Bullish or Bearish? Week of Dec. 16, 2019

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 is in a strong uptrend that appears unstoppable, but also unsustainable for the long term.

RSI: (S&P 500) @ 67.08 = SPX is still overbought. At over 70 RSI, it will be extremely overbought.

MACD: Above Zero Line and above Signal Line = Bullish

Daily Intraday Volatility: 12.63 = Low (Bearish)

Comment: The market meandered around last week with one big rally, which brought the indexes back to overbought. RSI is near 70, which is always a warning sign, and VIX remains in the basement.

The trade deal appears to be completed, but no one knows for sure. The market had a muted reaction to the news on Friday. By the way, the market also had a muted reaction to the Fed meeting (except for the one-day rally).

By any measure, the indexes are overbought, and that could continue through the holidays. Nevertheless, no one knows what is going to happen because we are in uncharted territory. I won’t even attempt to guess which direction the indexes are going this week. However, common sense tells me if you have extreme profits on any index or stock, it would not be a bad idea to take some money off the table. That being said, everyone is waiting for the “Santa Claus rally,” and the odds are good the market will not disappoint.

Bottom line: A Santa Claus rally is possible, even likely, but that does not reduce the increased risks as the market bubble expands. One day the market will have a date with reality, but we’re not there yet, but as I’ve repeatedly said, that day is coming (one day).

For a scathing opinion on the Fed’s actions regarding lower interest rates and QE, here is a fascinating read by Sven Henrich (Northman Trader). His seething anger at the Fed is evident as you keep reading: https://bit.ly/2El0QSC

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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


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