S&P 500 is above its 200-day moving average = Bullish
S&P 500 is above its 50-day MA = Bullish
S&P 500 one-month trend: SPX is still in a strong uptrend but Middle East problems could be a threat.
RSI: (S&P 500) @ 65.74 = SPX is still overbought, but not as much as last week.
MACD: Above Zero Line and above Signal Line = Bullish
Daily Intraday Volatility: 14.02 = Low (Bearish)
Comment: As I’ve warned for weeks, overbought markets cannot remain overbought indefinitely. At the moment, the Middle East could be the catalyst that causes a series of pullbacks. This week could determine market direction for weeks or months to come.
When RSI hit 78 last week, it was a flashing red warning sign that the market was due for a reversal, and on Friday we had one. The futures are lower on Sunday night but it is too early to say if that will continue into the market open.
As I and others have warned, it is still a good time to sell big winners as well as losers. It doesn’t mean sell everything in a panic, but to increase cash levels. Obviously, the world is a lot more dangerous now than it was last week, so be prepared for volatile conditions moving forward.
One of the best summaries I’ve seen of the current market and what goes on behind the scenes comes from Sven Henrich (Northman Trader). He talks about how Wall Street is always programmed to buy, and never to sell. I highly recommend it: https://bit.ly/2QPtWzb
Bottom line: It’s been years since we’ve had a bear market. There is no evidence we are headed towards one now but with an overbought market and a dangerous geopolitical environment, the odds have increased substantially.
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