Bullish or Bearish? Week of March 27, 2017

Here are the latest technical and sentiment indicators:

Technical Indicators (daily chart)

S&P 500 is hovering slightly above its 50-day MA (S&P 2330) = Neutral

MACD (S&P 500; 19,39,9) is above the zero line but pointing down = Neutral

MACD (S&P 500; 19,39,9) fell below its signal line = Bearish

S&P 500 support @ 2330 (50-day moving average), then 2320.

 

Sentiment Indicators (+RSI)

II survey: (March 21): 56.7% Bulls; 17.3% Bears = Bearish

AAII survey: (March 22): 35.3% Bulls; 30.5% Bears = Neutral

VIX: @ 12.98 = Bearish

RSI: (S&P 500) @ 44.80 = Neutral

Comment: The market always gives subtle clues that astute observers detect. Last Tuesday, there was an intraday reversal, and for the rest of the week, the market struggled as many traders sold each rally. Note that many technical indicators (above) turned from bullish (previously) to neutral/bearish. In addition, the sentiment indicators remain neutral/bearish. 

This coming week is very important as we look at more clues. In the past, after a rough week, the market often recovered, and it may do so again. However, if we continue to sell off during the week, that would be significant. I can’t predict which way the market will go but if it falls below its 50-day moving average, and lower, the market will be in for a rough spell. 

Bottom line: Something changed in the market last week, and not for the better. We will soon know if it’s only temporary. Meanwhile, be prepared to take either side as volatility makes a comeback. I’ve heard some pros predict 2500 (bullish) on the S&P as well as a 10% pullback (bearish). Typically, the truth lies somewhere in-between. 

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