WHAT THE INDICATORS ARE SAYING
This is what the technical indicators are telling us this week:
One-week trend = HIGHER. The Bulls took firm control last week. In fact, SPX rose from 4538 to 4712, an astounding 174 point rally (wow!). After an earlier two-week selloff, the bulls came back stronger than ever right in time for the holidays. Futures are higher on Sunday night and as usual, that could change in the morning.
SPX 20-day moving average (WEEKLY): HIGHER. SPX bounced off of its 20-day MA and rocketed higher.
RSI: (S&P 500) @65.78 (WEEKLY) OVERBOUGHT. Not surprisingly, RSI is overbought but not at extreme levels yet. If SPX continues moving higher this week, watch RSI for signs of extreme overbought levels.
MACD (WEEKLY) = NEUTRAL: MACD is still above the zero line (bullish) and is even with its 9-day signal line (neutral). MACD is not giving a strong signal.
Daily Intraday Volatility (VIX) = 18.69 = LOW: VIX plunged from 30 to 18.69 as fear took a leave of absence last week. There is no fear as we head towards the holidays with an upcoming Fed meeting.
Comment: If there was any fear remaining from a few weeks ago because of COVID or higher inflation, it’s nearly gone. The market made a spectacular recovery last week, making investors happy and just in time for the New Year.
With a Fed meeting on Tuesday and Wednesday, it’s likely that Fed Chairman Powell will tell everyone that all is well and they have everything under control, including inflation and anything else that may or may not appear.
Therefore, the odds are high that this will be another positive week as Powell will not do anything to upset the apple cart. Obviously, something could come out of left field but if all goes according to plan, there will be lots of smiles on Wall Street this week.
You’ve heard my warnings before, so take heed. While all looks bright at the moment, and this could be another excellent year for the indexes, there are enough looming problems to put a scare into any investor who cares to look. Unfortunately, few are looking.
Bottom line: It’s up, up, and away unless something unexpected happens. With a Fed meeting and plenty of good cheer, investors want to party hard this year and not worry about the future. (And who can blame them?) Unfortunately, the future has a funny way of moving in a direction that no one expects or was able to predict. As I’ve said before, enjoy the fun while it lasts because nothing lasts forever.
Stock evaluation program from Barchart: https://bit.ly/3v9Nj9G
For daily results of multiple indicators, read Yardeni Research: https://goo.gl/eT3fzA
For insightful analysis of the stock market, read Lance Roberts’ latest newsletter:www.realinvestmentadvice.com
For insightful analysis of economic conditions, read Wolf Richter: https://wolfstreet.com