The Weekly Trader


May19

Bullish or Bearish? Week of May 20, 2024

Short-term trend (DAILY CHART)   BULLISH: Last week, SPX rose from 5222 to 5303, another strong rally, this time for 81 points. The indexes are on a roll. They are above all three major moving averages and at all-time highs. Until something disrupts the uptrend, betting against it is too risky at this time (but that should change in the future). Note: Futures are FLAT on Monday morning.

Long-term trend (WEEKLY CHART) – BULLISH: "Up, up, and away," says the chart. The long-term uptrend "seems" unstoppable.

MACD (DAILY) = BULLISH: MACD is above the 9-day signal line and is above the zero line.

RSI: (S&P 500) = 67.97 (DAILY) OVERBOUGHT: The only warning sign is coming from RSI, which is saying SPX is overbought. If it rises above 70, it will be extremely overbought. RSI has been deadly accurate in the past so if SPX keeps climbing higher, watch out.

Comment: As mentioned above, the indexes are on a roll, with everything coming up bullish. The market seems unstoppable, that is, until something comes out of the blue to reverse its direction. Not surprisingly, SPX and the other indexes are overbought, and getting close to extreme levels. When RSI rises above 70, a reversal is not far behind.

The reason for the bullishness right now appears to be the hope the Fed will cut interest rates in the near future. I don't spend a lot of time thinking about "why" the market moves higher, only that it is.

It was recently reported that Warren Buffett's company has increased their cash reserves to a shocking $189 BILLION. Wow. Maybe he knows something we don't. Also, if someone ever tells you that Buffett buys stocks but never sells, now you know that's not true.

If you are long, you may want to consider taking some money off the table, a decision only you can make.

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