Here are the latest indicators:
S&P 500 one-month trend = Bullish
S&P 500 is above its 50-day moving average = Bullish
RSI: (S&P 500) @58.99 = Neutral
Intraday Volatility: Very Low
Comment: Although the S&P 500 is still lingering near its all-time highs, it’s been unable to move past it. Therefore, for the last few weeks, we’ve been in a holding pattern near the top of the range. I’ve learned the hard way that when the indexes are between support and resistance, it’s best to sit back and wait to see which side will win.
While waiting for the winner, observe the market action. Have you noticed that the market rises quickly but sells off slowly on most days? Those darn algos are doing everything in their power to keep the market in slow motion, and it’s working. Volatility is so low it can put you to sleep on some days. Until a winner is obvious, I’m mostly on the sidelines while making quick morning day trades on occasion. This is not the time to trade with large size until the next short-term trend can be identified.
Medium term, sentiment indicators are telling us we’re topping out. Stocks just delivered the best quarterly run in the last five years (Bloomberg). And individual investors at brokerage firms are holding the lowest amount of cash in history. This is a flashing red warning sign.
Bottom line: Hold your fire for now until the winning side is clear. Retail investors are expecting another Santa Claus rally this year (the bulls are dreaming of SPX 3000). You’d be wise to keep an open mind as the market often fools the most number of people, especially when “everyone” is expecting the same outcome.
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