The Weekly Trader

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

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

S&P 500 one-month trend: “V” Shaped Rally and Triple Top (one year) at Resistance. It could go in either direction but is hitting major resistance at all-time highs.

RSI: (S&P 500) @70.86 = Overbought

MACD: Above Zero Line and above Signal Line (Bullish)

Daily Intraday Volatility: 12.28 (Subdued). Volatility is still in the basement, which cannot last forever.

Comment: It’s been a while since I’ve seen such an overbought market (over 70 RSI is overbought and it could still go higher), and the VIX so low (at 12.28, volatility is crushed).

Last week, the market was headed lower early in the week, that is, until Fed Chair Jerome Powell gave the market hints that a rate cut is coming (he didn’t actually say that, but the market believes he will cut rates).

Something doesn’t make sense: On one hand, the indexes have just reached all-time highs (SPX 3000), and yet, the Fed wants to cut rates due to the trade wars and other disturbing data (my opinion: such as the hints a recession is looming, and less than spectacular earnings). Nevertheless, something has to give, and if not, this market bubble is going to expand even more. If Powell cuts rates, and the market zooms even higher, be prepared for the short of the year (if not the decade in the intermediate) before the end of the year.

As I said last week, do not short while the market screams higher (as no one knows how high a bubble can expand), but if I’m right, there should be fantastic shorting opportunities in the near future.

In two weeks, the Fed has their formal meeting, and they better not disappoint, or look out below. Although all of the indicators are bullish (with RSI the only exception), it wouldn’t take much for the market to plunge. And yet, although the Fed is playing with fire, it’s very possible they can keep the bull party going a bit longer.

With the VIX so low, it’s difficult for most traders to make money. On the other hand, buy-and-hold investors in indexes are pleased with their profits, and believe the Fed will save them if there is a sudden reversal. Although volatility has been suppressed over the last four months (thanks to the algos), it can’t last forever.

Bottom line: It’s a confused and dangerous market that looks pretty on the outside and weak on the inside. With the RSI so high, a dislocation would not be surprising, but the Fed will do whatever it can to support the indexes. Be alert to any possibility this week and beyond.

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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 moving average = Bullish

S&P 500 one-month trend: “V” Shaped Rally and Triple Top (one year) at Resistance. It could go in either direction but is hitting major resistance at all-time highs.

RSI: (S&P 500) @69.13 = Overbought

MACD: Above Zero Line and above Signal Line (Bullish)

Daily Intraday Volatility: 13.28 (Subdued). Volatility is in the basement, which will not last forever.

Comment: The shortened holiday week is disorientating, but now it’s back to business. The algos were able to keep volatility subdued last week, in fact, the VIX is ridiculously low once again. Also, RSI is in the overbought zone (over 70 is overbought). Investors are feeling giddy right now but I get the feeling there could be sand beneath their feet.

Although the market could squeak higher this week, with an overbought market, sky-high investor sentiment, and extremely low volatility, the odds are good we are headed lower. Sunday night futures aren’t telling us much (slightly lower), but do not be surprised if there is a selloff this week. It’s not a prediction, but based on the clues and indicators above, a selloff is likely. The real question is how fast it bounces back if I’m right.

Bottom line: The algos will try to keep the party going longer but the indicators and clues are pointing to trouble ahead. Be prepared for any scenario, and if you are shorting, do it AFTER the market breaks, not before. Look and see if the algos save the day once again. One thing for sure: Until investors feel true fear, the algos remain in control.

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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 moving average = Bullish

S&P 500 one-month trend: “V” Shaped Rally and Triple Top (one year) at Resistance. It could go in either direction but the odds are higher based on Sunday night futures.

RSI: (S&P 500) @62.37 = Slightly overbought

MACD: Above Zero Line and above Signal Line (Bullish)

Daily Intraday Volatility: 15.08 (Subdued). Volatility remains on the low side.

Last week, I thought it was going to be a wild and unpredictable week, but it was subdued with low volatility. This holiday week is starting off with a bang as the market attempts to hit its all time highs. It might do it this week, but next week could be a different story. I’ll be looking to see if the opening rally holds all day, which would be bullish.

Bottom line: Don’t fight a strong rally, and although we are overbought and in a market bubble, it can get bigger before it eventually pops. That’s why you never short a rally while it’s moving higher.

_____________________________________________________

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 moving average = Bullish

S&P 500 one-month trend: “V” Shaped Rally and Triple Top (one year) at Resistance. It could go in either direction.

RSI: (S&P 500) @67.53 = Overbought (Bearish)

MACD: Above Zero Line and above Signal Line (Bullish)

Daily Intraday Volatility: 15.40 (Subdued). Volatility is still on the low side.

Comment: As expected, Fed Chair Powell did not cut rates but gave hope to the bulls by insinuating that he might cut rates. The bulls ran with it, running the market higher on low volume. The Dow just had the best June in 80 years. Unfortunately, we are also overbought on the indexes as SPX hit resistance, creating a V-shaped rally and triple top (one year). What could possibly go wrong?

Well, a lot of things could go wrong, which is why this is going to be an interesting week. Powell speaks on Tuesday, and the Group of Seven meet on Friday and Saturday, with the highlight being the Trump-Xi meeting. There is pressure from all sides for Powell to cut rates, although he never promised anything. The algos will try to keep the markets calm but there will be a lot of cross currents, and volatility should increase (it might even explode one day). Powell has the power to disappoint the markets if he so desires, and obviously everyone will be watching the Trump-Xi meeting closely.

Bottom line: It should be a wild and unpredictable week. The market is overbought so if something goes wrong, the markets will fall swiftly. The market is at resistance so it will need a strong push to surpass the all-time highs. Get out the popcorn because we could go in either direction, and more than likely, we will!

_____________________________________________________

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 slightly above its 50-day moving average = Neutral

S&P 500 one-month trend = Multiple Short-term Trend Reversals (Inconclusive)

RSI: (S&P 500) @57.65 = Neutral

MACD: Below zero line but slightly above signal line (Neutral)

Daily Intraday Volatility: 15.28 (Subdued). Volatility is still on the low side.

Comment: The Fed has their two-day FOMC meeting on Tuesday and Wednesday, followed by a press conference on Wednesday afternoon. The consensus is there will be NO rate cut at this meeting, but Powell’s words will be closely scrutinized. No one can predict what Powell is going to say, or how the market will react. It really could go either way, so expect volatility during the week, and especially after he speaks.

My prediction: He won’t cut rates but he will say that he will in the future depending on market conditions.

Meanwhile, the best analysis I’ve seen on how to manage the current market environment comes from a piece that Lance Roberts wrote: https://bit.ly/2WIp3cq

Bottom line: It is going to be a tricky week for traders and investors, so stay alert, or wait until the dust clears. Wall Street really wants Powell to cut rates, and if he doesn’t deliver now or in the future, Wall Street won’t be pleased.

_____________________________________________________

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