This is what the technical indicators are telling us this week:
One-month trend = Bullish. SPX is well above its 200-day MA and is in an uptrend. Note: SPX is at 3372 on Sunday night, higher from a week ago. The 200-day is at 3065.
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) @ 67.27= 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): 22.05 = Danger Zone. VIX is still getting crushed by the volatility-killing algos. VIX fell below its 200-day moving average, which tells me there is no fear. Not good.
Comments: Futures are slightly higher on Sunday night as the indexes slowly keep climbing. Although the SPX and the other indexes are overbought, as you may know, markets can remain overbought for long time periods.
Buy and hold investors with index funds are the most pleased with this low volume, volatility-suppressed market. I’m guessing the markets will keep edging higher until the election. There’s a lack of buyers except for the Fed, it appears.
You can go along for the ride but be careful, because one day this bubble will pop. No one knows when, unfortunately. The higher we go, the more convinced most investors believe the market “will never go down,” and if it does, they believe, it will bounce back. I’ve seen this story before, but this one takes the cake.
As long as volatility is suppressed, the market can keep climbing. Any hint of a selloff is met with a strong reaction by the algos, so shorting the indexes at this time is not recommended.
There isn’t a lot to say except to be patient, and wait for better opportunities. The odds are good the market will continue in this direction a while longer, so be prepared for some very boring times (if you are a trader).
Obviously, that could change at any time if investors get spooked for whatever reason. For now, however, try not to fall asleep! Investors are pleased with this environment, and that’s fine. Anyone selling options is also pleased. Traders, however, must wait for better opportunities.
Meanwhile, Lance Roberts and Sven Henrich will try to make sense of this very unusual market with their latest blogs:
Lance Roberts @ realinvestmentadvice.com says the bulls still didn’t reach all-time highs: https://bit.ly/321pQK7
Sven Henrich @ NorthmanTrader tells the truth about this market in a radio interview: https://bit.ly/31ZqI1S
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