Bullish or Bearish? Week of October 26, 2020

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

One-month trend = Neutral to Bullish. SPX is well above its 200-day MA, a bullish signal, but the rally is still treading water after making all-time highs a few weeks ago. SPX closed at 3465 at the close on Friday, a slight drop from a week ago. Note: SPX futures are lower on Sunday night.

Mid-term (50- and 100-day MA) = Neutral. The S&P 500 is slightly above its 50-day MA and moving sideways.

RSI: (S&P 500) @ 55.75 (Daily) = Slightly Overbought. RSI is overbought but not at extreme levels. 

MACD = Neutral. MACD is above its zero line but even with its 9-day Signal Line. MACD fell from its bullish position and is moving sideways.

Daily Intraday Volatility (VIX): 27.55 = Low. VIX is still below its 200-day moving average, indicating that volatility is low, and that fear is nowhere to be found.

Comment: Expect an unpredictable market as the election looms. The algos are aggressively defending any selloffs, but reality is getting in the way. On one hand, the virus is ruining the lives and livelihoods of millions. The economy is teetering over a cliff with too many suffering.

On the other hand, the market is near its all time highs. They can’t both be right. As a trend trader, I’m finding it difficult to find good trades. Therefore, I’m on the sidelines and waiting. I assume there will be more opportunities after the election.

Although it’s a challenge, most investors are holding. I have to give investors a lot of credit. They did not flinch for the last decade, especially during the last year, and it paid off well for them. No one, and I mean no one, can predict what is going to happen in the near future. Many will guess, but no one knows for sure.

My advice: Wait and watch until after the election. I’m not comfortable with the market being at all time highs with so many problems in the economy, and in the world. Then again, logic and common sense didn’t win out over the last year, or even the last four years. That’s why trying to guess what the market will do in the next few weeks or months is a parlor game, one that I will not participate in.

Here is a more detailed analysis about the market from Lance Roberts: 

Lance Roberts @ realinvestmentadvice.com focuses on the stimulus package to make sense of a nonsensical market: https://bit.ly/35rdGf2

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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: https://wolfstreet.com

Bullish or Bearish? Week of October 19, 2020

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

One-month trend = Neutral to Bullish. SPX is well above its 200-day MA, a bullish signal, but the rally stalled last week after making all-time highs. SPX closed at 3483.81 at the close on Friday. Note: SPX futures are higher on Sunday night. Let’s see if the bulls can take control.

Mid-term (50- and 100-day MA) = Neutral to Bullish. The S&P 500 is still above its 50-day MA. So far, it has remained above.

RSI: (S&P 500) @ 58.64 (Daily) = Slightly Overbought. RSI fell back a little. It is overbought but not at extreme levels.

MACD = Bullish. MACD is above its zero line and is above its 9-day Signal Line. MACD came out of the doldrums and is pointing to a more bullish scenario.

Daily Intraday Volatility (VIX): 27.41 = Low. VIX is still below its 200-day moving average, indicating that volatility is low, and that fear is still missing.

Comment: These are strange times and a strange market. Market veterans complained that they’ve never seen anything like it. Some have suggested there is an invisible hand (i.e. algos backed by the Fed) that is keeping the market propped up. I don’t have evidence of that but admittedly, the market refuses to fall for very long even as the economy shows signs of despair.

All bets are off when it comes to predicting what is going to happen two weeks before an election. I won’t even try. The facts: SPX is slightly higher on Sunday night. That means the odds are a little better than even that we will rally at the open. If we don’t, that would be significant. Oh, there are rumors of a stimulus deal. Perhaps that is raising hopes, but I follow the market, not the news.

Bottom line: It’s not easy following the trend two weeks before an election!

Here is a more detailed analysis about the market from Lance Roberts: 

Lance Roberts @ realinvestmentadvice.com wrote how the market stumbled last week on the failed stimulus talks. (This week could be a different story): https://bit.ly/3o7m24m

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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: https://wolfstreet.com

Bullish or Bearish? Week of October 12, 2020

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

One-month trend = Bullish. SPX moved well above its 200-day MA, a bullish signal. Although the trend was broken a week ago, SPX reversed direction and is making a play for all time highs.

Mid-term (50- and 100-day MA) = Bullish. The S&P 500 made a strong move above its 50-day MA. We are watching to see if it can remain above. Note: SPX 50-day MA is at 3380 on Sunday night (20 points higher than last week). Futures are slightly lower (on Sunday night).

RSI: (S&P 500) @ 60.72 (Daily) = Slightly Overbought. RSI has risen in the last week but is not at extreme levels (yet).

MACD = Bullish. MACD is slightly above its zero line and is above its 9-day Signal Line. 

Daily Intraday Volatility (VIX): 25 = Low. VIX is below its 200-day moving average, indicating that volatility is low, and that fear is nowhere to be seen.

Comments: A week ago, the indexes were struggling, the uptrend was broken, and there was a real risk the market was going to plunge. And just like that, SPX and the other indexes rallied back above their 50-day moving averages, and the all-time highs are within reach.

It goes to show how difficult it is to make predictions about the market.

The reasons people give for the rally are all over the map. To me, all that matters is that the market rallied. Now we need to see if this was a temporary blip or the real deal. Monday is a Federal holiday but the market is open, so it’s possible volume will be light.

The closer we get to the election, the more difficult it will be to make predictions. I also believe volatility will increase from now until the election, and so far I have been right.

Bottom line: Look for opportunities to go long when possible, but be prepared for some violent selloffs at times. It’s not an easy trading environment.

Here is a more detailed analysis about the market from Lance Roberts:

Lance Roberts @ realinvestmentadvice.com explains why the market rallied last week: https://bit.ly/30SfRqE

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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: https://wolfstreet.com

Bullish or Bearish? Week of October 5, 2020

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

One-month trend = Broken and still damaged. SPX is above its 200-day MA (bullish) but the uptrend remains broken (bearish). On Sunday night, the major index futures are higher. 

Mid-term (50- and 100-day MA) = Bearish. The S&P 500 climbed out of the basement last week but is still below its 50-day MA. It tried hard but failed to rise above its 50-day. Note: SPX 50-day MA is at 3361 on Sunday night.

RSI: (S&P 500) @ 49.68 (Daily) = Neutral. RSI rose slightly in the last week.

MACD = Neutral. MACD is slightly below its zero line but rose slightly above its 9-day Signal Line. 

Daily Intraday Volatility (VIX): 27.63 = Neutral. VIX rose slightly during the week. It is even with its 200-day moving average.

Comments: The indexes made a valiant attempt to rally above their 50-day moving averages, and although they tried hard, they failed to move above. It was a rather wild week, with strong rallies at the open, and several that failed. Technology stocks struggled during the week.

As market observers, all we can do is look at the clues and indicators and make educated decisions what to do. I follow the market rather than try to guess its direction. Admittedly, it’s difficult to follow a market like this, i.e. a market that is not trending.

These are dangerous times, and it’s easy to get on the wrong side of a trend. When the market is this unstable, staying on the sidelines is often a wise move. The other choice is day trading, but take profits fast. Hint: I have found that counter-trend day trades are working, but you have to be nimble.

Bottom line: Most institutions are not buying, but most are also not selling. The algos are pushing the market higher during the day, but the rallies often do not last. These are strange and dangerous times, so trade cautiously.

Extra: SPX is at the bottom of the Darvis box. If SPX fails to rally this week, and falls lower, it can get ugly, and fast. Be on your toes. If you follow the Nicholas Darvis strategy, you will not go long the indexes.

Here are comments from market analyst Lance Roberts:

Lance Roberts @ realinvestmentadvice.com questions whether the bounce last week will last: https://bit.ly/30x2mfX

__________________________________________________________

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: https://wolfstreet.com