The Weekly Trader

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. 

Here are the latest technical and sentiment indicators:

Technical Indicators (daily chart)

S&P 500 is above its 50-, 100-, and 200-day MA = Bullish

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

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

S&P 500 support @ 2350, then 2280

 

Sentiment Indicators (+RSI)

II survey: (March 14): 53.4% Bulls; 17.5% Bears = Bearish

AAII survey: (March 15): 31.2% Bulls; 38.7% Bears = Neutral

VIX: @ 11.28 = Bearish

RSI: (S&P 500) @ 61.79 = Neutral

Comment: How do you trade a trendless market? You don’t. In the past, when the Fed raised interest rates, and it was also options expiration week, there was usually fireworks. Not this time. Lately, the market is putting everyone to sleep, which is the time to be on guard. Instead of trying to guess what the market will do next, be ready to follow the trend (when that trend develops). By the way, small technical cracks are showing up. We have to wait and see if those cracks get bigger. 

Lance Roberts of realinvestmentadvice has another excellent column here: goo.gl/9hD891 : Just Buy Everything.  

 

My latest MarketWatch column: goo.gl/9Lcnoa

Here are the latest technical and sentiment indicators:

Technical Indicators (daily chart)

S&P 500 is above its 50-, 100-, and 200-day MA = Bullish

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

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

S&P 500 support @ 2310 (50-day moving average)

 

Sentiment Indicators (+RSI)

II survey: (March 7): 57.7% Bulls; 17.3% Bears = Bearish

AAII survey: (March 8): 30.0% Bulls; 46.5% Bears = Neutral

VIX: @ 11.66 = Bearish

RSI: (S&P 500) @ 63.70 = Neutral

Comment: The volatility I expected last week occurred in bonds, oil, and precious metals. It could be a different outcome for stocks this week as Janet Yellen is expected to raise interest rates by at least .25%. Eventually, higher interest rates are going to affect the stock market. Although it’s still an uptrend, it’s weakening. Considering the blowout jobs numbers, the market reaction was tepid. After an eight-year bull market, it’s time to take precautions. Bottom line: The market is still overbought. 

 

 

Here are the latest technical and sentiment indicators:

Technical Indicators (daily chart)

S&P 500 is above its 50-, 100-, and 200-day MA = Bullish

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

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

S&P 500 support @ 2299 (50-day moving average)

 

Sentiment Indicators (+RSI)

II survey: (Feb. 28): 63.1% Bulls; 16.5% Bears = Bearish

AAII survey: (March 1): 37.9% Bulls; 35.6% Bears = Neutral

VIX: @ 10.96 = Bearish

RSI: (S&P 500) @ 72.41 = Bearish

Comment: I hope your seat belts are fastened because the next two weeks are going to be wild. The jobs report is released this Friday, so the market should be volatile as traders place their bets on the outcome. Janet Yellen has strongly hinted of an interest rate hike depending on those numbers (the Fed meets March 14 and 15). The market is obscenely overbought but it’s impossible to predict which way it will ultimately go. Traders smarter than me have identified many red flags, some coming from the bond market. Nevertheless, overbought markets can get more overbought before reversing. Bottom line: Pay close attention, be nimble, and be prepared for extreme volatility. 

Here are the latest technical and sentiment indicators:

Technical Indicators (daily chart)

S&P 500 is above its 50-, 100-, and 200-day MA = Bullish

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

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

S&P 500 support @ 2288 (50-day moving average)

 

Sentiment Indicators (+RSI)

II survey: (Feb. 21): 61.2% Bulls; 17.5% Bears = Bearish

AAII survey: (Feb. 22): 38.5% Bulls; 32.3% Bears = Neutral

VIX: @ 11.47 = Bearish

RSI: (S&P 500) @ 79.43 = Bearish

Comment: Typically, when a market goes sideways for a long time period, it will break out to one side or the other. That means this overbought market could get even more overbought. On the other hand, it could plunge. My strategy is the same as last week: I have a large cash position to take advantage of a major pullback while buying short-term call options while the market is in an uptrend.

Eventually, this bubble will end but no one can predict when. Speaking of bubbles, with an RSI of 79, we are in extreme overbought territory. Even retail investors are starting to think that “this time is different” as they pour money into equity index funds.

It’s hard for new traders to realize that sometimes, the best trade is not to trade at all. When the market isn’t making sense, like now, when most indicators are out of whack and the market keeps breaking new records (i.e. longest up days in a row, etc.), it’s time to minimize trades or stay out until there is a better setup. Obviously, few are heeding that advice. It’s not easy to be patient when the market keeps making new all-time highs.