Bullish or Bearish? Week of October 25, 2021

WHAT THE INDICATORS ARE SAYING 

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

One-week trend = UP. The bulls continue to run with the ball as SPX rose from 4471 to 4533, another healthy 73-point advance. SPX is getting close to its all-time highs. Futures are slightly LOWER on Sunday night but that could change in the morning. 

SPX 20-day moving average (WEEKLY): UP. SPX is moving farther away from its 20-day MA. The bull run continues.

RSI: (S&P 500) @66.12 (WEEKLY) = Slightly overbought but not in the danger zone. RSI is elevated but not at extreme levels.

MACD (WEEKLY) = MIXED. Once again, the weekly MACD is giving mixed signals: The MACD line is below its signal line (bearish) but above the zero line (bullish). However, the signal line is pointing lower but not sure if that is significant.

Daily Intraday Volatility (VIX) = 15.43 = All is well on Wall Street, says the VIX as it falls even lower. Nothing to see here.

Comment:  The Bad News Bears just can’t catch a break. Until the moving averages break support, it may be financial malpractice to short the indexes (my apologies to any professional short-sellers). On the other hand, it’s always possible that a black swan will unexpectedly appear. In 13 years, I think I saw it twice.

Strong earnings was the reason for the advance, or so I’ve been told. While several indicators show the market as having a “lack of conviction,” the bulls keep scoring points.

Futures are slightly lower on Sunday night but the only number that counts is the opening. It’s been a very long time since we’ve had a deep correction, as Lance Roberts correctly mentions in his blog. Here’s another one for the record books: From Lance: There is another streak that is also just as problematic. Currently, the S&P 500 index has gone 344-days without violating the 200-dma. Such is the sixth-longest streak going back to 1960.” Wow.

Wake me up when something happens. Like everyone else, I’m feeling very complacent. (FYI: In reality, complacency is a dangerous emotion, especially if you’re a trader. That’s when the market comes up and bites you when you least expect it!)

Bottom line: Sit and wait.

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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’ latest newsletter:www.realinvestmentadvice.com

For insightful analysis of economic conditions, read Wolf Richter: https://wolfstreet.com

Bullish or Bearish? Week of October 18, 2021

WHAT THE INDICATORS ARE SAYING 

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

One-week trend = UP. The bulls decisively won the week, no questions asked. SPX rose from 4391 to 4471 last week, a healthy 80-point advance. The bulls are back in control. Futures are FLAT on Sunday night but that could change in the morning.

SPX 20-day moving average (WEEKLY): UP. SPX rose strongly above its 20-day moving average as the bulls successfully defended. All systems are go this week unless something changes the narrative.

RSI: (S&P 500) @62.45 (WEEKLY) = Neutral to slightly overbought. RSI is still slightly elevated but not at extreme levels. It’s not giving a strong signal in either direction.

MACD (WEEKLY) = MIXED. The weekly MACD is giving mixed signals: The MACD line is below its signal line (bearish) but above the zero line (bullish). Translation: Nothing to see here.

Daily Intraday Volatility (VIX) = 16.30 = VIX has fallen a bit in the last week, reflecting calm and a lack of fear even as inflation rears its ugly head. All is well on Wall Street, says the VIX.

Comment:  The sell-off from a couple of weeks ago has been forgotten. The bulls took control last week and now almost everyone appears bullish again. What can I say? It’s the reason I don’t make predictions: No one can tell you what the market is going to do day-to-day, but at least the indicators give us clues.

Right now the indicators are saying that the trend is up and SPX is only slightly overbought. According to technical analysis, unless something comes out of left field (like a unexpected negative economic report), the market is headed higher.

Eventually, inflation is going to affect the market, especially if the Fed has to raise interest rates. That would be a game-changer. For now, however, sit back and enjoy the bull party. As I said last week, this could be the calm before the storm, or just the calm. Enjoy these up trending days as one day it will end. Until it does, however, full spead ahead!

Bottom line: I don’t see any red flags this week. The market could drift all week in either direction but there are no clues (yet) or a major event that could affect the market. (Then again, I don’t have a crystal ball so anything is possible.)

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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’ latest newsletter:www.realinvestmentadvice.com

For insightful analysis of economic conditions, read Wolf Richter: https://wolfstreet.com

Bullish or Bearish? Week of October 11, 2021

WHAT THE INDICATORS ARE SAYING 

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

One-week trend = FLAT. The bulls won the week because they were able to stop the market from declining further. SPX rose from 4357 to 4391 last week, a 34 point advance. It was a vicious back and forth battle, making some investors dizzy. Futures are LOWER on Sunday night (but that could change in the morning).

SPX 20-day moving average (WEEKLY): FLAT. SPX rose slightly above its 20-day moving average (i.e., now it’s a support level), repairing some of the damage from last week. It’s too early for the bulls to declare victory, but retaking the 20-day was a good start.

RSI: (S&P 500) @57.84 (WEEKLY) = Neutral to slightly overbought. RSI is still slightly elevated but not at extreme levels. All one can do is wait and watch.

MACD (WEEKLY) = MIXED. The weekly MACD is giving mixed signals: The MACD line is below its signal line (bearish) but above the zero line (bullish). MACD on the daily chart is below the zero line but moving higher.

Daily Intraday Volatility (VIX) = 18.77 = VIX reflects the sigh of relief the bulls feel, with the VIX barely dropping.

Comment:  The bulls want to forget the selloff of a week ago but the market is still vulnerable. With the indexes still at all-time highs, it wouldn’t take much to send the markets lower. Suggestion: More than ever, have a plan of what to do in a worst-case scenario. Don’t leave yourself vulnerable to a severe selloff.

Meanwhile, the bulls did a good job of stopping the damage, at least temporarily. This week we will have a better idea of who is in control. A lot of outside forces are swirling around, including inflation, which could upset the bullish narrative. That’s why I’m not ready to proclaim that the bulls are out of the woods yet. (Don’t forget we’re still in the historically dangerous month of October).

I don’t see much of a trend nor strong momentum. It could either be the calm before the storm, or just calm (i.e., consolidation). It’s too early to know which.

Bottom line: Another trendless, impossible-to-predict market that can chop you up if you’re not careful…so be careful.

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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’ latest newsletter:www.realinvestmentadvice.com

For insightful analysis of economic conditions, read Wolf Richter: https://wolfstreet.com

Bullish or Bearish? Week of October 4, 2021

WHAT THE INDICATORS ARE SAYING 

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

One-week trend = DOWN. The bears won the week even after Friday’s 500 point Dow rally. SPX plunged from 4455 to 4357 in the last week, a vicious 98 point hit (but it could have been worse. The bulls received a gift of 50 SPX points on Friday.) For the first time in a long time, the bears took control, snapping a 6-month winning streak. Note: There is a lot of activity in the futures market. At the moment, futures are LOWER on Sunday night but that may change in the morning.

SPX 20-day moving average (WEEKLY): DOWN. SPX has dropped below its 20-day moving average on a weekly chart but is still above the 50-, 100-, and 200 MA. However, on the daily chart, it is downright ugly. On the daily, SPX has dropped below the 50- and 100 MA. Since I am a weekly trader, I don’t see a disaster. Instead, I see a red flag on the weekly chart. The bulls should attempt to save the market this week and keep Friday’s rally going on Monday and beyond.

RSI: (S&P 500) @55.67 (WEEKLY) = Neutral to slightly overbought. It was only a week ago that RSI was above 70 and was a warning to anyone who’d listen it was in the danger zone. Now it’s only slightly overbought at 55.67 (which means there is still room for SPX and the other indexes to fall).

MACD (WEEKLY) = LOWER. The weekly MACD is giving mixed signals: The MACD line is below its signal line (bearish) but above the zero line (bullish). However, the daily MACD is awful. MACD is below its signal line and the zero line. The weekly tells me that you shouldn’t panic yet (if you are long). There is still time for the bulls to save this market.

Daily Intraday Volatility (VIX) = 21.15 = VIX has creeped up a bit higher but there is still little fear. It will take more than a 100 drop in the SPX to scare the bulls.

Comment:  It was a terrible week for the bulls but after 13 bullish years, this was not even a hiccup. This week is important as we will find out if the selloff has legs.

The bulls will try to keep the momentum from Friday going into Monday. Here’s what to look for: If the upcoming rally (i.e., multiple rallies) fail(s), that is a huge red flag. However, this is the chance for the bulls to prove the party has not ended.

Unfortunately for the bulls, it’s tough to convince investors that all is well when inflation has reared its ugly head, when the bull market feels exhausted, and when interest rates remain artifically low. There’s a lot of danger signs and yet, the bulls have pulled a rabbit out of hat so many times I wouldn’t count them out.

This is not an easy trading environment. Investors are feeling dizzy and traders are getting whipsawed. Please think about containing risk by trading smaller size and being extra cautious.

Bottom line: Predicting this market is near impossible so I won’t even try. The market is slightly overbought and there is little fear, a recipe for problems. And yet, here we are, 13 years later……… (Tick…tock).

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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’ latest newsletter:www.realinvestmentadvice.com

For insightful analysis of economic conditions, read Wolf Richter: https://wolfstreet.com