The Weekly Trader

Here are the latest technical and sentiment indicators:

Technical Indicators (daily chart)

S&P 500 is below its 50-day MA = Bearish

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

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

S&P 500 support @ 2330

 

Sentiment Indicators (+RSI)

II survey: (April 18): 51.9% Bulls; 18.3% Bears = Bearish

AAII survey: (April 19): 25.7% Bulls; 38.7% Bears = Neutral

VIX: @ 14.63 = Neutral

RSI: (S&P 500) @ 48.71 = Neutral

Comment: The S&P futures gapped up almost 1% overnight (at this writing) based on the election results from France. Although the market might open up on the high side, there is no guarantee it will last. The only guarantee is this week will be volatile as GDP is released on Friday, tech heavyweights report earnings, political and geopolitical events heat up, and Congress returns from vacation. 

If you are bullish, it’s risky to chase the spike at the open. If you are bearish, it could be too early to short (i.e. fading the gap). It’s times like this that the wisest choice is to sit back and wait before pouncing. Observe whether the morning rally holds, or reverses. Observe how the market closes. It’s very likely the market is going to zig and zag all week, so be prepared for any scenario. It is going to get interesting, so be careful out there. 

Here are the latest technical and sentiment indicators:  

Technical Indicators (daily chart)

S&P 500 is below its 50-day MA = Bearish

MACD (S&P 500; 19,39,9) is slightly below its zero line and pointing down = Bearish

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

S&P 500 support @ 2330 (it’s slightly below support), and 2305.

 

Sentiment Indicators (+RSI)

II survey: (April 11): 56.3% Bulls; 17.5% Bears = Bearish

AAII survey: (April 12): 29% Bulls; 37.4% Bears = Neutral

VIX: @ 15.96 = Neutral

RSI: (S&P 500) @ 35.90 = Neutral 

Comment: It was the first time in 16 years that the market sold off on the day before Good Friday. Last week was dangerous because of multiple intraday reversals ending in the Thursday selloff during the last half hour. It’s too early to proclaim the bull market is over but red flags are everywhere. The technical indicators are signaling we’re in for a short-term selloff but that can change on a dime. Nevertheless, it’s time to be more cautious than usual based on the technical readings. For example, the S&P 500 fell below its 50-day moving average. We’ll watch this week to see if the indexes can rise above its 50-day MA or sink further. If the indexes continue to plunge, look out below. (If there’s a selloff, my technician friends say we could get to 2100 or 2200 on the S&P 500 before there’s a bounce).

Depending on how painful it gets, I’ll be looking at the millions of investors sitting in index funds. I wonder how much pain they can take before they sell. As I wrote earlier, it’s too early to proclaim the bull market is over, but you should definitely be on guard. In the past, when the market seemed ready to fall into the abyss, it was miraculously saved by Fed comments or actions. This time I’m waiting to see what happens. One thing for sure: If this is the real deal (i.e. correction and trend change), it will be brutal. If you aren’t comfortable buying put options, wait until the selling stops and be prepared to go long.

Bottom line: No one can predict what is going to happen this week, so be ready for anything. As I predicted weeks ago, volatility is making a comeback. That’s great for traders but it will make investors dizzy and nervous. Keep your eye out for intraday reversals, late day selloffs, and head fakes.

 

Here are the latest technical and sentiment indicators:

Technical Indicators (daily chart)

S&P 500 is hovering slightly above its 50-day MA = Neutral

MACD (S&P 500; 19,39,9) is above the zero line but pointing down = Neutral

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

S&P 500 support @ 2346 (50-day moving average)

 

Sentiment Indicators (+RSI)

II survey: (April 4): 55.8% Bulls; 18.3% Bears = Bearish

AAII survey: (April 5): 28.3% Bulls; 39.6% Bears = Neutral

VIX: @ 12.87 = Bearish

RSI: (S&P 500) @ 49.67 = Neutral

Comment: Last week was interesting because of the intraday reversals. Put another way, the rallies did not hold. Right now, I’m watching the 50-day moving average, which is acting as support. This is earnings week so anything is possible. I am leaning bearish because of the intraday reversals and failed rallies, but this market could go in either direction. After all, sideways markets can be the most deceiving, so be on guard. 

Here are the latest technical and sentiment indicators:

Technical Indicators (daily chart)

S&P 500 is hovering above its 50-day MA (S&P 2339) = Neutral

MACD (S&P 500; 19,39,9) is above the zero line but pointing down = Neutral

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

S&P 500 support @ 2339 (50-day moving average), and 2317.

 

Sentiment Indicators (+RSI)

II survey: (March 28): 49.5% Bulls; 18.1% Bears = Bearish

AAII survey: (March 29): 30.2% Bulls; 37.4% Bears = Neutral

VIX: @ 12.37 = Bearish

RSI: (S&P 500) @ 53.68 = Neutral

Comment: On Monday, the S&P 500 bounced off of its 50-day moving average, but remained above it all week. That tells me it will take a lot more momentum to bring this market down. So far, there is little fear, although sentiment did take a slight turn to the cautious side in the II and AAII surveys (above). In fact, in the AAII survey, for the first time in a long time, bearish sentiment is higher than the bull side (it’s not significant yet unless it hits extreme levels).

Recently, I’ve heard predictions ranging from S&P 2500 on the high end to 2250 on the low end. The market hasn’t committed to one side or the other, so anything  is possible. As always, only the market is right which is why I  suggest being ready for either scenario. It’s possible the lengthy uptrend is coming to an end, which is why the market is only slightly above its 50-day moving average. On the other hand, there could be one final blowoff rally that could be the final bull market top. Put another way, it’s a 50-50 bet which way the market is going, and I don’t bet. One thing is for certain: No one knows for sure what is going to happen this week, so making big bets now is unwise. However, look for intraday reversals or a sudden pickup in volatility. That would be significant. 

Here are the latest technical and sentiment indicators:

Technical Indicators (daily chart)

S&P 500 is hovering slightly above its 50-day MA (S&P 2330) = Neutral

MACD (S&P 500; 19,39,9) is above the zero line but pointing down = Neutral

MACD (S&P 500; 19,39,9) fell below its signal line = Bearish

S&P 500 support @ 2330 (50-day moving average), then 2320.

 

Sentiment Indicators (+RSI)

II survey: (March 21): 56.7% Bulls; 17.3% Bears = Bearish

AAII survey: (March 22): 35.3% Bulls; 30.5% Bears = Neutral

VIX: @ 12.98 = Bearish

RSI: (S&P 500) @ 44.80 = Neutral

Comment: The market always gives subtle clues that astute observers detect. Last Tuesday, there was an intraday reversal, and for the rest of the week, the market struggled as many traders sold each rally. Note that many technical indicators (above) turned from bullish (previously) to neutral/bearish. In addition, the sentiment indicators remain neutral/bearish. 

This coming week is very important as we look at more clues. In the past, after a rough week, the market often recovered, and it may do so again. However, if we continue to sell off during the week, that would be significant. I can’t predict which way the market will go but if it falls below its 50-day moving average, and lower, the market will be in for a rough spell. 

Bottom line: Something changed in the market last week, and not for the better. We will soon know if it’s only temporary. Meanwhile, be prepared to take either side as volatility makes a comeback. I’ve heard some pros predict 2500 (bullish) on the S&P as well as a 10% pullback (bearish). Typically, the truth lies somewhere in-between.