S&P 500 is above its 200-day moving average = Bullish
S&P 500 is above its 50-day moving average = Bullish
S&P 500 one-month trend = Uptrend (Bullish)
RSI: (S&P 500) @72.28 = Extremely Overbought (Bearish)
MACD: Above zero line but even with its signal line (Neutral)
Daily Intraday Volatility: Low (VIX remains in the basement at 12.73)
Comment: The S&P 500 nudged its way higher to all-time highs last week with SPX touching 2940 before retreating slightly. The big money was made in individual stocks (with a number of winners and losers) while volatility in the indexes remains extremely low.
This is the week of the Fed meeting and it should be interesting. Although GDP was a strong 3.2, a number of experts proclaim the number is actually much lower (based on the way inflation is calculated. More on this later). The indexes did rise near the end of the day on Friday but it wasn’t a huge rally. Bond market yields got crushed (and bonds rallied), which is a clue the bond market doesn’t believe the economy is as strong as advertised.
And that is why the Fed meeting will be very interesting. There are rumors the Fed might actually cut rates at this coming meeting. No one knows for sure what they will do, but it’s unlikely they will raise rates (according to the experts). All we can do is watch and wait.
With the market at all-time highs, with RSI telling us the market is extremely overbought, and with investors bullish again, it wouldn’t take much to send this market lower. Nevertheless, the Fed and the White House are determined to keep this rally going, so it’s risky to short the indexes.
For a much deeper analysis of the current market environment and steps you should take to protect your portfolio, read Lance Robert’s latest piece, The Bull is Back, but Will it Stay?: https://bit.ly/2VvPKUV
Bottom line: With the Fed meeting this week, the odds are good there will be some whiplash. No one knows how the market will react to the Fed, but the odds are also good the Fed will be very accommodating. The danger is that the market bubble will continue to grow, increasing the risks of a major dislocation in the future.
What to Watch For This Week (week’s calendar at end of article): https://cnb.cx/2W7Tadz
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