Here are the most recent market indicators:
S&P 500 one-month trend = Downtrend (with multiple Pivot Points)
S&P 500 is below its 200-day moving averages = Bearish
RSI: (S&P 500) @39.32 = Near oversold = Moderately Bullish
Daily Intraday Volatility: Moderate to High
Comment: As expected, last week’s Monday rally was a short-term blow off top, and the market plunged for the rest of the week. The market fell so fast in the last two days that we’re nearly oversold. Because no one wants to see a major selloff two weeks before Christmas, prepare for an upcoming rally, at least for a few days. Soon, the Fed, the White House, and Wall Street will make positive comments. The Fed has a meeting on Dec. 18th and 19th, so it’s extremely likely they will say something positive to instill confidence.
However, after the Fed makes positive comments, if the markets keep falling, then it’s much worse than anyone imagines. For now, the Fed is feeling pressured and perhaps is unnerved by recent market action. In addition, they probably know that earnings are not going to be as strong as expected. They’re in a real quandary: If they don’t raise rates, it would scare the market. If they raise rates too much, it could break the market. So they are going to have to talk a good game to avoid a major selloff. For investors’ sake, I hope they succeed.
Bottom line: The easy days of a slow, uptrending market are over for now as volatility has returned in full force. The algos were Wall Street’s friend on the way up, and they will be their opponent on the way down.
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