to struggle when these guys underperform.
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S&P 500 New 52-Week Highs/Lows: New Highs contracted again on the rally, but we did see fewer New Lows. The High-Low Differential looks bullish as it rises after bottoming above the zero line.
Climax* Analysis: There were no climax readings today.
*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) continue to rise bullishly, but we do note that the STO-V has reached overbought territory. It has more room to move higher, but this needs to be monitored. We continue to see the declining trends broken on %Stocks > 20EMA and %PMOs Rising. We didn't see much expansion on today's rally, but these readings could be considered mildly bullish.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
The ITBM and ITVM are rising strongly and we are seeing slightly more PMO Crossover BUY Signals within the index.
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.
We like this expansion in participation which is taking out declining trends. The Silver Cross Index is rising, but does need a higher reading. 55% is above our bullish 50% threshold, but just barely. The Golden Cross Index has stalled and given we have about the same number of stocks above their 200-day EMA, it is likely to stagnate further. The Silver Cross Index is above its signal line so the IT Bias is BULLISH, while the Golden Cross Index is below its signal lines 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 have all but one member of the Bias Table above on Bull Biases. The STOs and ITBM/ITVM are rising strongly. Participation is expanding and has broken declining trends. The PMO is rising and Stochastics look good. Yesterday's upside exhaustion climax turned out to be more of an initiation than an exhaustion. At this point, we should look for higher prices, but we are troubled by the OBV negative divergence and lack of participation by the Dow Industrials. We also have a declining trend on MAGS, the Magnificent Seven ETF which is not making all-time highs with the SPY. The broad market needs to pick up the slack if mega-caps start to weaken. Based on expansion in participation, that may be happening. It needs to.
Erin is 15% long, 0% short. (This is intended as information, not a recommendation.)
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CALENDAR
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BITCOIN
Yesterday's comments still apply:
"The double top on Bitcoin is a problem particularly given we are in a declining trend that started at that second top. The confirmation line of the pattern will likely be tested soon and based on the declining PMO and Stochastics (as well as a negative RSI), it is likely to see a breakdown at around 90,000."
BITCOIN ETFs
INTEREST RATES
Yields rose again today, but as noted yesterday, most remain in declining trends so there is more work to do.
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 do see a small rising trend off support at 4.4%, but it just isn't taking advantage yet. Stochastics did tip up and the PMO does look like it is bottoming. We can't get that bullish yet. More than likely we will see more gyrations sideways. We'll watch for a melt up.
BONDS (TLT)
IT Trend Model: NEUTRAL as of 11/10/2024
LT Trend Model: SELL as of 12/13/2024
TLT Daily Chart: TLT managed a small rally today, but it didn't really make much headway as we had a lower high and a lower low. The small double top formation is still there. The PMO is flat on the zero line and Stochastics did top. At the same time the RSI is now positive again. We see downside pressure likely to be applied given we do see a short-term rising trend on the 20-year yield.
The large declining trend channel does put a negative spin on Bonds right now.
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 reversing off the confirmation line of the bearish double top pattern. We don't think this will turn into a big rally based on the RSI and falling PMO. Stochastics did turn up, but remain very weak below 20. We continue to look for a breakdown.
GOLD
IT Trend Model: BUY as of 1/10/2025
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold continued to make its way higher in spite of a rising Dollar today. It is exceedingly bullish right now and given the very positive indicators and rising relative strength against the Dollar, it is likely to just keep moving up. However, the RSI is overbought again so a small decline or pause is in order.
Discounts spiked yesterday meaning that investors are more bearish on Gold now. Maybe this means we'll get that pause or small pullback soon.
GOLD MINERS (GDX) Daily Chart: The move on Gold Miners has begun to look toppy. Participation is slowly melting away and the PMO has topped. Stochastics have dropped below 80. Gold still looks very bullish and that should prevent a deep decline. However, if we do get that pause or pullback in Gold that is overdue, GDX will likely decline more deeply.
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 Oil looks more bullish than it has in some time. We now have a bullish double bottom on the chart and indicators are starting to show some improvement. The PMO hasn't bottomed yet and the double bottom pattern hasn't been confirmed, but this looks like a good setup to at least get some kind of rally going. Energy is starting to look bullish overall.
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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