The Weekly Trader

S&P 500 is above its 200-day moving average = Bullish  

S&P 500 is above its 50-day MA = Bullish

S&P 500 one-month trend: SPX is in a strong uptrend that appears unstoppable, but also unsustainable for the long term.

RSI: (S&P 500) @ 63.98 = SPX is still overbought. At over 70 RSI, it will be extremely overbought.

MACD: Above Zero Line and above Signal Line = Bullish

Daily Intraday Volatility: 13.62 = Low (Bearish)

Comment: Last week, SPX sold off for two days, but then rebounded back by the end of the week, fueled by a blockbuster jobs report. RSI is still high but it is off its extreme highs, and VIX is still low but it is off its extreme low. Now that we’re almost back to where we started, all we can do is sit back and look for opportunities, if any.

The Sunday night futures are slightly lower, and aren’t telling us much. At this time, predicting what the market will do over the next week or two is a useless exercise. No one has a clue. The Fed has the market’s back so the odds are with a rally, but anything can happen, especially in the geopolitical world. My best advice is to take it day by day.

Bottom line: The indexes are still overbought but that could change in a heartbeat. Investors are enjoying the ride higher while traders sit and wait for a better risk reward.

For a trader’s perspective, read the following piece by Sven Henrich, Northman Trader, who makes a strong case for selling: https://bit.ly/2RxOrmc, and also this more detailed analysis: https://bit.ly/33YQthD

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For daily results of multiple indicators, read Yardeni Research: https://goo.gl/eT3fzA

For insightful analysis of the stock market, read Lance Roberts:www.realinvestmentadvice.com

For insightful analysis of economic conditions, read Wolf Richter:www.wolfstreet.com


S&P 500 is above its 200-day moving average = Bullish  

S&P 500 is above its 50-day MA = Bullish

S&P 500 one-month trend: SPX is in a strong uptrend that appears unstoppable, but also unsustainable for the long term.

RSI: (S&P 500) @ 69.34 = SPX is overbought. At over 70 RSI, it will be extremely overbought.

MACD: Above Zero Line and above Signal Line = Bullish

Daily Intraday Volatility: 12.62 = Extremely Low (Bearish)

Comment: RSI went above 70 last week before pulling back slightly. The indexes are extremely overbought, and judging by the Sunday night futures, we could become more overbought.

The market is like a game of musical chairs and when the music stops, all hell is going to break loose. No one knows the time or place, or what will be the catalyst. However, if you believe in reality, then this market has a date with destiny sometime in the near future.

Veteran market watchers are in awe, and many have stopped warning others to be careful. At the moment, the market doesn’t care. Fueled by kind words from the Fed, additional quantitative easing, and low interest rates, the market seems unstoppable. And it is, until it isn’t.

Be cautious as we are in rarified air. This market is for short-term traders, long or short. Meanwhile, my article on blow-off tops was just published on MarketWatch: https://on.mktw.net/2OK343V

Bottom line: Stand back and observe. This market is one for the history books.

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For daily results of multiple indicators, read Yardeni Research: https://goo.gl/eT3fzA

For insightful analysis of the stock market, read Lance Roberts:www.realinvestmentadvice.com

For insightful analysis of economic conditions, read Wolf Richter:www.wolfstreet.com


S&P 500 is above its 200-day moving average = Bullish  

S&P 500 is above its 50-day MA = Bullish

S&P 500 one-month trend: SPX is in a strong uptrend that still seems unstoppable for the moment.

RSI: (S&P 500) @ 66.87 = SPX is still overbought. At over 70 RSI, it will be extremely overbought.

MACD: Above Zero Line and above Signal Line = Bullish

Daily Intraday Volatility: 12.34 = Extremely Low (Bearish)

Comment: This will be a shortened week (Thursday holiday and Friday markets close at 1:00 p.m. ET), so I’ll keep it short.

The indexes pulled back slightly during the week, relieving some of the pressure from a severely overbought market. Futures are up on Sunday night, so it’s possible the march higher will continue. As I’ve repeatedly said, shorting the indexes during an uptrend is not recommended.

In addition, I’ve determined that in this current environment, trading individual stocks is more profitable than trading indexes, but that obviously depends on your trading strategy. For me, there hasn’t been enough volatility to lure me back to the indexes, and until there is, I trade individual stocks. (I’d be happy to hear from anyone who is doing well trading indexes).

Speaking of indexes, index buy and holders are doing well by doing nothing but watching the indexes slowly climb higher. Of course, the buy and hold strategy will stop being profitable one day, but for now, index investors look pretty smart. This might continue through this week and beyond. No one knows.

Bottom line: Keep a close eye on the indexes and still be on the lookout for individual stocks (to buy or short).

Have a great Thanksgiving!

FYI: I have a new article coming out on MarketWatch later in the week. I’ll share the link on this space when it’s published.

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For daily results of multiple indicators, read Yardeni Research: https://goo.gl/eT3fzA

For insightful analysis of the stock market, read Lance Roberts:www.realinvestmentadvice.com

For insightful analysis of economic conditions, read Wolf Richter:www.wolfstreet.com


S&P 500 is above its 200-day moving average = Bullish  

S&P 500 is above its 50-day MA = Bullish

S&P 500 one-month trend: SPX is in a strong uptrend that seems unstoppable at the moment.

RSI: (S&P 500) @ 74.11 = Extremely Overbought. SPX is in the danger zone, and although it can keep moving higher, caution is advised.

MACD: Above Zero Line and above Signal Line = Bullish

Daily Intraday Volatility: 12.05 = Extremely Low (Bearish)

Comment: It’s extremely rare to see such an overbought market. The indexes hit all-time highs on Friday with the Dow surpassing 28,000 for the first time ever. RSI is extremely overbought at 74.11, and although the indexes can still scream higher, a day of reckoning will come (eventually). Other sentiment warnings: The VIX is in the basement, and the Investors Intelligence sentiment survey (II) is at 57, near a screaming sell. It’s been many years since I’ve seen extreme sentiment numbers like these.

As I warned last week, it’s dangerous to short an uptrend, and that advice still stands. This market has all the makings of a blow-off top, so caution is still advised if trading the indexes.

There is still money to be made if trading individual stocks. The risk-reward of trading the indexes is poor, but there are still excellent opportunities, both bullish and bearish, with stocks.

Regarding the overall market, institutions are mostly on the sidelines with the algos (and the Fed’s QE) fueling the rally. It’s quite remarkable to see the market rising on low volume and low volatility. Buy and holders are delighted while anyone shorting the indexes (not recommended at this time) is pulling his or her hair out.

Where do we go from here? I’m watching in awe as the market gets more overbought, knowing we are experiencing a rare blow-off top. I’m watching RSI to see how high it can go, and am amazed it’s near 75 without any meaningful pullback. No one can predict how high the indexes will go but when it eventually reverses, it will be frightening.

Bottom line: Enjoy this rare market event while it lasts because this is one for the history books. Meanwhile, I recommend reading the following two articles, which will give you additional insights into the current market:

Sven Henrich (Northman Trader): https://bit.ly/2OknkYy

Lance Roberts (realinvestmentadvice.com): https://bit.ly/2KqpdSn

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For daily results of multiple indicators, read Yardeni Research: https://goo.gl/eT3fzA

For insightful analysis of the stock market, read Lance Roberts:www.realinvestmentadvice.com

For insightful analysis of economic conditions, read Wolf Richter:www.wolfstreet.com


S&P 500 is above its 200-day moving average = Bullish  

S&P 500 is above its 50-day MA = Bullish

S&P 500 one-month trend: SPX is in a strong uptrend.

RSI: (S&P 500) @ 70.22 = Extremely Overbought. SPX is in the danger zone, and although it can keep moving higher, a pullback is imminent.

MACD: Above Zero Line and above Signal Line = Bullish

Daily Intraday Volatility: 12.07 = Extremely Low (Bearish)

Comment: It’s rare to see such overbought conditions. With positive news regarding China, the Fed’s continuation of QE ($60 billion+ a month), and low interest rates, the market appears to be headed to the moon. But anyone who studies the stock market knows we’re in the danger zone. With a RSI of 70 and a VIX at 12, it won’t take much to reverse this market. Also add in the fact that my investor friends are bragging again, always a sign we are at or near a top.

Can the market go higher from here? Yes, it can, which is why you never short an uptrend. But wise traders and investors are on the lookout for signs of a stall and reversal. Typically, that first pullback will catch most people by surprise. Don’t waste your time figuring out “why” the market pulled back (after it occurs). But do spend your time evaluating whether the pullback is short-term (buy on the dip) event, or a longer-term selloff.

Why am I so confident there will be a pullback? Because we’ve gone too far and too fast, investors are giddy, and some of the technical indicators I follow are flashing warning signs. The algos are doing everything possible to keep this market propped up with help from the Fed, and so far they’ve been successful. But when investors and institutions get spooked one day, and they should in the near future, the pullback will be intense.

Investors who don’t read the clues or indicators are perhaps afraid to miss out on the so-called “Christmas rally.” This is what happens at market tops: the ones who resisted buying until now throw caution to the wind and jump in, almost always at the wrong time. As I said, the markets could go higher from here, but the risks are too great and the rewards too small at these overbought levels.

Bottom line: You have to make your own decisions what to do, but I personally have not seen such extreme overbought conditions in many years. Traders with more experience than me have made similar observations. Therefore, go long if you must but tread cautiously.

Note: Monday is Veteran’s Day but the markets are open. To all veterans: Thank you for your service.

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For daily results of multiple indicators, read Yardeni Research: https://goo.gl/eT3fzA

For insightful analysis of the stock market, read Lance Roberts:www.realinvestmentadvice.com

For insightful analysis of economic conditions, read Wolf Richter:www.wolfstreet.com