Bullish or Bearish? Week of Dec. 24, 2018

Here are the most recent market indicators:

S&P 500 is well below its 200-day moving averages = Bearish 

S&P 500 one-month trend = Downtrend

RSI: (S&P 500) @22.44= Extremely Oversold = Bullish 

Daily Intraday Volatility: Moderate to High 

Comments:  Because of the shortened week, this will be a bit shorter than usual. This week, I”m publishing a piece on MarketWatch, which I’ll post here in a few days.

The market rallied into the Fed meeting, as expected, but it did not take kindly to the Fed Chairman’s words or actions. I was thinking that if the market can’t handle a minuscule .25% raise in interest rates, then the problems must be deeper than anyone can imagine. In fact, they are.

That being said, because the market is so oversold (RSI at 22.67 is the lowest in a decade), and sentiment is so bearish, don’t be surprised to see a huge rally, perhaps (this week). Unfortunately, because this is a bear market, the rallies will eventually fail.

If you’re an investor, you should use the rallies to reduce risk by selling losing stocks and increasing cash positions. I’ve made many mistakes as a trader and as an investor, but I survived because I always had healthy cash positions. For me, cash is true diversification, and is also an insurance policy.

If you are a trader, then you should be familiar with hedges such as buying put options to offset long positions, or buying inverse ETFs.

I’ll have a lot more to say on this topic in my MarketWatch article. Have a great holiday!


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

I will notify you of my posts via twitter@michaelsincere

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