WHAT THE INDICATORS ARE SAYING
This is what the technical indicators are telling us this week:
One-week trend = HIGHER. The bulls took control and moved SPX from 4620 to 4725 last week, an impressive 105-point gain. After a rough start on Monday, the bulls ran the “ball” higher the rest of the week. FUTURES are flat on Sunday night but that could change in the morning.
SPX 20-day (WEEKLY): SPX fell last Monday but as expected, the 20-day MA was defended and the bulls took over.
RSI: (S&P 500) @63.70 (WEEKLY) OVERBOUGHT. RSI is overbought but not at extreme levels.
MACD (WEEKLY) = NEUTRAL: MACD is still above the zero line (bullish) and even with its 9-day signal line (neutral). MACD is still not giving a strong signal. (Keep in mind that MACD works great with volatile individual stocks or during volatile market conditions.)
Daily Intraday Volatility (VIX) = 17.96 = LOW: Fear is still on holiday according to the VIX, which has plunged below 20, a sign that there is no fear (for now).
Comment: It’s a five-day market week but volatility should be contained, which allows the algos to take control. Unless there is an unexpected black swan event, the market should be flat to higher this week.
There isn’t a lot to say except the bull market has broken all records for another year. Nevertheless, there are danger signs everywhere, those we know and many we don’t know about yet.
Money managers want to wrap this year on the plus side so uptrending stocks will be chased and downtrending stocks will be abandoned. Managers want to show clients they are holding only the winning stocks but no losers. This is known as “window dressing.”
For this reason, the odds are with the bulls until we get closer to the end of the week, when volatility and volume should lessen. Be careful on those days as it’s easy to get whipsawed.
Bottom line: Look for a positive week unless an unusual and unknown catastrophe occurs. The odds are good that next year will be wildly different, but we will take it one week at a time.
Have a great holiday and New Year and I’ll check back with you in January!
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