Bullish or Bearish? Week of Nov. 20, 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 has fallen below its signal line = Bearish

S&P 500 support @ 2560

 

Sentiment Indicators (+RSI)

II survey: (Nov. 14): 63.5% Bulls; 15.4% Bears = Bearish

AAII survey: (Nov. 15): 29.4% Bulls; 35.2% Bears = Neutral

VIX: @ 11.43 = Bearish

RSI: (S&P 500) @ 55.24 = Neutral

Comment: The market got a little rocky for a couple of days last week, reminding us of how a real stock market behaves. While the S&P ended the week nearly flat, underneath there is technical damage. A MACD sell signal was triggered during the week, which has led to pullbacks in the past. In addition, the AAII bullish sentiment plunged from 45% to 29%, but not enough to trigger a contrarian buy signal. In addition, the Investor’s Intelligence survey is still as bullish as ever. 

Because of the holidays, it’s possible any pullback will be subdued, but continue to be on guard. Typically, the market enters the holidays in a bullish mood until the end of the year. After all, fund managers are making a final sprint to beat the indexes (and lock in their compensation), so they tend to buy anything that moves. In fact, it would be unusual if the market retreated strongly from here, however, anything is possible so watch closely. The odds are we are going to limp into the end of the year. Nevertheless, watch for signs of deterioration. 

Note: There should be light trading this week due to the holidays, which reminds me: Have a great Thanksgiving! 

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