The Weekly Trader

Here are the latest technical and sentiment indicators:

Technical Indicators (daily chart)

S&P 500 is well above all its moving averages = 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 @ 2640

 

Sentiment Indicators (+RSI)

II survey: (Dec. 5): 64.2% Bulls; 15.1% Bears = Bearish

AAII survey: (Dec. 6): 36.9% Bulls; 34.2% Bears = Neutral

VIX: @ 9.58= Bearish

RSI: (S&P 500) @ 71.63 = Bearish

Comment: Last week was a little rocky but the market recovered quite nicely, so the bull market continues. Everyone everywhere is talking about bitcoin. I see a bubble while others see opportunities. So far, the opportunists have been right as bitcoin goes to the moon. Its chart is the textbook version of parabolic, and yet no one wants to sell because they’re afraid to miss out on the next 100% rally. Bubbles are so much fun on the way up, but they destroy wealth on the way down. The problem with bitcoin is we all know its price but not its value. I’ll bet even shoe shiners are telling their customers to buy bitcoin. 

This week is a Fed meeting, which is typically bullish. Add in the holidays and you have the making of a low volatile, moderately bullish environment for stocks. However, astute traders are on guard right now. After all, red flags are everywhere, but few see them. Here is Lance Robert’s view of the current market environment, and I think he nailed it perfectly: https://goo.gl/Yka497

Here are the latest technical and sentiment indicators:

Technical Indicators (daily chart)

S&P 500 is well above all its moving averages = 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 @ 2640

 

Sentiment Indicators (+RSI)

II survey: (Nov. 28): 62.3% Bulls; 15.1% Bears = Bearish

AAII survey: (Nov. 29): 36.0% Bulls; 31.6% Bears = Neutral

VIX: @ 11.43= Bearish

RSI: (S&P 500) @ 73.11 = Bearish

Comment: I’m not going to be a party pooper. There is little doubt we are entering the “euphoria” stage of the bull market, so enjoy it while it lasts. Although euphoria always ends in tears, the fun part is in the late stages. Just be sure you don’t get trapped when the party ends, and it will end. Since the Fed is meeting in a week and the holidays are approaching, the odds are with the bulls. Be on the lookout for an intraday reversal (from euphoria to reality), but if none occurs, going long is your best bet. As for me, I’m flat on Fridays. By the way, look at how extreme the RSI is, but it could get even more extreme. 

FYI: My MarketWatch column on speculating with put options will be out tomorrow at www.marketwatch.com. It’s a good time to learn how to buy puts (it’s less risky than shorting). In the future you will be glad you learned how to buy puts (that is, when the bubble pops in spectacular fashion). 

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 below its signal line = Bearish

S&P 500 support @ 2580

 

Sentiment Indicators (+RSI)

II survey: 

AAII survey: (Nov. 22): 35.5% Bulls; 29% Bears = Neutral

VIX: @ 9.65 = Bearish

RSI: (S&P 500) @ 64.51 = Neutral

Comment: As expected, the S&P 500 rallied during the holiday week. Bitcoin also rallied and has reached bubble levels, but don’t tell that to bitcoin buyers. They seem to think bitcoin’s spectacular rise is normal. I beg to differ. At this time, no one knows the true value of bitcoin, which is what makes it such a dangerous trade.

Regarding the S&P, we’re due for a nasty correction but no one can predict when, although a likely target is a few weeks to a few months from now. One possible scenario: A sudden and severe correction followed by a huge rally. That’s the setup I’m looking for, but I will play it week by week because the market can change on a dime. Meanwhile, the bulls are in control so let’s see how far they can run with the ball. It’s been an impressive rally, but what goes up eventually comes down. I admit this has been a much longer wait than almost anytime in history. 

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 has fallen below its signal line = Bearish

S&P 500 support @ 2560

 

Sentiment Indicators (+RSI)

II survey: (Nov. 14): 63.5% Bulls; 15.4% Bears = Bearish

AAII survey: (Nov. 15): 29.4% Bulls; 35.2% Bears = Neutral

VIX: @ 11.43 = Bearish

RSI: (S&P 500) @ 55.24 = Neutral

Comment: The market got a little rocky for a couple of days last week, reminding us of how a real stock market behaves. While the S&P ended the week nearly flat, underneath there is technical damage. A MACD sell signal was triggered during the week, which has led to pullbacks in the past. In addition, the AAII bullish sentiment plunged from 45% to 29%, but not enough to trigger a contrarian buy signal. In addition, the Investor’s Intelligence survey is still as bullish as ever. 

Because of the holidays, it’s possible any pullback will be subdued, but continue to be on guard. Typically, the market enters the holidays in a bullish mood until the end of the year. After all, fund managers are making a final sprint to beat the indexes (and lock in their compensation), so they tend to buy anything that moves. In fact, it would be unusual if the market retreated strongly from here, however, anything is possible so watch closely. The odds are we are going to limp into the end of the year. Nevertheless, watch for signs of deterioration. 

Note: There should be light trading this week due to the holidays, which reminds me: Have a great Thanksgiving! 

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