Bullish or Bearish? Week of May 25, 2020

Mid-term: The S&P 500 started off with a bang last week and is now right below its 200-day moving average = Bullish. 

One-month trend = Sideways. SPX has slowly climbed higher during the month = Bullish.

RSI: (S&P 500) @ 57.74 = Mildly overbought. 

MACD: MACD is above its zero line and even with its 9-day Signal Line = Neutral

Daily Intraday Volatility (VIX): 28.16 = Elevated but falling = Neutral. 

Comment: It’s a four-day week after the Memorial Day holiday. It’s a tale of two countries, and two tapes. On one hand, the country is nervous over the high number of virus deaths, and millions are in economic pain. The country is struggling to get back to “normal.” 

On the other hand, the stock market acts as if everything is fine. Futures are up strongly on Monday night. Apparently, the bulls are going to make a play for the S&P 500’s 200-day moving average, and they might get their wish. 

It’s impossible to predict what is going to happen this week so I will leave it to the professionals to give their take. I admit I have no idea which direction we’re going, but the bulls seem to be in control for now. I do know that only one entitiy can be right: either the stock market is signaling that all is well, or the economy is telling us things are dire. 

Bottom line: Be patient during these strange times. Trade less when uncertain. 

I turn to Lance Roberts, Wolf Richter, and Sven Henrich for their excellent analysis: 

Lance Roberts @ realinvestmentadvice.com on how the market is “stuck in the middle.”: https://bit.ly/2LZd4Ec

Sven Henrich @ Northman Trader on how the market is oblivious to reality, and another Straight Talk video: https://bit.ly/2zvBbYr

Wolf Richter @ wolf street.com on the Hertz bankruptcy and other economic warning signs: https://bit.ly/3d4B0lv

___________________________________________________________

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

___________________________________________________________

Bullish or Bearish? Week of May 18, 2020

Mid-term: The S&P 500 had a lackluster week, unable to rise above its 200-day moving average. Unless something changes this week, it’s still a bear market (by my definition). Futures are higher on Sunday night so maybe the bulls can push it to SPX 3000.

One-month trend = Sideways. SPX has worked hard but has gone nowhere in the last month. It’s either going to break out or break down.

RSI: (S&P 500) @ 52.71 = Neutral. The market could go in either direction this week. 

MACD: MACD is above its zero line and even with its 9-day Signal Line = Neutral

Daily Intraday Volatility (VIX): 31.89 = Relatively High. Volatility remains elevated but much lower than a month ago. Volatile trading days are still expected. 

Comment: I wish I had something exciting to say but I don’t. Jerome Powell gave a harsh assessment of the economy on Thursday, and the market sold off quickly. On Sunday night he backtracked and said things are looking brighter. Which is it?

As Lance Roberts said last week, either the economy is right and we’re in deep trouble, or the stock market is right and the worst is over. But both the stock market and economy can’t be right.

The market has been drifting sideways for nearly a month with low volume and lack of institutional participation. We can continue drifting for a while longer until the market either plunges or rallies. No one can predict which, so the best strategy is sit and wait for the next trend.

Bottom line: It appears as if the economy is getting worse while the stock market keeps climbing. Unusual is an understatement. If trading, be patient and don’t try to force trades. Sometimes the best trade is not trading at all. Let’s hope we get some clarity this week.

Here are two additional and more detailed analysis of the current market:

Lance Roberts @ realinvestmentadvice.com sees a seasonal sell signal: https://bit.ly/36f5wqf

Sven Henrich @ Northman Trader with a Straight Talk video on the current market: https://bit.ly/3g0Et6n

___________________________________________________________

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

___________________________________________________________

Bullish or Bearish? Week of May 11, 2020

Mid-term: The S&P 500 continued to move higher, coming ever closer to the almighty 200-day moving average. This is another pivotal week. Can SPX surpass the 200-day (and stay above)? If it can, it’s bullish. If not, it’s bearish.

One-month trend = Bullish. SPX has worked hard, with the Fed’s help, to rally right below its 100 and 200-day moving averages. The economy is in shambles but the market spikes higher. Both can’t be right (more on this later).

RSI: (S&P 500) @ 58.29 = Neutral. The market could go in either direction this week.

MACD: MACD is above its zero line and even with its 9-day Signal Line = Neutral

Daily Intraday Volatility (VIX): 27.99 = Relatively High. Volatility remains elevated but much lower than a month ago. Volatile trading days are still expected.

Comment: Most people are shaking their head at last week’s market action. The unemployment rate and job losses were the worst since the Great Depression, and some economists say it’s even worse than you think. Meanwhile, the stock market rose back near its previous highs (Nasdaq already did).

As Lance Roberts says, either we have a depressionary economy or that things couldn’t be better, according to the stock market. Both can’t be right, and we should know soon who it is.

It’s no secret that the Fed has been pouring trillions into the stock market using a variety of methods. No one knows how long they will do that, and how long it will be successful. Common sense says reality will hit one of these days, but then again, logic has taken a vacation.

Bottom line: My gut feeling says the worst is coming, and reality will be arriving at the stock market near you. But with the Fed ready to pump up any selloff, anything is possible. Read the excellent blogs below for excellent discussions on the current stock market.

The following is a must-read interview with Larry McDonald, publisher of the “Bears Trap Report.” In summary, he says, buy silver and other commodities, and sell stocks: https://bit.ly/2zu2Dp3

Lance Roberts @ realinvestmentadvice.com on how a depressionary economy and rising stock market can’t both be right: https://bit.ly/2yBfR3D

Sven Henrich @ Northman Trader with an informative video discussion with three market gurus: https://bit.ly/3blIzmn

___________________________________________________________

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

Bullish or Bearish? Week of May 4, 2020

Mid-term: The S&P 500 spurted higher last week but is still slightly below its 200-day moving average = BearishThe longer it remains below its 200-day MA, the more bearish it is. It must rise above the 200-day MA and stay above for the bulls to take control.

One-month trend = Bullish. SPX has worked hard, with the Fed’s help, to rally above its 50-day moving average. Nevertheless, at this writing, it has still not risen above its 100-day or 200-day MA. Until then, the bear case is still possible, and in play.

RSI: (S&P 500) @ 52.53 = Neutral. The market could go in either direction this week but futures are lower on Sunday night.

MACD: MACD is slightly above its zero line and slightly above its 9-day Signal Line = Neutral to Bullish

Daily Intraday Volatility (VIX): 37.19 = Relatively High. Volatility remains elevated. Expect volatile trading days. 

Comment: The indexes started the week with a spectacular rally (small caps rallied 10% in 3 days) before and during the Fed meeting. Just when it appeared as if SPX would rise above its 200-day moving average (and also while hitting key Fibonacci technical levels), SPX retreated (they gave back nearly all of the gains). On Sunday night, the futures are lower and it appears as if the rally has run out of steam, at least for now.

As the market climbed higher last week, traders wondered if that was a bear market rally, another word for a Bull Trap. That is when the bulls believe the worst is over and they buy at the top of a rally, only to watch it reverse direction.

I spoke to a buy and hold investor friend of mine who has all of his money in various indexes. He was down as much as 30% a month ago and now is down only 13%. He is thinking of selling but “only when I get back to even.” You heard it here first: Many investors are not going to sell until they get ALL of their money back.

For my friend’s sake, I hope he succeeds. But I have seen this scenario before with individual stocks. You lose money, you get 75% of the money back, and you get greedy. You want 100% of your money back so you don’t sell. Then the stock plunges. I’m not predicting this will happen to the SPX, but it’s possible. After all, the economy is not in a good place and we have not solved the virus problem.

Bottom line: This will be another fascinating week. The Fed helped the market last week with monetary and fiscal injections, and helped to smash the bears…for three days. This week we will find out who really has the winning hand. I’m also curious if the Fed jumps in again to “save” the market if it starts to get ugly again. We shall see.

Once again, I recommend that you read the following pieces. Be sure to watch the video from Sven, which gives a bearish analysis of the market environment:

Sven Henrich @ Northman Trader on the failed rally last week: https://bit.ly/3fcdCUG

Lance Roberts @ realinvestmentadvice.com on why selling in May makes sense this year: https://bit.ly/2WlZmjD

___________________________________________________________

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