Bullish or Bearish? Week of June 19, 2017

Here are the latest technical and sentiment indicators:

Technical Indicators (daily chart)

S&P 500 is above its 50-day MA = Bullish

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

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

S&P 500 support @ 2400

 

Sentiment Indicators (+RSI)

II survey: (June 13): 50.0% Bulls; 18.6% Bears = Bearish

AAII survey: (June 14): 32.3% Bulls; 29.5% Bears = Neutral

VIX: @ 10.38 = Bearish

RSI: (S&P 500) @ 60.93 = Neutral

Comment: The market is in a sideways range with an occasional intraday rally or selloff that typically deflates by the next day. The Nasdaq did take a beating but the S&P and Dow are holding near all-time highs. Although this market is dangerous, there is still room for it to go higher. No one is able to predict when the day of reckoning is coming (except that it always comes). You can ride the uptrend a bit longer knowing the party will end quickly and viciously one day. Or you can play it safe and sit on the sidelines primarily in cash.

I’m amazed that so many investors are blindly buying index funds at these levels. What happened to buy low and sell high? And yet, it’s possible that we could hit S&P 2500, or higher. As for me, the risk of catching those last few pennies on the upside is not worth the reward. That’s why I’m using very, very short-term trading strategies, both long and short. Most of the time, however, I am just watching and waiting, and not trading at all. I learned the hard way that it’s usually not profitable to trade during a sideways market. 

 

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