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.)

 

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