Bullish or Bearish? Week of November 22, 2021

WHAT THE INDICATORS ARE SAYING 

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

One-week trend = FLAT. The bulls took back control during the week. SPX rallied from 4682 to 4697, landing at the exact spot as a week ago (a 15-point gain). Very odd! SPX is still near its all-time highs. Futures are flat on Sunday night but that could change in the morning. 

SPX 20-day moving average (WEEKLY): HIGHER. SPX is above its 20-day moving average and is still in an uptrend. 

RSI: (S&P 500) @71.63 (WEEKLY) OVERBOUGHT = RSI says that SPX is extremely overbought (above 70), and can’t seem to budge.

MACD (WEEKLY) = SLIGHTLY BULLISH: MACD is above the zero line (bullish) and slightly above its 9-day signal line. MACD is not giving significant signals.

Daily Intraday Volatility (VIX) = 17.91 = Still no worries on Wall Street as VIX remains on the low side.

Comment: It’s a shortened week so I’ll keep it short. Thanksgiving is Thursday and there is a half day of trading on Friday. Last week, SPX gained back the 15 points it had lost.

There isn’t much to say about the market. Inflation has appeared but the Fed acts like they have it under control. We shall see.

In past years, the market tended to rally before holidays, but there is no guarantee that will happen this week. Enjoy the three trading days but be careful as strange things can happen to the market before holidays (i.e., lots of head fakes). On Friday, volatility should be subdued. It’s usually not a great trading day.

Have a great Thanksgiving and I’ll see you next Monday.

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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 November 15, 2021

WHAT THE INDICATORS ARE SAYING 

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

One-week trend = FLAT. The bears tried to take over early in the week but failed once again. SPX fell from 4697 to 4682, a mild 15-point pullback. SPX is still near its all-time highs. Futures are flat on Sunday night but that could change in the morning. 

SPX 20-day moving average (WEEKLY): HIGHER. SPX is above its 20-day moving average and is still in an uptrend.

RSI: (S&P 500) @71.01 (WEEKLY) OVERBOUGHT = RSI is telling us that SPX is overbought. Although SPX and the other indexes pulled back a little last week, the indexes are firmly in overbought territory.

MACD (WEEKLY) = BULLISH: MACD is above the zero line (bullish) and slightly above its 9-day signal line. The slope of MACD is pointing higher, a bullish sign.

Daily Intraday Volatility (VIX) = 16.29 = No worries on Wall Street as VIX remains in the basement.

Comment: Although the indexes are overbought and the bears are still in hiding, we’re coming closer to the holidays. No one can predict if we’ll get a Santa Claus rally but it’s possible. Anything is possible, even a blow-off top. It’s still too risky to short this market no matter how overbought it is.

With the indexes so overbought, the Bad New Bears had a chance to take over early in the week, but they couldn’t finish the job. (Are there any shorts left?)

At this point, the market seems to have stalled out and few are expecting any fireworks as we get closer to the holidays. I also know from experience that sometimes when you least expect it, the market can come up and bite you. This could be one of those times. After all, no one is expecting anything out of the ordinary until next year. That’s the consensus. However, the market is an independent entity that does what it wants when it wants.

Bottom line: No one knows anything so wait and watch. It feels quiet out there, maybe too quiet.

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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 November 8, 2021

WHAT THE INDICATORS ARE SAYING 

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

One-week trend = WAY UP. The bulls ran the market higher all week. SPX rose from 4605 to 4697, an astounding 92-point rally. SPX is at its all-time highs and is obscenely overbought. The bears are in hibernation but they better wake up soon. Their day in the sun is coming. Futures are flat on Sunday night but that could change in the morning.

SPX 20-day moving average (WEEKLY): UP. SPX has moved away from the 20-day in a strong uptrend. This is a powerful bull rally.

RSI: (S&P 500) @72.42 (WEEKLY) = RSI is telling us that SPX is ridiculously overbought. I haven’t seen overbought numbers like these in a very, very long time. RSI is flashing a WARNING sign. Yes, we could get even more overbought but we are in the danger zone.

MACD (WEEKLY) = LEANING BULLISH: MACD is above the zero line (bullish) and even with its signal line and pointing higher. It’s not a slam dunk bullish signal but it’s close.

Daily Intraday Volatility (VIX) = 16.48 = No put buying on Wall Street. All is well, according to professional option traders.

Comment: I am flabbergasted at the overbought readings, but perhaps I shouldn’t be. Last week was a Fed meeting after all (and 80 percent of the time the market rallies on Fed days (at least during a bull market)).

It’s possible we are seeing a blowoff top (can’t be sure until afterwards, however). I do know that anyone who doesn’t heed the signs of this extremely overbought market will regret it one day. If Mark D. Cook was alive, he’s be blowing a gasket right now. In fact, that’s what was his prediction a month ago: “The market is going to blow a gasket.”

I know it’s silly to warn anyone about the increased stock market risks when we’re ready to celebrate the upcoming holidays. That’s one of the reasons I got out of the prediction business. However, while I can’t predict when the market is going to give back a huge chunk of its gains, I know it will. I also can’t predict how bad it will be (correction or crash), but like a looming hurricane, be prepared.

The way to survive the coming volatility is to be diversified, know what you own, don’t go on margin, don’t take unnecessary risks, have cash on the side to go shopping for stocks that are on sale, and learn technical analysis (my new book coming out in March explores the top technical indicators and oscillators, among other things).

Bottom line: I am in awe how this market seems unstoppable. I have seen this story before, but not for a very long time.

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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 November 1, 2021

I am sad to announce that Mark D. Cook, my friend and mentor, passed away last week at age 67. He was an extremely successful self-taught options trader and an expert on bear markets. I had planned to interview him this weekend for my new stock market book, something he was looking forward to. He told me he was convinced a bear market was closer than ever, within months or in 2022, and he was eager to share his thoughts. He was astounded by how far and fast the stock market had risen, and he warned there would be dire consequences. He was extremely concerned about inflation and warned that if anything could kill the market, it was inflation.

I miss his sharp wit, honesty, and daily market commentary. He always told you where he stood.

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 4533 to 4605, another remarkable 72-point advance. SPX is near its all-time highs and is overbought again. Meanwhile, the Bad News Bears have gone into hiding. On the other hand, many bulls are getting overconfident and giddy (and some well-known touts are publicly feasting on their good fortune). This is not a good sign. Futures are HIGHER on Sunday night but that could change in the morning. 

SPX 20-day moving average (WEEKLY): UP. SPX has moved away from its 20-day MA and is in a strong uptrend. The bull run continues. 

RSI: (S&P 500) @68.82 (WEEKLY) = RSI is telling us that SPX is a whisker away from extremely overbought.

MACD (WEEKLY) = LEANING BULLISH: MACD is above the zero line (bullish) but below its signal line (bearish) but it is pointing higher. It’s not a slam dunk bullish signal (until it crosses the signal line).

Daily Intraday Volatility (VIX) = 16.26 = All is well on Wall Street, says the VIX. Nothing to see here. 

Comment: The market is in a strong uptrend and is also overbought. It’s been so long since the markets have had even a 10 percent correction that when one occurs, it will seem like a disaster. Many investors will be caught off guard one of these days (but don’t try to predict when).

Shorting has been extremely difficult unless you’re day trading. The trend is up, up, and away. Until there are signs of exhaustion or a black swan event, we appear to be going even higher. Don’t fight the trend (at least right now). Being early is the same as being wrong.

Those who are long, especially index investors, have never had it so good. Don’t forget these seemingly unstoppable bullish days as no strategy works forever. However, no one knows when they end, either.

PS: As I wrote in the commentary above, some overconfident bullish touts are acting like the market will never go down, one of the reasons I believe that Mark D. Cook may be right about the coming bear market.

Note: There is a Fed meeting this week — typically a bullish affair, especially if they can convince investors that inflation is transitory.

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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 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. 

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

Bullish or Bearish? Week of Sept. 27, 2021

WHAT THE INDICATORS ARE SAYING 

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

One-week trend = FLAT. The bears and bulls fought it out all week, and that should continue this week. SPX rose from 4432 to 4455 in the last week, a measly 23 point rally. Nevertheless, it was a vicious, back-and-forth battle for investment control. Futures are HIGHER on Sunday night. As always, direction could change in the morning. 

SPX 20-day moving average (WEEKLY): FLAT. SPX is resting slightly above its 20-day moving average on a weekly chart. The bulls saved the indexes from falling further, but the market is still vulnerable. We are watching the 20-day MA closely for clues. If SPX breaches the 20-day, that would be a red flag.

RSI: (S&P 500) @64.51 (WEEKLY) = Slightly Overbought. RSI has returned to a “normal” overbought level. It could get more overbought (above 70), or swing in an entirely different direction. We must wait and see.

MACD (WEEKLY) = MIXED. MACD is leaning bearish but it’s still above the zero line (i.e., a bullish signal). While MACD is more bearish than in the past, it has not given a sell signal.

Daily Intraday Volatility (VIX) = 17.75 = VIX is still on the low side but a smidgen of fear creeped into the markets over the last two weeks. Still nothing to write home about.

Comment:  The market played out exactly as we anticipated last week. SPX began the week on a sour note, but that only lasted a day. Before, during, and after the Fed meeting, the market miraculously went higher and higher. At the Fed meeting, Fed Chairman Powell said that inflation was under control and they are watching. Nothing to see here…so move on.

Now that the Fed meeting is behind us, the true market sentiment may appear. There are reasons for optimism and also reasons for nervousness. The bears and bulls have been fighting it out for months and that should continue. There is no way we can predict what the market will do in the near future.

I suggest relying on the indicators and oscillators for clues, and not opinion. Although it appears as if the bull market is on its last legs, it keeps coming back to surprise nearly everyone. Until the major moving averages are broken, shorting is too risky. And yet, I wouldn’t bet the house on a rally (at least now).

Bottom line: This week is a coin toss.

 

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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 Sept. 20, 2021

WHAT THE INDICATORS ARE SAYING

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

One-week trend = LOWER. The bears took control again last week. SPX fell from 4458 to 4432, an annoying 26 point drop. Futures are LOWER (and moving even lower) on Sunday night. However, in the morning anything is possible. 

SPX 20-day moving average (WEEKLY): Downtrend. SPX is slightly above its 20-day moving average but headed lower. The bulls are desperate to stop the indexes from falling further. The indexes are weaker than two weeks ago but not in imminent danger yet.

RSI: (S&P 500) @63.27 (WEEKLY) = Slightly Overbought. RSI fell dramatically from an extreme 73 reading two weeks ago to “normal” overbought levels. The bulls are bruised but they are still in the game.

MACD (WEEKLY) = Slightly bearish. For the first time in months, MACD fell from its neutral reading and is leaning bearish. It’s too early to proclaim anything except that MACD detected weakness. We will watch it for clues.

Daily Intraday Volatility (VIX) = 20.81 = VIX is still on the low side but a smidgen of fear creeped into the markets over the last two weeks. Nothing to write home about but interesting to watch.

Comment:  The reversal I warned about arrived last Tuesday. The market rallied hard last Monday but gave up its gains the rest of the week. In the past, the bulls typically took back control after even one bad week. This time they struggled.

The market is a little skittish but I looked at the calendar: The Fed is meeting this week and the bulls are looking for Fed Chair Powell to save them. Typically, the markets rally before and right after the Fed meeting, especially when Powell hints that everything is fine and low interest rates will continue as far as the eye can see.

The skunk at the party this week is inflation, and everyone is seeing it. The Fed is pretending there is no inflation and that everything is under control, and for his sake I hope it is. It is guaranteed that questions about inflation will be asked. Powell will have answers.

As you see at the top of this blog, RSI is slightly overbought, MACD dropped a little, and VIX is saying that traders are getting a tiny bit cautious (they are buying more put options for protection). Nothing to worry about yet but be on guard.

Bottom line: No one knows nothing, so don’t even try to guess. The market is not as bullish like in the old days, momentum is weakening slightly, and investors are cautiously optimistic. Jerome, the ball is in your court. We can’t wait to hear your soothing words.

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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