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. 

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