WHAT THE INDICATORS ARE TELLING US
This is what the technical indicators are telling us this week:
One-week trend = Up, up, and away. The bulls took over last week, with the SPX rising by an astounding 114 points, moving from 4166 to 4280. The previous week’s selloff was more than erased, and the bulls are back in control. SPX futures are flat on Sunday night. No one can stop them but reality, which is in short supply.
RSI: (S&P 500) @68.05 (WEEKLY) = Neutral. RSI is close to the danger zone. If it surpasses 70, then it will be extremely overbought. Don’t use RSI for timing, but it sure has been accurate these last few months.
MACD (WEEKLY) = Mixed Signals. MACD is above its zero line but slightly below its 9-day Signal Line. MACD is still not giving a clear signal at this time.
Daily Intraday Volatility (VIX): 15.62 = After a slight rise the previous week, VIX is back in the basement again. No real fear, only the fear of missing out.
Barchart Stock Evaluator for SPY and QQQ (link below): SPY are both 100 percent strong buys (according to this indicator).
Comment: As we expected, the bulls came roaring back, bringing the SPX higher by over 115 points in one week. Not surprisingly, SPX is back to its all-time highs, and is also overbought. It’s possible it could get more overbought this week. Back and forth as the bulls and bears fight for control.
Warning signs: Margin debt is at all-time highs. This is always a concern as it reflects the lack of fear. As a result, investors and traders are willing to borrow money from the brokerage to buy more and more shares.
I’ll leave you with this thought. For the last 13 years of this bull market, investors have not experienced a bear market or even a correction for longer than a few weeks. An entire generation of traders and investors believe that the “market never goes down.” Imagine how these people will react when a real bear market arrives. It won’t be pretty. Unfortunately, no one knows when the big bad bear will arrive, only that it will one day.
Stock evaluation program from Barchart: https://bit.ly/3v9Nj9G
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