Bullish or Bearish? Week of Jan. 16, 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 = Bullish

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

MACD (S&P 500; 19,39,9) is even with its signal line = Neutral

S&P 500 support @ 2240, 2225, and 2200

 

Sentiment Indicators (+RSI)

II survey: (Jan. 10): 58.6% Bulls; 18.3% Bears = Bearish

AAII survey: (Jan. 11): 43.6% Bulls; 27.0% Bears = Neutral

VIX: @ 11.23 = Bearish

RSI: (S&P 500) @ 61.33 = Neutral

Comment: Market is in a holding pattern thanks to the computer algos which buy on every dip. We’re still overbought at nosebleed levels but until sentiment changes, nothing changes. CSX is the poster child for overbought: a railroad company rising like a 1999 Internet stock. No one can predict the date and time, but the market is way overdue for a nasty pullback. And if sentiment also changes, that pullback could be worse than expected. 

Update: CSX is on a roller coaster ride. It sank after earnings were announced (-4%), but then rallied back the next day (+23%). FYI, it was a bull raid, a classic short squeeze.

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