The Weekly Trader

Here are the latest technical and sentiment indicators:

Technical Indicators (daily chart)

S&P 500 is above its 50-day MA but pointing down = Neutral

MACD (S&P 500; 19,39,9) is above its zero line = Bullish

MACD (S&P 500; 19,39,9) is equal to its signal line = Neutral

S&P 500 support @ 2560

 

Sentiment Indicators (+RSI)

II survey: (Nov. 7): 64.4% Bulls; 14.4% Bears = Bearish

AAII survey: (Nov. 8): 45.1% Bulls; 23.1% Bears = Neutral

VIX: @ 11.29 = Bearish

RSI: (S&P 500) @ 61.93 = Neutral 

Comment: For the first time in months, the market retreated strongly during the day before recovering some of its losses. Astute market watchers noticed that something changed during the week, i.e. increased selling, which was reflected in a number of indicators. One week does not make a market, which is why this week is so important. The bulls are still in control but their grip appears less strong. Let’s see if the uncertainty carries over into this week.

For a more detailed analysis of the market, here is Lance Robert’s most recent blog. He believes a 3-5% correction is likely: https://goo.gl/BijbDq

 

Here are the latest technical and sentiment indicators:

Technical Indicators (daily chart)

S&P 500 is above its 50-day MA = Bullish

MACD (S&P 500; 19,39,9) is above its zero line = Bullish

MACD (S&P 500; 19,39,9) is equal to its signal line = Neutral

S&P 500 support @ 2560

 

Sentiment Indicators (+RSI)

II survey: (Oct. 31): 63.5% Bulls; 14.4% Bears = Bearish

AAII survey: (Nov. 1): 45.1 Bulls; 28.6% Bears = Neutral

VIX: @ 9.14 = Bearish

RSI: (S&P 500) @ 70.40 = Overbought 

Comment: There is not much change from last week except that more retail investors are catching the bull fever. Technical readings are bullish while sentiment is so bullish it’s a red flag.  While some pros are predicting a major correction, others keep blindly buying at all time highs. Eventually, the market will stop climbing but for now, the bulls are in control. Lately, investors are hopeful there will be another Christmas rally. We shall see. 

 

Here are the latest technical and sentiment indicators:

Technical Indicators (daily chart)

S&P 500 is above its 50-day MA = Bullish

MACD (S&P 500; 19,39,9) is above its zero line = Bullish

MACD (S&P 500; 19,39,9) is equal to its signal line = Neutral

S&P 500 support @ 2560

 

Sentiment Indicators (+RSI)

II survey: (Oct. 24): 62.3% Bulls; 15.2% Bears = Bearish

AAII survey: (Oct. 25): 39.6% Bulls; 33.0% Bears = Neutral

VIX: @ 9.80 = Bearish

RSI: (S&P 500) @ 70.69 = Overbought 

Comment: The slow melt-up continues with few hiccups. The S&P retreated for a day but came back to make another all-time high. The higher we go, the more dangerous the market gets, and yet, it keeps rising. When a market gets this overbought, patience is the only emotion that wins…eventually. (Meanwhile, the bulls are partying well past midnight and beyond.)

Hint: The Fed meets this week, and for years, the market has moved somewhat higher during and after the Fed meeting. Let’s watch and see what happens. 

 

Here are the latest technical and sentiment indicators:

Technical Indicators (daily chart)

S&P 500 is above its 50-day MA = Bullish

MACD (S&P 500; 19,39,9) is above its zero line = Bullish

MACD (S&P 500; 19,39,9) is above its signal line = Bullish

S&P 500 support @ 2540, then 2500

 

Sentiment Indicators (+RSI)

II survey: (Oct. 17): 60% Bulls; 15.2% Bears = Bearish

AAII survey: (Oct. 18): 37.9% Bulls; 27.9% Bears = Neutral

UMichigan Consumer Confidence survey: (highest since 2004) = Bearish 

VIX: @ 9.97 = Bearish

RSI: (S&P 500) @ 79.66 = Overbought (i.e. ridiculously overbought) 

Comment: This market continues to defy gravity, and reality, as it continues to break bull market records. For the last month (and even the last two years), the market has slowly creeped higher. If this is the melt-up stage of the bull market, it’s happening in slow motion. Trying to guess the day of reckoning, or even a 3% correction, has been a loser’s game.

No one knows when the music will stop, but it will. Caution is still advised because the risk-reward is not favorable to the bulls. Nevertheless, the market continues to move higher. As I’ve repeatedly said, be sure to initiate protective stops if long. By now, many investors don’t remember the last time the market went down.  On the other hand, veteran traders know how this remarkable market will end.  

Not surprisingly, many who missed the party are just now piling into equity ETFs, another clue the party is about to end sooner rather than later. And yet, selling in a panic has also not been a wise move. Why sell when it feels so good to buy and hold? 

Bottom line: Be patient, trade small, and observe the market for clues, i.e. intraday reversals, or a sudden selloff to 2450 and below. The lack of volatility for this length of time is downright scary, and just in time for Halloween. It feels like the calm before the storm, but up to now, the bulls have been right. Stay alert and wait for the fireworks to start in the future at a time and place only Rod Serling knows. 

The most hated bull market ever? For further reading, check out Lance Robert’s latest: https://goo.gl/z4f1WV

Here are the latest technical and sentiment indicators:

Technical Indicators (daily chart)

S&P 500 is above its 50-day MA = Bullish

MACD (S&P 500; 19,39,9) is above its zero line = Bullish

MACD (S&P 500; 19,39,9) is above its signal line = Bullish

S&P 500 support @ 2500

 

Sentiment Indicators (+RSI)

II survey: (Oct. 10): 60.4% Bulls; 15.1% Bears = Bearish

AAII survey: (Oct. 11): 39.8% Bulls; 26.9% Bears = Neutral

VIX: @ 9.61 = Bearish

RSI: (S&P 500) @ 72.39 = Overbought

Comment: I’ve run out of ways to describe how overbought this market is. This from Adam Taggart via Peak Prosperity (thanks to Lance Roberts for the heads-up):

  1. It has been over 100 months (more than 8.5 years) since the current bull market began in April of 2009.
  2. It has been 15 months since the last (and very brief) drop of 5% in the S&P 500.
  3. This past September saw record low volatility, including a stretch now claimed to be “the most peaceful days in the history of the markets.”
  4. Since last year’s presidential election, at which point the markets were already considered dangerously overvalued, the DJIA is up over 20%.
  5. The Dow, S&P and the Nasdaq are all trading at all-time highs.

Anyway you look at it, this low volatile market is in the danger zone and has been for a while. Could the market continue to go higher from here? Absolutely. That is why so many investors are not selling their index funds or stocks. Apparently, most investors believe they will be able to get out in time. When the next correction and bear market arrives (it always arrives), it’s unknown how millions of investors will know it’s time to get out. Many won’t get out and will grit their teeth and hold (typically until the pain gets too great).

Bottom line: This bull market has gone on longer and farther than most imagined. Even a number of bullish pros are getting cautious. When you look at the data points above, you must be cautious, using stop losses when possible. Technically, we’re at historic levels, and when this market unwinds one day, it will be mammoth. The longer the market rises, the more most investors believe the market will keep rising (it’s human nature). In addition, look at the RSI, at over 70, which is always a clue a short-term pullback is near (when over 70).

Once again, read Lance Robert’s most recent analysis of the market here: https://goo.gl/uWfZnc