Bullish or Bearish? Week of September 18, 2023
Short-term trend (DAILY CHART) – NEUTRAL: Last week, SPX hardly budged. falling from 4457 to 4450, a 7-point drop. It would have been a decent week but the market sold off hard on Friday, which was also options expiration day. At least for a day, volatility returned to the market. Note: Futures are FLAT on Monday morning.
Long-term trend (WEEKLY CHART) – NEUTRAL: On the longer term weekly chart, SPX is above its major moving averages, which is a bullish sign. Over the last few weeks, however, SPX hasn't gained any traction, thus the neutral rating.
MACD (DAILY) = NEUTRAL. MACD is even with the 9-day signal line and also even with the zero line. MACD is not giving a strong signal in either direction.
RSI: (S&P 500) = 47.76 (DAILY) NEUTRAL. RSI was in the neutral range last week and is once again giving a neutral signal.
Comment: For the second week in a row, all of the indicators are neutral, which means they are not giving any significant signals. It's a little surprising since September has traditionally been volatile, but not this year, at least not yet.
Patience is required if trading this market. If investing, stay the course until the indicators give useful signals, or if the market gets extremely overbought or oversold. Selling covered calls is one options strategy that works in this slightly bullish to neutral environment. On the other hand, it's tough on traders on many days, but the pros find their favorites and trade accordingly.
Those rising interest rates are squeezing the bond market while also increasing pressure on company earnings. Some risk-adverse investors have moved to Treasuries, which are paying higher returns due to inflation (if you can't beat them, join them).
Bottom line: Unless something unexpected happens, the indicators are pointing to another dull week.