Bullish or Bearish? Week of April 2, 2018

Here are the latest indicators:

S&P 500 one-month trend = Bearish

S&P 500 is below its 50-day and 100-day moving average, although above its 200-day MA = Bearish

RSI: (S&P 500) @42.77 = Neutral

Intraday Volatility: High

Daily results of multiple indicators (from Yardeni Research): https://goo.gl/eT3fzA

Comment: It was a wild four days as volatility skyrocketed. In fact, I just finished writing an article for MarketWatch on how day trading strategies work in high volatility environments (like now). Although the market appears weak, we could have one final blow-off top. That’s what everyone is hoping for so they can get out in time.

A blow-off top happened to bitcoin (look at the chart) when it hit $19,982 a coin on December 17th. That was a clue to get out, but few did. As of Sunday night, bitcoin was trading at $7,000 per coin. (Not to pat myself on the back, but the week of December 18th, I wrote in this blog ( https://goo.gl/5BC9nK )  that bitcoin was a bubble based on the enthusiasm I observed from newcomers, the extreme chart, how amateurs were paying a fortune for bitcoins, and how Starbucks was filled with bitcoin buyers and brokers, similar to what I saw before the real estate crash in 2007). The clues were so obvious at that time.)

Back to reality: Instead of a blow-off top, the current market could just keep meandering lower like it’s doing now, ie. one day up, two days down, etc. That would be the most frustrating for nearly everyone, and the most dangerous. It would give false hope to the bulls while smashing the bears every few days. No one can predict market direction but as I wrote in the past, the party is nearly over, the police are at the door, so it’s time to reduce risk. After a nine year bull market, the coming bear market or correction is not going to be pretty, or pleasant for most people. This is the time to study, read market history, trade smaller positions if a beginner, and protecting your money. It also means increasing cash positions (only you can determine the percentages). 

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