This is what the technical indicators are telling us this week:
One-month trend = Neutral. Once again, the algos have pushed the indexes above its 200-day MA, where it has remained in a sideways pattern. Note: SPX is at 3224 on Sunday night, slightly higher from a week ago. The 200-day is at 3033.
Mid-term (50 and 100-day MA) = Bullish. The S&P 500 is above its 50- and 100-day MA.
RSI: (S&P 500) @ 61.24 = Neutral. Slightly overbought.
MACD = Neutral. MACD is above its zero line and and even with its 9-day Signal Line.
Daily Intraday Volatility (VIX): 25.68 = Neutral. VIX didn’t move much in the last week.
Comment: If this feels like the movie, Groundhog Day, you are right. The indexes moved slightly higher from last week but otherwise, everything has remained the same: The virus is ravaging the country, the economy is in trouble, and the futures are mixed on Sunday night, moving from slightly higher to slightly lower.
Last week, there was one interesting difference. The so-called technical leaders like Microsoft and Netflix failed to rally, and in fact, fell rather sharply. When the technology leaders that brought you to the dance fail to perform, that is a potential clue of a rotation. It’s too early to say the rotation will continue but it needs to be watched.
In other words, based on Bear Market 101, when overbought technology stocks start to falter, and traders look for less popular stocks to chase, it’s a possible topping out clue. I believe technicians call it a “distribution top.” We should find out if they are right this week.
I’m still in awe that with all of the bad news swirling around, the market continues to inch higher. I know the party is going to end fairly soon, and everyone else seems to know it too. And yet, no one is selling because of one reason: Everyone believes they can get out in time.
Read the analysis from Lance Roberts and Sven Henrich below, as well as Wolf Richter, who do an excellent job of analyzing what’s really going on in the market and real economy.
My advice is to be careful out there. Eventually, reality and the market will meet, and only one can be right.
Here is an detailed analysis of the current market by two professionals:
Lance Roberts @ realinvestmentadvice.com cleverly points out the bull market continues, that is, a bull market in viruses: https://bit.ly/3eIZm4u
Sven Henrich @Northman Trader raises doubts about the so-called “V” shaped recovery: https://bit.ly/399Dn5x
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