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 3397 on Sunday night, slightly higher from a week ago. The 200-day is at 3073. The futures market is edging higher.
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) @ 68.30= Overbought. A few more points higher and we’re in the danger zone.
MACD = Neutral. MACD is above its zero line and is still even with its 9-day Signal Line.
Daily Intraday Volatility (VIX): 22.54 = 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 still no fear.
Comments: Records are made to be broken because we’re at all-time highs for the major indexes. Only a handful of stocks are pushing the indexes higher, and if you’re fortunate enough to own one of these stocks, happy days are here again.
If you look at the indicators above, nothing has changed. The indexes are overbought but the market keeps climbing higher. Sadly, the economy is in deep trouble and the virus still isn’t done with us.
It’s likely that volatility will be suppressed for a while longer, perhaps until after the election. That is the most likely scenario, but then again, Mr. Market sometimes surprises everyone, but not often, and not lately.
The odds are also good we will inch higher this week and beyond but that is based on the clues, not facts. The facts are the market indexes are extremely overbought, and yet, they can get more overbought.
I know that investors are playing with fire right now, like playing a game of musical chairs, but how can you argue with success? Few are buying, and few are selling. Right now it’s a waiting game.
Bottom line: Wake me up when something changes.
I’m going to turn it over to Lance Roberts and Sven Henrich, who have more to say about the market than I do:
Sven Henrich @ NorthmanTrader does a “reality check” and includes a video: https://bit.ly/3aX5DZV
Lance Roberts @ realinvestmentadvice.com compares the market to a garden, and says that winter is coming so you better prepare: https://bit.ly/3j8Aplk
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