Bullish or Bearish? Week of Feb. 6, 2017

Here are the latest technical and sentiment indicators:

Technical Indicators (daily chart)

S&P 500 is above its 50-, 100-, and 200-day MA = Bullish

MACD (S&P 500; 19,39,9) is above the zero line = Bullish

MACD (S&P 500; 19,39,9) is even with its signal line = Neutral

S&P 500 support @ 2277


Sentiment Indicators (+RSI)

II survey: (Jan. 31): 61.8% Bulls; 17.6% Bears = Bearish

AAII survey: (Feb. 1): 32.8% Bulls; 34.2% Bears = Neutral

VIX: @ 10.97 = Bearish

RSI: (S&P 500) @ 63.27 = Bearish

Comment: I’ve been re-reading a bestselling classic, “The Battle for Investment Survival,” by G.M. Loeb, a founding partner of E.F. Hutton. He says that to win the battle for investment survival, you must be willing to “hold funds uninvested while awaiting real opportunities.” I couldn’t agree more. With sentiment from financial advisors and financial media at all time highs, this is the time to increase cash positions. There is no doubt in my mind that a terrific pullback is coming, and having cash on the side will allow you to buy low. I certainly can’t predict when this correction will occur, but the odds have recently increased. Be patient, and be cautious. When this bubble starts to deflate, it will be an eye-opener for the masses. 

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