Bullish or Bearish? Week of Dec. 11, 2017

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

Bullish or Bearish? Week of Dec. 4, 2017

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).