In this video, Dave breaks down the three time frames in his Market Trend Model, reveals the short-term bearish signal that flashed on Friday’s close, relates the current configuration to previous bull and bear market cycles, and shares how investors can best track this model to ensure they’re on the right side of the market trends!

This video originally premiered on November 4, 2024. Watch on our dedicated David Keller page on StockCharts TV!

Previously recorded videos from Dave are available at this link.

It’s here! The SPY starts a period of favorable seasonality for the next six months. Carl takes us through his charts and explains favorable versus unfavorable periods of seasonality.

Carl covers our signal tables showing new weakness seeping in despite this period of favorable seasonality. The market looks toppy right now.

Today’s market overview covers the weakness that has been developing throughout the market. He also covers Gold, the Dollar, Yields, Bonds, Bitcoin, Gold Miners and Crude Oil among others!

Carl also walks us through the Magnificent Seven in both the short and intermediate terms. Which ones are holding up and which are showing signs of weakness?

Erin drops in on sector rotation discussing the breakdown of nearly all sectors. No sectors hold rising PMOs as of airing of the trading room.

The pair finish the program by looking at viewer symbol requests with an eye toward relative strength and momentum.

01:26 Seasonality Discussion

02:52 Bias Chart and DP Signal Tables

06:41 Market Overview

12:56 Magnificent Seven

19:54 Questions

23:44 Sector Rotation

29:45 Symbol Requests

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Technical Analysis is a windsock, not a crystal ball. –Carl Swenlin

(c) Copyright 2024 DecisionPoint.com

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.

DecisionPoint is not a registered investment advisor. Investment and trading decisions are solely your responsibility. DecisionPoint newsletters, blogs or website materials should NOT be interpreted as a recommendation or solicitation to buy or sell any security or to take any specific action.

Helpful DecisionPoint Links:

Trend Models

Price Momentum Oscillator (PMO)

On Balance Volume

Swenlin Trading Oscillators (STO-B and STO-V)

ITBM and ITVM

SCTR Ranking

Bear Market Rules

Good morning and welcome to this week’s Flight Path. Equities saw the “Go” trend remain in place this week but we saw weakness with a few aqua bars. GoNoGo Trend shows that the “NoGo” trend strengthened at the end of the week in treasury bond prices. U.S. commodities hung on to the “Go” trend and indeed we saw strength with bright blue bars. The U.S. dollar also remained in a “Go” trend but the indicator paints weakness with aqua bars.

$SPY Shows Weakness with a Pair of Aqua Bars

The GoNoGo chart below shows that we still have been unable to conquer the high from last month. This week saw price gap lower and weaker aqua bars return as price fell further. If we turn our attention to the oscillator panel we can see that after holding at the zero level for a few bars we have broken down into negative territory and volume has increased. We will watch closely to see if this further threatens the “Go” trend that is currently in place.

The longer time frame chart tells us that the trend remains strong but we see another lower weekly close this week after the Go Countertrend Correction Icon (red arrow) we recently noted above price. As price approaches the last high from the summer we will watch to see if it finds support. GoNoGo Oscillator is falling but still in positive territory so we will pay attention to what happens as it gets closer to the zero line.

Treasury Rates Remain in Strong “Go” Trend

Treasury bond yields saw the “Go” trend continue this week and after a couple of weaker aqua bars the week closed with strong blue “Go” colors after price made another higher high this week. GoNoGo Oscillator shows that momentum is still in positive territory but no longer overbought as it falls to a value of 3. We will look for support at the zero level if and when it gets there.

The Dollar Sees Weakness in “Go” Trend

We saw another Go Countertrend Correction Icon (red arrow) this week right after price made a new high. Since then we have seen consecutive aqua bars that demonstrate some trend weakness.  Price rebounded on Friday with a strong bar and so we will watch to see if the trend will strengthen as it approaches prior highs. GoNoGo Oscillator fell sharply but turned around at a value of 1 and so is now rising at a value of 3 confirming the “Go” trend in the price panel.

There is only one way to trade in a long-term uptrend: long. Forget about picking tops and breaks below short-term moving averages. Leaning bearish within a long-term uptrend is not a profitable strategy. Instead, we should lean bullish and use oversold conditions to our advantage.

In a long-term uptrend, I am only interested in oversold conditions because these provide setups to trade in the direction of the bigger trend. I ignore overbought conditions because it is normal to become overbought in an uptrend. Oversold conditions, on the other hand, occur after a pullback and this is an opportunity to partake in the long-term uptrend.

The chart below shows SPY with two momentum oscillators: RSI(10) and %B(20,2). I am using both to identify oversold conditions in a long-term uptrend. SPY is well above its rising 200-day SMA (blue line) so the long-term trend is clearly up. %B tells us the location of the close relative to the Bollinger Bands. The indicator dips below 0 when the close is below the lower Band and this is an oversold condition. RSI becomes oversold with a dip below 30.

On the chart above, we can see %B becoming oversold in mid April, late July and last week (green shading). RSI became oversold in mid April and early August, but has yet to become oversold here in early November. On the price chart, notice that SPY is trading near its 50-day SMA (pink line). Prior dips below the 50-day SMA marked pullbacks within the bigger uptrend, not the start of a bigger trend change.

Oversold conditions are not the signal. Oversold conditions simply serve as an alert to be on guard for a short-term reversal. Keep in mind that price can become oversold and remain oversold. Chartists, therefore, need a bullish catalyst to signal a change from oversold to strength. For RSI and %B, we can use their centerlines to identify an upturn in momentum. The chart below shows these centerlines as short red lines (50 for RSI and 0 for %B). 

A bullish signal triggers when RSI becomes oversold and then breaks above 50, while a bullish signal triggers when %B becomes oversold and then breaks above 0. The green arrows show breakouts in late April and mid August. %B became oversold last week and has yet to break above 0. Thus, it is still in oversold condition. RSI did not become oversold. I would like to see both become oversold and then look for the momentum breakouts.

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Highlights from Chart Trader (Weekly Reports/Videos):

November 1st Report: Stocks pulled back the last two weeks and we showed five breadth indicators to identify oversold conditions. We are also monitoring the September breakouts and key support levels for QQQ, MAGS, XLK and five other tech-related ETFs. Plus a bearish pattern in SMH. With recent pullbacks, we are seeing oversold conditions in two ETFs and bullish setups in two Healthcare stocks.

October 25th Report: The weight of the evidence remains bullish, but the surge in the 10yr Yield is concerning. We quantify the recent surge and show how stocks reacted to past surges. We continue to monitor the cup-with-handle breakout in SPY, as well as the triangle breakouts in QQQ and the tech-related ETFs. This report also featured trade setups in ETFs and stocks related to industrial metals.

Click here for ChartTrader access!

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The Nifty largely consolidated over the past five sessions but did so with a bearish undertone. The Nifty traded in a defined range and closed the week with a modest gain. Importantly, the index also stayed below its crucial resistance points. The volatility also expanded; the India VIX surged higher by 8.68% to 15.90 on a weekly basis. Given the ranged move by the markets, the trading range got narrower. The Nifty oscillated in a 363-point range; this was much less than the previous week. Following a largely consolidating but bearish setup, the headline index closed with a modest weekly gain of 123.55 points (+0.51%).

It was a four-day trading week as Friday just had a short one-hour symbolic ceremonial Mahurat Trading session. In the week before this one, the Nifty had violated and closed well below the 100-DMA which currently stands at 24669. The Index has also violated the 20-week MA placed at 24744. This makes the zone of 24650–24750 the most important market resistance area. So long as the Nifty stays below this zone, no trending and sustainable upmove shall occur in the markets. In other words, so long as the Nifty stays below this crucial resistance zone, it remains vulnerable to continued selling pressure. The most immediate support zone for the Nifty now stands at 23900; the markets would get weaker if this level is breached on the downside.

The global markets are expected to give a stronger handover; given this thing, the Indian markets may see a stable start to the week on Monday. The levels of 24450 and 24580 would act as immediate resistance points. The supports come in at 24120 and 23900.

The weekly RSI stands at 51.24; it remains neutral and does not show any divergence against the price. The weekly MACD is bearish and trades above the signal line.

The pattern analysis of the weekly charts shows strong momentum on the downsides for Nifty. The 20-DMA is showing a steep decline; it has already crossed below the 50-DMA and it is about the cross below the 100-DMA as well. This indicates strong selling pressure and has increased the possibility of the Nifty staying in an intermediate downtrend for some more time. The resistances have been dragged lower; technical rebounds, as and when they happen, would find resistance between 24650-24750 levels.

All in all, even if the Nifty gets a stable and firm start to the week, it is not out of the woods as yet. Any technical rebounds, as and when they take place, should be chased very cautiously. All up moves shall face resistance at the levels of 24600 and higher; there is a greater likelihood that these rebounds are likely to get sold into at higher levels. It is strongly recommended that leveraged positions must be kept at modest levels and all profits on either side must be guarded vigilantly. A highly cautious approach is advised for the coming week.

Sector Analysis for the coming week

In our look at Relative Rotation Graphs®, we compared various sectors against CNX500 (NIFTY 500 Index), which represents over 95% of the free float market cap of all the stocks listed.

Relative Rotation Graphs (RRG) do not show any major change in the sectoral setup. The Nifty Pharma, Services Sector, IT, and Consumption Indices are inside the leading quadrant of the RRG. Even though a couple of them are slowing down in their relative momentum, these groups are likely to relatively outperform the broader markets.

The Nifty FMCG and Midcap 100 index are the only two groups inside the weakening quadrant; they may also continue to slow down on their relative performance against the broader markets.

The PSU Bank Index, Realty, Infrastructure, Media, PSE, Auto, Energy, and Commodities indices are inside the lagging quadrant. Among these, the Energy, Auto, PSE, and Media Index may relatively underperform the broader markets. The rest are improving sharply on their relative momentum and may eventually improve their relative performance against the broader market.

The Nifty Bank, Metal, and Financial Services index are inside the improving quadrant and may continue improving their relative performance against the broader markets.

Important Note: RRG™ charts show the relative strength and momentum of a group of stocks. In the above Chart, they show relative performance against NIFTY500 Index (Broader Markets) and should not be used directly as buy or sell signals.  

Milan Vaishnav, CMT, MSTA

Consulting Technical Analyst

www.EquityResearch.asia | www.ChartWizard.ae

In this video from StockCharts TV, Julius begins by looking back at the completed monthly bars for October to assess the long term trends in the 11 S&P sectors. He follows that up with an updated view for SPY in coming weeks. After that, Julius looks forward using seasonality to find sectors that have strong seasonal tendencies and overlays them on a Relative Rotation Graph, in order to see whether these seasonals are aligning with current relative trends.

This video was originally published on November 1, 2024. Click anywhere on the icon above to view on our dedicated page for Julius.

Past episodes of Julius’ shows can be found here.

#StayAlert, -Julius

In this StockCharts TV video, Mary Ellen reviews the negative price action in the broader markets while highlighting pockets of strength. She shares how the rise in interest rates is impacting the markets ahead of next week’s FOMC meeting. Last up is a segment on how to use longer term charts to uncover long term winners and ride out short term volatility.

This video originally premiered November 1, 2024. You can watch it on our dedicated page for Mary Ellen on StockCharts TV.

New videos from Mary Ellen premiere weekly on Fridays. You can view all previously recorded episodes at this link.

If you’re looking for stocks to invest in, be sure to check out the MEM Edge Report! This report gives you detailed information on the top sectors, industries and stocks so you can make informed investment decisions.

After yesterday’s “trick,” investors received a “treat” at the end of the trading week, as the stock market regained its footing and bounced back a bit.

Even though the October nonfarm payrolls were much weaker than expected—up by 12,000 when the Dow Jones estimate was for an increase of 100,000 jobs—the market shook it off. The decline is attributed to Boeing’s strike and two major hurricanes. According to a recent Barron’s report, the Bureau of Labor Statistics survey responses were below average, so the data may be skewed. Unemployment is steady at 4.1%, and wages grew by 4.4% annually.

Stocks Bounce Back

The data doesn’t indicate the US economy is heading toward a recession. The major stock market indexes bounced back, with the Nasdaq Composite ($COMPQ) gaining the most after Thursday’s spooky selloff. However, Friday’s bounce didn’t change the Nasdaq’s big picture (see daily chart below).

FIGURE 1. NASDAQ COMPOSITE SHOWS DOWNSIDE MOVEMENT. Friday’s selloff didn’t change the technical picture. The index needs to close above its 21-day EMA to reverse the downside move.Chart source: StockCharts.com. For educational purposes.

The Nasdaq broke above its tight consolidation range on Monday, but, after Thursday’s selloff, it closed well below its 15-day exponential moving average (EMA). Friday’s rebound didn’t change the technical picture. The index went as high as the 15-day EMA, but closed below it in what resembles an inverted hammer, although it didn’t close lower than Thursday’s close.

There is a weakening in market breadth, as displayed by the breadth indicators—Bullish Percent Index, Percentage of Nasdaq stocks trading above their 200-day moving average, and the Advance/Decline Line—displayed in the lower panels.

Small Caps Ain’t Getting Much Love

With interest rate cuts already in play and with more to come, you would think that small-cap stocks would start getting some attention. But we haven’t seen that yet. Even though the S&P 600 Small Cap Index ($SML) broke above a trading range on the weekly chart, there’s not enough buying pressure to send the index into an uptrend.

FIGURE 2. SIDEWAYS FOR SMALL-CAP STOCKS. The high probability of a 25-basis-point interest rate cut at the next FOMC meeting isn’t helping small-cap stocks, which continue to trade in a consolidation.Chart source: StockCharts.com. For educational purposes.

Treasury Yields Jump

Yields fell after the weak jobs report, but that was short-lived. Treasury yields reversed and climbed higher, with the 10-year US Treasury yield closing at 4.36% on Friday (see chart below). $TNX is trading above its 15-day EMA. The question now is whether $TNX will reach its July 1 high.

FIGURE 3. 10-YEAR US TREASURY YIELD INDEX ($TNX) KEEPS ON RISING. $TNX has been on a steady rise since the end of September, when it broke above its 15-day EMA.Chart source: StockCharts.com. For educational purposes.

Treasury yields have been trending up after breaking above the 15-day EMA at the end of September. The rise in yields doesn’t help bond prices, which move in the opposite direction.

The iShares 20+ Year Treasury Bond ETF (TLT) has been trading below its 15-day EMA since September 19, and Friday’s price action was very bearish (see chart below).

FIGURE 4. BOND PRICES SINK. The iShares 20+ Year Treasury Bond ETF (TLT) has been cascading lower since mid-September when it broke below its 15-day EMA.Chart source: StockCharts.com. For educational purposes.

While Treasury yields climb, the economic data shows the economy is growing while the labor market is cooling. This supports the narrative of an interest rate cut. The CME FedWatch Tool shows a 99.7% probability of a 25-basis-point interest rate cut on November 7.

Next week could bring some volatile action to the market, although given the way the stock market has been acting in the last two weeks, there’s no telling what it will do. The best you can do is take it one day at a time.

End-of-Week Wrap-Up

• S&P 500 closed down 1.37% for the week, at 5728.80, Dow Jones Industrial Average down 0.15% for the week at 42,052.19; Nasdaq Composite closed down 1.50% for the week at 18,239.92
• $VIX up 7.62% for the week, closing at 21.88
• Best performing sector for the week: Communication Services
• Worst performing sector for the week: Real Estate
• Top 5 Large Cap SCTR stocks: Summit Therapeutics (SMMT); Reddit Inc. (RDDT); Ubiquiti, Inc. (UI); Applovin Corp. (APP); Carvana (CVNA)

On the Radar Next Week

• US Presidential Election
• October ISM Services PMI
• Fed Interest Rate Decision
• Fed Press Conference
• November Michigan Consumer Sentiment Index
• Earnings from Palantir Technologies (PLTR), Marathon Petroleum Corp. (MPC), Novo Nordisk (NVO), Arm Holdings (ARM), Gilead Sciences (GILD), Applovin Corp (APP), among many others.

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.

With the Magnificent 7 stocks struggling to hold up through a tumultuous earnings season, what sort of opportunities are emerging on the charts going into November?  Today we’ll break down some of the names we’ve included in our Top Ten Charts to Watch for November 2024.

Some of these charts are overextended, having already logged significant gains in the last month.  Others have already experienced short-term pullbacks and may provide actionable entry points around an ascending 50-day moving average.  Still others may be worth following less as an investment candidate, but more as a good measure of overall risk appetite for investors.

Let’s start with one of the sectors that I have found investors to be generally underweight, even though the relative performance has really begun to shine in recent months.

Stifel Financial Corp. (SF)

In my recent podcast interview with Ari Wald of Oppenheimer, we talked about emerging strength in the capital markets group, fueled by likely Fed rate cuts into early 2025.  Stifel Financial Corp. (SF) has made a new 52-week high pretty much every month in 2024, October included.

After recently pushing above the $105 level, the stock has now pulled back enough to bring the RSI back below the overbought level.  While the overbought condition speaks to the strength of the long-term uptrend, we can see that previous pullbacks in May and February featured a very similar configuration with price and momentum indicators.

This is the type of chart in a clear long-term uptrend of higher highs and higher lows.  But given the recent drop in the RSI after the October peak, I’d be looking for a tactical pullback which could provide a new higher low.  The 50-day moving average is often an area where this sort of pullback could occur, similar to frequent tests earlier this year.

Home Depot, Inc. (HD)

The chart of Home Depot (HD) may provide a perfect example of the “fat pitch” chart, marked by a short-term pullback within a long-term uptrend.  The stock broke above its March high around $390 in September, and after peaking around $420 the price has pulled back to that same pivot point.

This chart provides a clear illustration of the technical analysis concept of “polarity”, where resistance later becomes support.  Given that HD has pulled back to this pivot point around $420, as well as an ascending 50-day moving average, I’m inclined to label this as an actionable pullback within a long-term uptrend phase.  Also note the RSI just above 40, which is often the lower end of the range for RSI when the stock is in a bullish phase.

Alphabet Inc. (GOOGL)

The Magnificent 7 stocks all deserve our attention given their significant weights in our equity benchmarks.  But Alphabet (GOOGL) in particular may be the most important to watch in November, given its meager follow-through after earnings this week.

Alphabet has been building up an inverted head and shoulders bottoming pattern since August.  The recent breakout above the neckline around $168 seemed to complete this pattern and indicate a high likelihood of further upside.  On Wednesday, we saw a gap higher on earnings, but by that day’s close, the stock was down by the lows of the day.

I’ve found that during bull market phases, breakouts tend to persist, as there are usually plenty of willing buyers interested in taking on additional risk for the possibility of greater returns.  But during bear markets, breakouts often will fail, as investors sell strength because they’re way more concerned with downside risk than upside potential.

Looking for the other seven charts to watch?  Check out the full video on my YouTube channel!

RR#6,

Dave

PS- Ready to upgrade your investment process?  Check out my free behavioral investing course!

David Keller, CMT

President and Chief Strategist

Sierra Alpha Research LLC

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice.  The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.  

The author does not have a position in mentioned securities at the time of publication.    Any opinions expressed herein are solely those of the author and do not in any way represent the views or opinions of any other person or entity.

We noticed on Thursday evening how poor the internals were for the SPY based on Price Momentum Oscillator (PMO) internals. These internals are the percent of stocks with rising PMOs and the percent of stocks with PMO Crossover BUY Signals. The accompanying short-term Swenlin Trading Oscillators (STOs) and IT Breadth Momentum (ITBM) and IT Volume Momentum (ITVM) are also in decline.

Currently a mere 18% of stocks hold rising momentum. This is not a good foundation for a rally. At the same time I know that things get as bad as they are going to get before they start getting as good as they can get. These are oversold readings that could see an upside reversal. For now they are puny readings. Note also that the STOs turned down in negative territory.

We currently have less than one quarter of stocks with PMO BUY Signals where the PMO is above its signal line. We note that this indicator also saw a top below the signal line which is also quite bearish. Both the ITBM and ITVM continue to decline out of overbought territory. They still have plenty of real estate to fall further.

Conclusion: While the rally on Friday could change the face of some of these indicators, the PMO indicators won’t likely see a significant upside reversal. Even if they do, they are still likely to be reading below our bullish 50% threshold. Considering how close we are to all-time highs, we should have stronger internals. Beware.

Good Luck & Good Trading,

Erin Swenlin

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Technical Analysis is a windsock, not a crystal ball. –Carl Swenlin

(c) Copyright 2024 DecisionPoint.com

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.

DecisionPoint is not a registered investment advisor. Investment and trading decisions are solely your responsibility. DecisionPoint newsletters, blogs or website materials should NOT be interpreted as a recommendation or solicitation to buy or sell any security or to take any specific action.

Helpful DecisionPoint Links:

Trend Models

Price Momentum Oscillator (PMO)

On Balance Volume

Swenlin Trading Oscillators (STO-B and STO-V)

ITBM and ITVM

SCTR Ranking

Bear Market Rules