Today the Semiconductor ETF (SMH) 50-day EMA crossed down through the 200-day EMA (Death Cross), generating an LT Trend Model SELL Signal. SMH is in trouble as it has already lost the short-term rising trend. Participation has been dealt a blow as %Stocks > 20/50/200EMAs are reading very low and have dropped significantly. Stochastics and the PMO have topped. It appears likely that the next two support levels will be tested.
The weekly chart shows SMH had a parabolic advance, then broke the parabolic. It is now in a high-level consolidation with up to a 30% range. The weekly PMO is falling fast so we should expect 200 to be tested.
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MARKET/INDUSTRY GROUP/SECTOR INDEXES
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THE MARKET (S&P 500)
IT Trend Model: NEUTRAL as of 3/4/2025
LT Trend Model: BUY as of 3/29/2023
SPY 10-Minute Chart: Today's decline started in the morning and never let up. We saw a slight rise to finish the day and the 10-minute PMO did have a Crossover BUY Signal. Stochastics also look favorable, but we don't hold out too much hope that tomorrow will bring higher prices.
SPY Daily Chart: The gap is about to be closed. Typically when the fill, you'll see a continuation in that direction. The PMO is already flattening out and is well below the zero line.
The VIX is on its way back down on our inverted scale and nervousness seeps back into the market. It is still above its moving average, but we don't like this deterioration. Stochastics are still robust and are about to cross above 80. This does allow bulls some hope that the rally isn't over yet. Mega-caps definitely took the market down as the relative strength line to RSP fell.
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S&P 500 New 52-Week Highs/Lows: We saw more New Lows as we would expect, but New Highs expanded on the decline. The High-Low Differential is now rising above the zero line again.
Climax* Analysis: There were no climax readings today. We do note that Net A-D was positive on today's decline.
*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) are both falling now which doesn't bode well for this rally. Interestingly we saw a slight expansion in participation and a few more rising PMOs.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL.
The ITBM and ITVM are still rising which does give us the impression that a follow-up decline may not be too painful, but we are not bullish in the intermediate term right now. We did see more PMO BUY Signals.
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 is still mediocre, but could support more rally. The Silver Cross Index is rising again toward its signal line. The Golden Cross Index is declining and should continue to do so given we have less stocks above their 200-day EMA. 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: Mega-caps clearly were responsible for today's big decline. The relative strength line turned over against equal-weight RSP which is a problem for the market. Net A-D was actually positive and we saw a slight increase in stocks above their 20-day EMAs. New Highs also made an appearance. However, if mega-caps are going to begin correcting again, the market will fall. There are a mediocre number of stocks above key moving averages. The STOs are declining and the PMO looks vulnerable below the zero line. This has the earmarks of a bear market rally. We are expecting to see the market lose the current rising trend.
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 is struggling to get out of its declining trend. The indicators are suggesting it will happen as the RSI just moved into positive territory and the PMO is rising. Stochastics did tick down which isn't encouraging, but they are still holding above 80 so there is some internal strength to be had. We're cautiously bullish.
BITCOIN ETFs
INTEREST RATES
Long-term yields are on the rise and we expect that to continue a bit longer given the rising trends. Short-term yields are still in consolidation mode, but if longer-term rates continue to rise, we do expect these will eventually follow suit.
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 was higher on the day but is still holding below gap resistance. It is also still traveling in a bearish rising wedge. However, we like the indicators here and do think we will see it rise a bit further. The RSI is now in positive territory and the PMO is rising on a Crossover BUY Signal. It is below the zero line so it isn't a huge vote of confidence, but coming on alongside Stochastics which are above 80 now, we think it is bullish.
BONDS (TLT)
IT Trend Model: BUY as of 2/25/2025
LT Trend Model: SELL as of 12/13/2024
TLT Daily Chart: For bulls, maybe we are seeing a build out of the handle on this bullish cup with handle formation. It does appear that it has further to fall. Stochastics just dropped below 20 and the PMO is falling. We see a double top now in the 'handle' and price dropped below the confirmation line of the pattern. The double top pattern suggests we'll see a drop below 87.
Here's the double top annotated.
DOLLAR (UUP)
IT Trend Model: NEUTRAL as of 3/5/2025
LT Trend Model: BUY as of 5/25/2023
UUP Daily Chart: The Dollar is now working on filling the gap. This looks like a good bottoming formation and now we have a new PMO Crossover BUY Signal. Stochastics have jetted above 80. We should see more upside on the Dollar.
GOLD
IT Trend Model: BUY as of 1/10/2025
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold was down very slightly today. We are very bullish on Gold in the intermediate and long terms, but short term, it does need more consolidation or pullback. With the Dollar looking more bullish, it is likely to experience downside pressure. The PMO is nearing a Crossover SELL Signal and $GVZ has punctured the upper Bollinger Band again. Relative strength is also fading against the Dollar. Look for Gold to churn or pull back.
Discounts have gotten higher meaning investors are more bearish on Gold right now. That would play right into a decline for Gold.
GOLD MINERS (GDX) Daily Chart: Gold Miners are consolidating their last rally and are forming a bull flag. We still see Gold struggling near-term so we expect the same from Gold Miners. They could use a pullback, but participation is still incredibly high and the Silver Cross Index is nearing 100%. Look for GDX to churn or pullback alongside Gold.
CRUDE OIL (USO)
IT Trend Model: NEUTRAL as of 2/27/2025
LT Trend Model: SELL as of 3/18/2025
USO Daily Chart: Crude Oil has now reached horizontal resistance and could stumble here. The indicators are looking fairly bullish. The PMO is now rising toward the zero line and appears to indicate new strength now, not just diminishing weakness. Stochastics did top though so we aren't that bullish, but ultimately it does appear that we'll get a bit more upside here.
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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