The Weekly Trader

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 slightly below its signal line = Bearish

S&P 500 support @ 2400

 

Sentiment Indicators (+RSI)

II survey: (June 20): 51.5% Bulls; 19.4% Bears = Bearish

AAII survey: (June 21): 32.7% Bulls; 28.9% Bears = Neutral

VIX: @ 10.02 = Bearish

RSI: (S&P 500) @ 58.74 = Neutral

 

Comment: After a strong Monday (June 19), the S&P petered out and went sideways the rest of the week. The lack of follow-through is not healthy, so the bulls are on warning. And yet, the bears were unable to take advantage. Last week was the kind of environment where “even a skunk couldn’t make a scent.”

There are times to be in the market, but wise traders also know when to be out. Obviously, the market environment could change on a dime, and it will one day. In fact, veteran traders warn that when a market moves this slowly and with so little volatility, it builds up energy, which will result in a huge market explosion, either up or down. If they are right, volatility should violently increase (no one knows when, however). 

Bottom line: As long as the sideways market continues, cash is your friend. Don’t forget that the indexes are at all-time highs, so it’s about time the market “puts up or shuts up.” Until then, remain on guard. There are too many people holding index funds on margin who believe that the market will never go down. History tells us that never ends well. 

 

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 even with its signal line = Neutral

S&P 500 support @ 2400

 

Sentiment Indicators (+RSI)

II survey: (June 13): 50.0% Bulls; 18.6% Bears = Bearish

AAII survey: (June 14): 32.3% Bulls; 29.5% Bears = Neutral

VIX: @ 10.38 = Bearish

RSI: (S&P 500) @ 60.93 = Neutral

Comment: The market is in a sideways range with an occasional intraday rally or selloff that typically deflates by the next day. The Nasdaq did take a beating but the S&P and Dow are holding near all-time highs. Although this market is dangerous, there is still room for it to go higher. No one is able to predict when the day of reckoning is coming (except that it always comes). You can ride the uptrend a bit longer knowing the party will end quickly and viciously one day. Or you can play it safe and sit on the sidelines primarily in cash.

I’m amazed that so many investors are blindly buying index funds at these levels. What happened to buy low and sell high? And yet, it’s possible that we could hit S&P 2500, or higher. As for me, the risk of catching those last few pennies on the upside is not worth the reward. That’s why I’m using very, very short-term trading strategies, both long and short. Most of the time, however, I am just watching and waiting, and not trading at all. I learned the hard way that it’s usually not profitable to trade during a sideways market. 

 

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 @ 2400

 

Sentiment Indicators (+RSI)

II survey: (June 6): 55.8% Bulls; 18.3% Bears = Bearish

AAII survey: (June 7): 35.4% Bulls; 29.5% Bears = Neutral

VIX: @ 10.70 = Bearish

RSI: (S&P 500) @ 63.64 = Overbought

Comment: This week should be interesting because of the Fed meeting. At first glance, the market went nowhere last week, but underneath the surface it was volatile. I couldn’t explain the current market any better than analyst Lance Roberts, who backs up his opinion with frightening charts. His weekend column is here: https://goo.gl/F5IY2X and another gem on meltups: https://goo.gl/EcFOuM

Bottom line: The market is still in an uptrend but be very, very cautious. 

 

My latest MarketWatch column: https://goo.gl/AKTldp

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 slightly above its signal line = Bullish

Observe: S&P 500 support @ 2400

 

Sentiment Indicators (+RSI)

II survey: (May 30): 50.0% Bulls; 19.2% Bears = Bearish

AAII survey: (May 31): 26.9% Bulls; 31.5% Bears = Neutral

VIX: @ 9.58= Bearish

RSI: (S&P 500) @ 69.56 = Overbought

Comment: As this unloved bull market continues to rise, there’s a chance we could have a eurphoric breakout over the next few months, and yet, the higher the market goes, the riskier it gets. The current market reminds me of 1999, when exuberance reached extreme levels. Shorting at this level is not advised as any pullback should be an opportunity to “buy on the dip.” Because markets move in cycles, what goes up must come down, but no one can predict when. The inevitable smash will come one day but don’t fight the herd or you will get trampled. Just be ready to get out of the way when the herd goes over the cliff one day. 

Bottom line: The technical indicators are flashing buy while the sentiment indicators are flashing caution. Sentiment can get even more extreme (look at bitcoin, for example) before it eventually sours. Follow the uptrend if you wish but be careful not to get trapped. When millions of investors try to get out of their index funds at once, it will not be a pretty sight. (But don’t expect this to happen for a while.) 

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 slightly above its signal line = Bullish

Observe: S&P 500 support @ 2400

 

Sentiment Indicators (+RSI)

II survey: (May 23): 51.9% Bulls; 18.3% Bears = Bearish

AAII survey: (May 24): 32.9% Bulls; 30.0% Bears = Neutral

VIX: @ 9.81= Bearish

RSI: (S&P 500) @ 63.05 = Near overbought

Comment: The bull market continues as the S&P surpassed 2400, although not with strong volume or conviction. Nevertheless, the market is in an uptrend, and if there is a pullback, the only strategy that is working is “buy the dip.” One day buying the dip won’t work, but until that day comes, you follow the trend. It’s true we’re getting ever closer to a correction (and bear market), but the inevitable smash could be months away, and perhaps even next year. Meanwhile, every pullback has been a buying opportunity. The ridiculously low VIX is a warning sign, and RSI is near overbought. Otherwise, it looks like blue skies ahead…….(for now).