Bullish or Bearish? Week of Sept. 28, 2020

This is what the technical indicators are telling us this week: 

One-month trend = Broken and hurt but prepared to recover. SPX is above its 200-day MA (bullish) but the uptrend is still broken (bearish). Note: SPX closed at 3298 at the close on Friday, lower from a week ago, and below its 50-day MA, which is at 3350. On Sunday night, the major index futures are slightly higher.

Mid-term (50- and 100-day MA) = Bearish. The S&P 500 is still below its 50-day MA but is making a recovery attempt. Let’s see if the indexes can fight their way above the 50-day, and stay there. 

RSI: (S&P 500) @ 44.62 (Daily) = Slightly oversold. The RSI hardly moved in the last week. There was some institutional selling during the week. 

MACD = Slightly Bearish. MACD is slightly below its zero line and has dropped below its 9-day Signal Line. 

Daily Intraday Volatility (VIX): 26.38 = Neutral. VIX is slightly below its 200-day moving average, which tells me there is little fear. 

Comments: The indexes were in serious trouble last week until a strong save on Friday. Although the SPX is still below its 50-day moving average, it will make an attempt to regain its former glory. You can count on it. The key is whether the expected rally will be successful. It is essential you pay close attention to the rally. As most traders know, you always learn more from rallies than selloffs.

The indexes are still slightly damaged from a slow selloff that has lasted several weeks. And yet, the wimpy bears have not fully taken control. That is why I am certain the bulls will do whatever they can to bring the indexes well above their 50-day moving averages this week.

This is a watch and see week. No one knows who has the upper hand yet. I believe we are transitioning from a bull to a bear market, but I can’t prove it, and even if I’m right, this transition takes time. Be patient, and try not to get caught on the wrong side of a strong trend. As you know, on some days it’s been pretty wild.

Bottom line: Don’t feel compelled to trade everyday. During volatile days like last week, sometimes it’s best to move to the sidelines and wait for better opportunities.

Lance Roberts @ realinvestmentadvice.com suggests you are prepared for both an overdone selloff (short-term) and a deeper correction (medium-term): https://bit.ly/3cE2RJK

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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

Bullish or Bearish? Week of Sept. 21, 2020

This is what the technical indicators are telling us this week: 

One-month trend = Broken and Bearish. SPX is above its 200-day MA but the broken uptrend has not recovered yet. Note: SPX closed at 3319 at the close on Friday, lower from a week ago, and below its 50-day MA, which is at 3342. On Sunday night, all the major index futures are flat, but that could change in the morning.

Mid-term (50- and 100-day MA) = Bearish. The S&P 500 fell below its 50-day MA last week. Let’s see if the indexes can fight their way above the 50-day, and stay there.

RSI: (S&P 500) @ 42.74 (Daily) = Slightly oversold. The RSI hardly moved in the last week. There was some institutional selling during the week.

MACD = Neutral to Bearish. MACD is barely above its zero line and has dropped below its 9-day Signal Line. 

Daily Intraday Volatility (VIX): 25.83 = Neutral. VIX is slightly below its 200-day moving average, which tells me there is still little fear.

Comments: The market played out just as we anticipated last week with an attempt to rally on the Fed meeting days. But on the other days, the bulls were holding on for dear life. The market has definitely taken a turn for the worse, with a big caveat.

The bulls need to take control this week or it could be a slippery slope downward. As usual, no one can predict the future, but I can tell you last week was brutal, especially for the FAANG stocks, including crowd favorites Amazon and Apple.

If you study market history, you know when the market leaders fall, that often signals the end of a bull market. I’m not saying we’re there yet, but watch the leaders closely over the next few weeks and months to see how they act.

Bottom line: The market has turned treacherous with a lot of twists and turns waiting to confuse and distract unsuspecting bulls and bears.

Below is further market analysis by Lance Roberts:

Lance Roberts @ realinvestmentadvice.com says the correction may continue as the election looms, so take steps to reduce risk (good advice): https://bit.ly/3cflAv4

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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

Bullish or Bearish? Week of Sept. 14, 2020

This is what the technical indicators are telling us this week: 

One-month trend = Broken. SPX is above its 200-day MA but the broken uptrend has not recovered yet. Note: SPX closed at 3340 at the close on Friday, lower from a week ago. The 200-day is at 3097. On Sunday night, all the major index futures are higher.

Mid-term (50- and 100-day MA) = Neutral to Bearish. The S&P 500 fell to its 50-day MA last week. Let’s see how it reacts at the 50-day, which is now acting as resistance.

RSI: (S&P 500) @ 44.78 (Daily) = Slightly oversold. The RSI fell from a high of 80 a week ago to 44.78. It reflects institutional selling last week.

MACD = Neutral. MACD is above its zero line and and below its 9-day Signal Line. 

Daily Intraday Volatility (VIX): 26.87 = Neutral. VIX is slightly below its 200-day moving average, which tells me there is little fear even after last week’s pullback.

Comments: Last week was a rough one for the markets. After the holiday, the Dow fell by over 600 points, tried to recover, and fell again. The worst day was Thursday, when the market rallied at the open and plunged later in the day. You always learn more from rallies, and a failed rally telegraphed trouble.

This week, the Fed is meeting. Typically, the markets move higher on the day before and during the Fed meeting. Usually, the Fed has nice things to say, and many promises to make. As usual, no one knows how the market will react, so trying to guess market direction this week is risky.

SPX is at the lower end of the Nicholas Darvis box. Few follow the Darvis box but I do. It tells me that the market is at risk of falling further, but I also know the algos will aggressively defend the 50-day moving average. If SPX and the other indexes fell below the 50-day, that would be significant and surprising.

Bottom line: We have an injured market that is slightly above its 50-day moving average. The Fed is meeting so they will do whatever it takes to instill confidence. It’s a gamble to guess market direction this week as it could go either way. After the Fed meeting, we will have a better idea which side (bull or bear) is winning. Be prepared for anything.

Below is further market analysis by Lance Roberts:

Lance Roberts @ realinvestmentadvice.com says speculators are getting even more speculative: https://bit.ly/3ivT0YL

__________________________________________________________

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 Sept. 7, 2020

This is what the technical indicators are telling us this week: 

One-month trend = Neutral. SPX is above its 200-day MA but the uptrend was broken last week, at least temporarily. Note: SPX is at 3426 on Sunday night, lower from a week ago. The 200-day is at 3092. On Monday night, SPX futures are slightly higher while the Nasdaq futures are flat.

Mid-term (50 and 100-day MA) = Neutral. The S&P 500 is above its 50- and 100-day MA but pointing down.

RSI: (S&P 500) @ 53.38 (Daily) = Neutral. The RSI on SPX and the other indexes have returned to neutral.

MACD = Neutral. MACD is above its zero line and is even to slightly below its 9-day Signal Line. 

Daily Intraday Volatility (VIX): 30.75 = Neutral. VIX is above its 200-day moving average, which reflects that some fear appeared last week.

Comments: I hope that you put in your trading diary that when RSI gets in the danger zone (above 70 or below 30), pay attention. RSI zoomed over 80 early last week, and the next day, the market sold off fast and furiously. Although RSI doesn’t always react so quickly, it worked perfectly this time. The indexes were extremely overbought and a severe selloff was the result.

Now that the indicators have returned to neutral levels, many believe that all is well. All is not well. First, the futures market is indicating a mixed market, which is always a warning sign. Second, it’s possible the selloff is not over.

The market was damaged last week, and it needs time to repair. It’s unknown what is going to happen this week, so be on guard for anything.

The charts do not look pretty at the moment, so keep your eye on the 50-day moving average. If that is breached, the selloff could continue. If the bulls can hold the 50-day, then the damage can be repaired.

The lesson is that the market can change from blue skies to a thunderstorm in seconds. Many bullish investors got too overconfident and fearless, as reflected in RSI and the VIX. And now we’ll see if the bears can take advantage or not.

Bottom line: Be on guard as anything is possible. The bulls need a calm market this week, while the bears want to take advantage of the increased volatility. Let’s see who makes it to the Winner’s Circle.

Below is further market analysis by Lance Roberts and Sven Henrich:

Lance Roberts @ realinvestmentadvice.com was right about the market decline, and now wonders if the market rally is over: https://bit.ly/33dvDwS

Sven Henrich @ Northman Trader discusses the intense selloff last week, and the damage that was done: https://bit.ly/3h9dkOj

__________________________________________________________

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