S&P 500 is above its 200-day moving average = Bullish
S&P 500 is above its 50-day MA = Bullish
S&P 500 one-month trend: SPX uptrend is up but hitting resistance at all-time highs.
RSI: (S&P 500) @ 61.93 = Slightly Overbought
MACD: Above Zero Line and above Signal Line = Bullish
Daily Intraday Volatility: 13.74 = Low
Comment: This is one of those rare times when the indicators above are screaming bullish but the sentiment indicators are screaming, “Be careful!” If you look at the chart, everything looks wonderful with a few potential problems:
- We are hitting resistance at all-time highs in SPX (3007), and twice in the past, the indexes retreated at these levels.
- The drone attack on the Saudi oil processing facility is causing havoc on oil around the world. Futures are lower Sunday night, which should continue into the open. However, the buy-on-the-dip algos will be buying at the open to attempt to calm volatility.
- Most concerning of all is investor sentiment. From my conversations with investors, they are pleased with their portfolios, their profits have increased beyond their wildest expectations, they will “never” sell no matter how low the indexes go, and they are now strong believers in buy-and-hold. With the markets at all time highs and investor sentiment so complacent with a belief the markets can only go higher, I see a major break in the near future. Investors are relying on the Fed to save them from any downturns. To me, this is similar to what happened when bitcoin hit $20,000 before collapsing. Bitcoin investors were also buying at the top. If anything goes wrong with the bullish scenario in the stock market, all hell is going to break loose.
To give you a different perspectives (although slanting to the “be cautious” side) are the following two must-read columns. They go into much deeper detail than I have.
Bottom line: The indicators are flashing “Go Go Go” but the sentiment and resistance levels are flashing “Watch out below!” Let’s see if the Fed can once again prop up the market (Fed meeting on Tuesday and Wednesday). I agree with Sven, who says that investors are “playing with fire.”
Here are the two articles that I recommend reading:
Sven Henrich (Northman Trader): https://bit.ly/2lP4C0G
Avi Gilburt using Elliott Wave (Seeking Alpha): https://bit.ly/2kKHlN5
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