Bullish or Bearish? Week of August 10, 2020

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

One-month trend = Bullish. SPX broke out of its sideways pattern and is well above its 200-day MA. Note: SPX is at 3351 on Sunday night, higher from a week ago. The 200-day is at 3056.

Mid-term (50 and 100-day MA) = Bullish. The S&P 500 is well above its 50- and 100-day MA. 

RSI: (S&P 500) @ 68.90= Overbought. A few more points higher and we’re in the danger zone.

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

Daily Intraday Volatility (VIX): 22.21 = Danger Zone. VIX got crushed last week thanks to the volatility-killing algos. VIX fell below its 200-day moving average, which tells me there is no fear. That’s not good.

Comment: This is really something to see. The overbought market has gotten more overbought. The RSI and VIX are flashing warning signs, so be prepared for a sudden reversal in the near future.

Ask any stock market veteran: They’ve never seen anything like this. I have my suspicions about what is happening, but the facts are that volatility has gotten crushed since March. That means buy and hold investors are celebrating while many speculators are sitting on the sidelines, waiting for better opportunities.

The economic and virus news continues to be dreadful as the market comes close to hitting all time highs. Either the economy is not really in bad shape or the stock market is lying. But the stock market and economy can’t both be right. Something has to give…eventually.

Bottom line: I’m speechless. I’m on the sidelines waiting for better trading opportunities.

Meanwhile, Lance Roberts will try to make sense of this very unusual market with his latest blog entry:

Lance Roberts @ realinvestmentadvice.com says the bulls have a very loud megaphone: https://bit.ly/3ivkcql

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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 August 3, 2020

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

One-month trend = Neutral. SPX is above its 200-day MA but has moved sideways. Note: SPX is at 3271 on Sunday night, slightly higher from a week ago. The 200-day is at 3048. If SPX falls below 3000, there will be trouble. 

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

RSI: (S&P 500) @ 61.03= Slightly overbought

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

Daily Intraday Volatility (VIX): 24.46 = Neutral. VIX still hasn’t moved much in the last week, thanks to the volatility-killing algos.

Comment: Futures are flat on Sunday night. Although the indexes managed to squeak out a small gain last week, fueled by positive earnings from Apple and Amazon, beneath the surface there is trouble brewing.

The market is moving ever so slowly, and is relying on a few favorite stocks to keep the market going. It may seem like the market is moving higher, but in reality it’s gone nowhere for weeks. It is going sideways, not higher.

This means that one unexpected piece of bad news could send the market plunging. In reality, there has been so much bad financial news it’s hard to keep up, but the institutions still aren’t selling. When they do one day, all hell will break loose. Until then, however, be very very careful.

Unless you already owned shares of Apple and Amazon, it was a difficult week (and also unless you were able to buy call options on Kodak before the big announcement. In the old days, “front-running” was illegal). Many investors are doing well, but traders are struggling to catch a strong trend. It’s extremely difficult to sell short, but I’m sure that will change in the future.

Bottom line: I’m waiting for reality to catch up with the market, and when it does, it will not be a pretty sight. Until then, I patiently wait.

Here is a detailed analysis of the current stock market from Lance Roberts and Sven Henrich: 

Lance Roberts @ realinvestmentadvice.com smartly keeps his hedges in place as the market gets more insane: https://bit.ly/2PgrXn9

Sven Henrich @Northman Trader correctly exposes this ridiculous market and tells the truth. Be sure to see his video: https://bit.ly/2PgUglo

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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 July 27, 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 stalled over the last two days. Note: SPX is at 3215 on Sunday night, slightly lower from a week ago. The 200-day is at 3041. If SPX falls below 3000, there could be trouble.

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

RSI: (S&P 500) @ 56.45= Neutral.

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

Daily Intraday Volatility (VIX): 25.84 = Neutral. VIX didn’t move much in the last week. 

Comment: On Sunday night, futures are slightly higher but it’s best to wait until the morning to confirm. Last week, the market started off flat to high, but then fell on Thursday and Friday. The Fed is meeting on Tuesday and Wednesday, and traditionally, the market moves higher on the day of the announcement (but these are strange times, so anything is possible).

I hate to keep repeating myself but the financial news keeps getting worse while the market hangs on for dear life. You may have noticed that gold, and bitcoin, have broken out recently. Traders run to gold when there are economic problems. In addition, keep watching the dollar, which has been in a downtrend. People smarter than me believe that could change.

In addition to worsening economic news, the virus keeps spreading, the economic stimulus package has stalled, and the unemployment rate is too high. On the other hand, White House economic advisor Larry Kudlow appeared on TV and promised there would be a “V” shaped recovery.

Once again, let me turn it over to the professional analysts, who have done an excellent job of evaluating the current market. Wolf Richter (below) wrote a series of devastating articles on how the economy, and housing, is worsening.

In addition, here is a detailed analysis of the current stock market from Lance Roberts and Sven Henrich:

Lance Roberts @ realinvestmentadvice.com writes about “The Cobra Effect.” Must reading: https://bit.ly/32SbcXE

Sven Henrich @Northman Trader says this is the biggest financial bubble ever. Be sure to see his video: https://bit.ly/2CPC6on

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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 July 20, 2020

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

One-month trend = Neutral. Once again, the algos have pushed the indexes above its 200-day MA, where it has remained in a sideways pattern. Note: SPX is at 3224 on Sunday night, slightly higher from a week ago. The 200-day is at 3033.

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

RSI: (S&P 500) @ 61.24 = Neutral. Slightly overbought

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

Daily Intraday Volatility (VIX): 25.68 = Neutral. VIX didn’t move much in the last week. 

Comment: If this feels like the movie, Groundhog Day, you are right. The indexes moved slightly higher from last week but otherwise, everything has remained the same: The virus is ravaging the country, the economy is in trouble, and the futures are mixed on Sunday night, moving from slightly higher to slightly lower.

Last week, there was one interesting difference. The so-called technical leaders like Microsoft and Netflix failed to rally, and in fact, fell rather sharply. When the technology leaders that brought you to the dance fail to perform, that is a potential clue of a rotation. It’s too early to say the rotation will continue but it needs to be watched.

In other words, based on Bear Market 101, when overbought technology stocks start to falter, and traders look for less popular stocks to chase, it’s a possible topping out clue. I believe technicians call it a “distribution top.” We should find out if they are right this week.

I’m still in awe that with all of the bad news swirling around, the market continues to inch higher. I know the party is going to end fairly soon, and everyone else seems to know it too. And yet, no one is selling because of one reason: Everyone believes they can get out in time.

Read the analysis from Lance Roberts and Sven Henrich below, as well as Wolf Richter, who do an excellent job of analyzing what’s really going on in the market and real economy.

My advice is to be careful out there. Eventually, reality and the market will meet, and only one can be right.

Here is an detailed analysis of the current market by two professionals: 

Lance Roberts @ realinvestmentadvice.com cleverly points out the bull market continues, that is, a bull market in viruses: https://bit.ly/3eIZm4u

Sven Henrich @Northman Trader raises doubts about the so-called “V” shaped recovery: https://bit.ly/399Dn5x

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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 July 13, 2020

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

One-month trend = Neutral. As expected, the algos continued to push the indexes slightly above its 200-day MA, where it has remained. Note: SPX is at 3185 on Sunday night, slightly higher from a week ago. The 200-day is at 3027.18. 

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

RSI: (S&P 500) @ 59.34 = Neutral. Slightly overbought.

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

Daily Intraday Volatility (VIX): 27.29 = Neutral. VIX didn’t move much in the last week.

Comment: The futures on Sunday night are higher, following in the footsteps of its impressive Friday afternoon rally. Technicians are warning of a correction or worse as their signals say that certain stocks, especially Google, Amazon, Microsoft, Apple, and Facebook are overbought. Wolf Richter @WolfStreet.com (link below) also discusses how these stocks are holding the market together.

The market keeps pushing higher but the virus does not let up. I wish I could ignore the virus but it is really ravaging people’s lives and livelihood, causing havoc with the economy. For some reason, the stock market has ignored it, and continues to do so as I write this.

But one day, out of the blue, the market will react, and it won’t be pretty. The market is overbought and getting more overbought. As Wolf and others have said, these five stocks have become the market.

We also can’t ignore the power of the algos, who initiate bull raids during the day at the slightest hint of a selloff. It happened again on Friday.

No one can predict the future, and this market could keep going up all week. But to win the stock market game, you must look for any clues that the party is over and the guests have overstayed their visit. We are close, very close, I suspect.

Bottom line: Be cautious out there as bad news is still looming, which the market has conveniently ignored. No one knows how long there will be a disconnect between the real economy and the stock market. When the market eventually smells the coffee, it will not be a pretty sight.

Here is an excellent analysis of the current market by two professionals:

Lance Roberts @ realinvestmentadvice.com sums up the current market with a title, “This is nuts…Again”: https://bit.ly/3fp00F8

Sven Henrich @Northman Trader discusses the current overbought market in an interesting video: https://bit.ly/2AW7vEO

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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 July 6, 2020

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

One-month trend = Neutral. As expected, the algos pushed the indexes above its 200-day MA last week, which is a slightly bullish sign. Let’s see how long it lasts. Note: SPX is at 3130 on Sunday night. The 200-day is at 3022.84.

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

RSI: (S&P 500) @ 56.37 = Slightly overbought = Neutral. 

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

Daily Intraday Volatility (VIX): 27.68 = VIX didn’t move much in the last week = Neutral. 

Comment:

As you can see above, we are in a holding pattern. Everything is in neutral for the second week on a row. That means it could be the calm before the storm (if you’re bearish), or happy days are here again (if you’re bullish).

When I look at reality, I am still having trouble finding good financial news. The employment numbers were not as rosy as Wall Street led you to believe (read Wolf Richter @Wolf Street below for a more thorough analysis). The virus keeps expanding with no end in sight. And the market is moving sideways, slightly above its 200-day moving average.

As the elections get closer, volatility should increase, and that could cause havoc with the market. I can’t predict what is going to happen in the near future because the algos and Central Banks are running the show, but if I had to place a bet, I’d say this is the calm before the storm. I just don’t know when the storm is coming!

Bottom line: We are at war with a virus so please stay safe and follow the rules. Below is a more detailed analysis of the market environment:

Lance Roberts @ realinvestmentadvice.com lists 15 rules for investors that are very helpful: https://bit.ly/2YZg7n6

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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 June 29, 2020

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

One-month trend = SPX is slightly BELOW its 200-day moving average = NeutralSPX has failed to stay above its 200-day MA, which is a bearish sign. I am certain the Fed, and its algo friends, will try and rescue the market once again.

Mid-term (50 and 100-day MA): The S&P 500 is still in a sideways pattern = Neutral.

RSI: (S&P 500) @ 45.65 = Slightly oversold = Neutral. 

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

Daily Intraday Volatility (VIX): 34.73 = VIX didn’t move much in the last week = Neutral. 

Comment: The overbought market had a chance to get more overbought last week, but reality interfered. It might be the virus, the political climate, or awful economic news, but the market fell back below its 200-day moving average on Friday. That was a negative sign. In addition, every rally was met with more selling, another clue that something changed last week.

And yet, I am certain the Fed will do whatever it takes to pump the market higher this week even while the bad news keeps coming. The virus news is the most damaging to the economy, and to the stock market. No one can predict who is going to win this battle this week, although the futures are slightly lower on Sunday night.

In addition to the worrisome news that never seems to stop, many investors and traders are convinced the market will never go down, and if it does, it will bounce back. Any experienced trader knows what once you are certain what’s going to happen to the market, usually the opposite occurs.

Only three months ago the market had a huge correction, and perhaps entered into a bear market. Then we had a monster rally, which could very well be a bear market rally. If that is true, if we are really in a bear market, and this recent rally is only temporary, then look out below.

I’m not predicting that is going to happen, but you better be prepared for any scenario. Personally, I’m amazed that the market is still this high considering everything that has been happening. It’s too early to short (maybe), but it’s a little late to go long.

Bottom line: The market is starting the week with a negative bias, which is not surprising considering everything happening in the world. The Fed appears to be the main entity pushing the market higher almost every day. I sure hope they know what they are doing.

Below is a more detailed analysis of the current market environment:

Sven Henrich @ Northman Trader doesn’t hold back his anger at the Fed for playing games with the stock market: https://bit.ly/3iakGTh

Lance Roberts @ realinvestmentadvice.com analyzes the market from a fundamental perspective, and doesn’t like what he sees: https://bit.ly/3eJAJFr

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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 June 22, 2020

Here is a more detailed analysis of the current market: 

One-month trend = SPX is slightly above its 200-day moving average = NeutralSPX is struggling to rise well above its 200-day MA, and if it does, the market has room to climb higher. If it falls below this week, it would be a negative sign.

Mid-term: The S&P 500 is still in a sideways pattern = Neutral. Perhaps it will be resolved this week.

RSI: (S&P 500) @ 55.12 = Slightly overbought = Neutral. 

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

Daily Intraday Volatility (VIX): 35.12 = VIX didn’t move at all in the last week = Neutral.

Comment: I’m really struggling to find good news to report. The rising virus numbers, protests, upcoming election, job losses, and economic damage isn’t going away anytime soon. Wait! There is some good news, the only good news I can report: The stock market is near its all time highs.

It’s hard to believe the stock market has ignored all of the bad news swirling about and is slowly grinding higher. Based on the indicators I use, the mountain is steep and getting harder to climb.

Friday was one of the most bearish days I’ve seen in a while. The Dow opened higher by over 300 points, struggled all day, but closed down 200 points. A bearish intraday reversal is a very negative sign.

The indicators above are telling us nothing significant as we wait until the market makes up its mind this week. It’s anyone’s guess which direction we will go.

Another troubling sign is the huge number of beginner traders who have entered the market near all time highs. That is typically a sign we are at or near the top. Only time will tell.

The average investor believes “I will get out in time before the crash.” It appears as if almost everyone is expecting another crash near or after the election, but that everyone thinks they will get out with their profits intact. I’ve heard this story before.

Bottom line: The market is struggling to move higher as the bad news keeps growing. Either the stock market is right and good economic news is coming soon, or the economy is right and reality will hit the market like a 2×4 in the face.

Below is Wolf Richter’s take on the market (Hint: He’s shorting. FYI, in January he correctly predicted the market would plunge).

Wolf Richter @wolfstreet.com who hates to short, wrote an excellent piece on why he has started new short positions: https://bit.ly/2Ngaz0P

Lance Roberts @ realinvestmentadvice.com agrees the bulls are in control….for now: https://bit.ly/2AWuYFQ

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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 June 15, 2020

One-month trend = Stalled Uptrend. SPX is slightly above its 200-day moving average = Neutral. SPX was in a strong uptrend until Thursday’s 1800 point drop in the Dow. Reality finally returned.

Mid-term: The S&P 500 was in a strong uptrend until last week’s pullback = Neutral.

RSI: (S&P 500) @ 51.72 = Don’t ignore RSI. It went from over 70 early last week back to neutral = Neutral.

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

Daily Intraday Volatility (VIX): 35.09 = VIX spiked last week, signaling that a little bit of fear crept into the market.

Comment: The signals last week were flashing red. First, there was RSI, which went above 70. As I wrote last week, anytime RSI moves above 70 on SPX, it’s a danger sign.

In addition to RSI, all of the indexes were bullish while the economy was struggling and the virus was spreading. There was no warning for the Thursday selloff, which is typical for corrections. Another warning sign: The hosts on several financial programs were outright giddy, including one well-known tout who acted as if the market would never go down.

Sunday night, the futures are telling us the market may open lower, but wait until the opening before trading. The market could go either way.

The powers that be, including the Fed, does not want to see another big selloff, but I would not be surprised to see us hit the March lows in the next few months. And yet, the algos will do everything in their power to suppress volatility and keep the rally going.

The big question is whether SPX can hold the 200-day moving average this week. If it can, then all is well for the rest of the week. If it can’t, then it’s going to be a very unpleasant week if you are bullish.

Bottom line: it’s anyone’s guess which direction we are going this week except to say that we went up too fast, and too far. Thursday brought a dose of reality to the markets, so let’s see if that was enough to slow the momentum. Once again, be on guard as we could go either way, and no one but the market itself knows the winning side.

Here is a more detailed analysis of the current market: 

Lance Roberts @ realinvestmentadvice.com analyzes the market from a realistic perspective: https://bit.ly/2YvnSzQ

__________________________________________________________

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 June 8, 2020

One-month trend = Uptrend. SPX is above its 200-day moving average= Bullish. Very impressive, I must admit.

Mid-term: The S&P 500 has been in a lengthy uptrend = Bullish.

RSI: (S&P 500) @ 72.48 = Extremely Overbought. RSI is telling us the market is way overbought. Caution is advised.

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

Daily Intraday Volatility (VIX): 24.52 = VIX keeps falling but not extreme yet = Neutral

Comment: Last week I thought that reality was going to hit the market, but it was not to be. The indexes continued to climb higher and higher, and even though it feels like the world is falling apart, the stock market acts as if all is well.

On Friday, the market supposedly rallied because the unemployment rate is only 13%, the worst since the Great Depression, but some thought it could have been worse. Hmmm.

Everything looks delightful for the market except for RSI, which is flashing a very strong warning sign. We are more overbought than even in March. Although you never fight the tape, I also don’t ignore RSI, which tells us the party will be ending in the near future. Sunday night, futures are higher, but let’s see what happens at the opening.

Enjoy the good times while they last, but they won’t last. Retail investors, and now hedge funds, are joining in for the fun. Everyone is sure the Fed has their back, and even if the market plunges, the Fed will save us (or so they say).

In fact, there is little fear, which reminds me of a Jesse Livermore saying, something about people are greedy when they should be afraid and afraid when they should be greedy. (Warren Buffett said something similar).

Bottom line: I sense a lot of greed right now.

Here is a more detailed analysis of the current market:

Lance Roberts @ realinvestmentadvice.com breaks down the jobs numbers in more detail with this excellent piece: https://bit.ly/3cE3TEh

Sven Henrich (Northman Trader) writes a scathing piece about how the Fed’s misguided policies are going to end in disaster: https://bit.ly/2Ycir8L

__________________________________________________________

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