Bullish or Bearish? Week of Jan. 2, 2017

Here are the latest technical and sentiment indicators:

Technical Indicators (daily chart)

S&P 500 is above its 50-, 100-, and 200-day MA but turning down = Neutral

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

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

S&P 500 support @2240, 2225 and 2200

 

Sentiment Indicators (+RSI)

II survey: (Dec. 27): 59.8% Bulls; 19.6% Bears = Bearish

AAII survey: (Dec. 28): 45.6% Bulls; 25.7% Bears = Neutral

VIX: @ 14.04 = Bearish

RSI: (S&P 500) @ 51.66 = Neutral

Comments: The S&P was able to pull out a 8.50% gain for the year thanks to a last minute rally. It’s too early to cheer because danger signs have increased. Examples: The VIX spiked but is still in the basement; MACD has made a slight turn downward;  S&P support at 2240 was taken out last Friday, which is not a good sign; sentiment surveys are way too bullish, and we still haven’t taken out Dow 20,000. Let’s see if volatility returns to this overbought market, and if it does, it will be a rocky road with many opportunities for traders. Another interesting observation is retail investors have been moving billions of dollars from managed mutual funds and buying index funds. (I wonder how that will turn out.)

 

Bullish or Bearish? Week of Dec. 26, 2016

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 @ 2240, 2225, and 2200

 

Sentiment Indicators (+RSI)

II survey: (Dec. 20): 59.8% Bulls; 19.6% Bears = Bearish

AAII survey: (Dec. 21): 44.6% Bulls; 29.2% Bears = Neutral

VIX: @ 11.44 = Bearish

RSI: (S&P 500) @ 65.97 = Overbought

Comment: Many say that Dow 20,000 is just a number, but they are wrong: It’s an important psychological pivot point. If the Dow is able to rise above it, and stay there, that is bullish. If it fails, that is bearish. All we want for the New Year is an established trend, and we don’t care if it’s an uptrend or downtrend as long as it lasts for longer than a few days. 

Bullish or Bearish? Week of Dec. 19, 2016

Here’s a link to my most recent MarketWatch column: goo.gl/uh6xv7

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 @ 2240, 2225, and 2200

 

Sentiment Indicators (+RSI)

II survey: (Dec. 13): 59.6% Bulls; 19.2% Bears = Bearish

AAII survey: (Dec. 14): 44.7% Bulls; 32.3% Bears = Neutral

VIX: @ 12.20 = Bearish

RSI: (S&P 500) @ 67.51 = Overbought

Commentary: It is unknown if there will be a Christmas rally or a pullback. It’s always possible for an extremely overbought market to get more overbought. If you are on the sidelines and can’t stand to miss the Dow 20,000 party, you can initiate a small position. It’s not the time to go all-in, however, as stocks will likely follow bonds, gold, and oil in the future (i.e. lower). 

Bullish or Bearish? Week of Dec. 12, 2016

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 @ 2165 (100-day moving average)

 

Sentiment Indicators

II survey: (Dec. 6): 58.8% Bulls; 19.6% Bears = Bearish

AAII survey: (Dec. 7): 43.1% Bulls; 26.5% Bears = Neutral

VIX: @ 11.76 = Bearish

RSI: (S&P 500) @ 76.31 = Overbought (Extreme)

Comment: The market appears to be going to the moon. Talk to veteran traders and they say this is one of the most overbought markets in history. Forget fundamentals and technicals as bullish emotion (and computer buy programs) are buying everything that moves. It’s still too risky to short heavily, but buying at these lofty levels is also unwise. One day the party is going to end and it will be brutal. Investor giddiness will turn to tears, and yet no one can say when. Let’s see if the Fed pops the bubble or puts gasoline on the fire. If my trader friends are right, you are witnessing a melt-up of historic proportions. You can hear people whisper, “Dow 20,000.” Take out the popcorn because the next few weeks and months are going to be extremely interesting. 

Bullish or Bearish? Week of Dec. 5, 2016

Here are the latest technical and sentiment indicators:

Technical Indicators (daily chart)

S&P 500 is above its 50-, 100-, and 200-day MA but pointing down = Neutral

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 but pointing down = Neutral

S&P 500 support @ 2178 and 2156 (50-day moving average)

 

Sentiment Indicators

II survey: (Nov. 29) 56.3% Bulls; 22.3% Bears = Bearish

AAII survey: (Nov. 23): 43.8% Bulls; 25.1% Bears = Neutral

VIX: @ 14.12 = Bearish

RSI: (S&P 500) @ 58.26 = Neutral

Comment: Most indexes are beyond overbought. The bulls are hoping for a xmas rally; the bears believe higher interest rates will derail the rally. My opinion: With ridiculous overbought readings and over-exuberance, I will err on the side of caution. It’s too early to short heavily, but too risky to go long. One thing for sure: Many experts, and retail investors, believe this market is unstoppable: Hello 1999 (again).