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) but reversed on Friday (Bearish)
RSI: (S&P 500) @53.91 = Neutral
MACD: Above zero line but even with its signal line (Neutral)
Daily Intraday Volatility: Moderate
Comment: The RSI went as high as 71 last week (70 is overbought) before plunging to 53.91 on Friday. SPX is currently resting at 2800, which is a major support level. It will be interesting to see if the bulls can hold 2800.
Fed Chairman Powell went beyond the usual dovishness and said that they would do anything to keep interest rates low and make Wall Street happy (my words). On Thursday, the indexes rallied on his kind words. On Friday, the indexes plunged.
Behind the scenes, institutional investors flocked to bonds for protection after U.S. bond yields inverted, a signal that many believe says a recession is near. It’s a warning sign, and although not perfect, it has signaled recessions in the past (the tricky part is the timing, as always). The inverted bond yield was enough to cause panic buying in bonds. Beginning now, be on the lookout for clues of a recession including job losses, poor housing sales, poor auto sales, and store closings.
If we get a recession with interest rates already low and debt so high, the Fed will really be in a quandary. And believe me, with stock prices at overbought levels, we could switch from buying on the dip to selling at any price. If you have huge gains from the stock market, it’s not a bad idea to take some money off the table, a decision only you can make.
Bottom line: All we can do is see if the bears take control again (they haven’t since December) or if the bulls can run this market even higher. No one, and I mean no one, can confidently predict what will happen this week.
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