Here are the most recent market indicators:
S&P 500 is below its 200-day moving average = Bearish
S&P 500 one-month trend = Major Pivot Points
RSI: (S&P 500) @53.52 = Neutral to Slightly Overbought
Daily Intraday Volatility: Moderate to High
Comment: With help from the algos and kind words from Chairman Powell, last week the market bounced back from last month’s low and is now in overbought territory.
This is a very pivotal week for the market. This week will help us determine if last week’s rally is the real deal or another manufactured, and unsustainable, head fake. Although the market is short-term overbought, it could get more overbought this week and move beyond SPX 2600. It could also move sideways in a low volatile environment, which is exactly what the financial world wants. Those are the best case scenarios.
In a worst-case scenario, the market will once again fail to surpass SPX 2600, and begin to retreat. If SPX reverses direction and plunges hard, bringing the other indexes along for the ride, that will confirm we are in a bear market. (Note: Sunday night futures are lower, so Monday could be volatile. Nevertheless, it’s the rest of the week that matters.)
There is a lot of bad news swirling around but the market ignored it recently, at least so far. Soon, earnings will be released and if many companies disappoint, reality will once again hit the market like a 2×4 across the face.
No one can predict how the market will react this week, but one thing is for sure: No one agrees what is going to happen. Therefore, avoid guessing and let the market be your guide. Another piece of advice: be sure to have a healthy amount of cash on the side in case of a worst-case scenario.
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