Here are the most recent market indicators:
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 = Uptrend (Bullish)
RSI: (S&P 500) @69.01 = Overbought (Bearish)
MACD: Above zero line and moving higher = Bullish
Daily Intraday Volatility: Moderate
Comment: Last week, the indexes rose firmly above their 200-day moving averages. On Friday, even on low volume, the indexes pushed higher, with the Dow rising by over 400 points.
If you look at the technical indicators, all systems are “go”, i.e. it’s a strong uptrend. The only bad news is the market is getting overbought with the RSI near 70. Although the market has room to move higher, prepare for a major reversal within the next week or two, if not sooner. Enjoy the ride higher while it lasts, because a market moving higher on low volume will not last long. The only question is how severe the pullback will be.
Bottom line: The market is moving higher, it’s a strong uptrend, and the momentum traders are happy. However, because the market is in overbought territory on low volume, a pullback is imminent.
Hint: I’ve seen this pattern before. It’s likely the S&P 500 will test at or near 2800 before reversing. If the market blasts through 2800 on high volume, I’d be surprised but still cautious. Ride the momentum while it lasts and be prepared for a strong intraday reversal to the downside in the coming week or two.
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