The Weekly Trader

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 @ 2368 (50-day moving average)

 

Sentiment Indicators (+RSI)

II survey: (May 9): 58.7% Bulls; 17.3% Bears = Bearish

AAII survey: (May 10): 32.7% Bulls; 30.2% Bears = Neutral

VIX: @ 10.40 = Bearish

RSI: (S&P 500) @ 58.16 = Neutral

Comment: The market has been flat and boring, and very deceiving. The VIX has been in the basement, breaking a number of records for being so low for so long. If you are trading, all you can do is wait for volatility to appear, and it will one day. It could be days or weeks, or longer, but when volatility appears, traders will get back to work again.

Many investors, however, are feeling pretty confident. Margin levels are at all-time highs and index funds are more popular than ever. So far, the strategy is working. A few experts have warned that the market is in the danger zone, but few are listening. 

When I look at the overall market, I see the danger signs, which is why I like holding a healthy amount of cash. I am also patient enough to wait for the market to make up its mind which way it will go, and for volatility to return. In fact, I’m curious how long this low-volatility environment can continue. Hint: Not indefinitely. Until then, be careful out there.

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 above its signal line = Bullish

S&P 500 support @ 2366 (50-day moving average)

 

Sentiment Indicators (+RSI)

II survey: (May 2): 58.5% Bulls; 17.9% Bears = Bearish

AAII survey: (May 3): 38.1% Bulls; 29.9% Bears = Neutral

VIX: @ 10.57 = Bearish

RSI: (S&P 500) @ 65.55 = Bearish

Comment: The S&P 500 is at the upper range with resistance at 2400, a few points away. Many technical indicators are bullish while sentiment indicators are warning that the crowd has become overconfident. Nevertheless, if the S&P breaks through resistance, the bulls remain in control. However, the odds are that the market retreats, and will either move sideways or down during the week. Last week, volatility was crushed as the market moved sideways. In a challenging market like this, it’s suggested you keep money on the side to take advantage of extreme conditions, if any.

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 slightly above its signal line = Neutral

S&P 500 support @ 2363 (50-day moving average)

 

Sentiment Indicators (+RSI)

II survey: (April 25): 54.7% Bulls; 17.9% Bears = Bearish

AAII survey: (April 26): 38.1% Bulls; 31.7% Bears = Neutral

VIX: @ 10.82 = Bearish

RSI: (S&P 500) @ 60.57 = Neutral

Comment: Last week, we had a two-day rally, which ran out of gas midweek. With the Fed on tap to speak this week, we might get increased volatility. For an excellent, detailed analysis of the current market, read Lance Robert’s most recent column here: goo.gl/4A1eWq

Here are the latest technical and sentiment indicators:

Technical Indicators (daily chart)

S&P 500 is below its 50-day MA = Bearish

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

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

S&P 500 support @ 2330

 

Sentiment Indicators (+RSI)

II survey: (April 18): 51.9% Bulls; 18.3% Bears = Bearish

AAII survey: (April 19): 25.7% Bulls; 38.7% Bears = Neutral

VIX: @ 14.63 = Neutral

RSI: (S&P 500) @ 48.71 = Neutral

Comment: The S&P futures gapped up almost 1% overnight (at this writing) based on the election results from France. Although the market might open up on the high side, there is no guarantee it will last. The only guarantee is this week will be volatile as GDP is released on Friday, tech heavyweights report earnings, political and geopolitical events heat up, and Congress returns from vacation. 

If you are bullish, it’s risky to chase the spike at the open. If you are bearish, it could be too early to short (i.e. fading the gap). It’s times like this that the wisest choice is to sit back and wait before pouncing. Observe whether the morning rally holds, or reverses. Observe how the market closes. It’s very likely the market is going to zig and zag all week, so be prepared for any scenario. It is going to get interesting, so be careful out there. 

Here are the latest technical and sentiment indicators:  

Technical Indicators (daily chart)

S&P 500 is below its 50-day MA = Bearish

MACD (S&P 500; 19,39,9) is slightly below its zero line and pointing down = Bearish

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

S&P 500 support @ 2330 (it’s slightly below support), and 2305.

 

Sentiment Indicators (+RSI)

II survey: (April 11): 56.3% Bulls; 17.5% Bears = Bearish

AAII survey: (April 12): 29% Bulls; 37.4% Bears = Neutral

VIX: @ 15.96 = Neutral

RSI: (S&P 500) @ 35.90 = Neutral 

Comment: It was the first time in 16 years that the market sold off on the day before Good Friday. Last week was dangerous because of multiple intraday reversals ending in the Thursday selloff during the last half hour. It’s too early to proclaim the bull market is over but red flags are everywhere. The technical indicators are signaling we’re in for a short-term selloff but that can change on a dime. Nevertheless, it’s time to be more cautious than usual based on the technical readings. For example, the S&P 500 fell below its 50-day moving average. We’ll watch this week to see if the indexes can rise above its 50-day MA or sink further. If the indexes continue to plunge, look out below. (If there’s a selloff, my technician friends say we could get to 2100 or 2200 on the S&P 500 before there’s a bounce).

Depending on how painful it gets, I’ll be looking at the millions of investors sitting in index funds. I wonder how much pain they can take before they sell. As I wrote earlier, it’s too early to proclaim the bull market is over, but you should definitely be on guard. In the past, when the market seemed ready to fall into the abyss, it was miraculously saved by Fed comments or actions. This time I’m waiting to see what happens. One thing for sure: If this is the real deal (i.e. correction and trend change), it will be brutal. If you aren’t comfortable buying put options, wait until the selling stops and be prepared to go long.

Bottom line: No one can predict what is going to happen this week, so be ready for anything. As I predicted weeks ago, volatility is making a comeback. That’s great for traders but it will make investors dizzy and nervous. Keep your eye out for intraday reversals, late day selloffs, and head fakes.