S&P 500 is above its 200-day moving average = Bullish
S&P 500 is above its 50-day moving average = Bullish
S&P 500 one-month trend: SPX is at all-time highs = The trend is up but it could reverse depending on what the Fed says and does this week.
RSI: (S&P 500) @64.29 = Slightly Overbought
MACD: Above Zero Line and below Signal Line (Neutral)
Daily Intraday Volatility: 12.16 (Extremely Low). Volatility is in the basement, which cannot last for too long.
Comment: This week it’s all about the Fed, in particular, on Wednesday at 2:00 p.m. ET. That’s when we’ll find out if the Fed will cut interest rates by .50% (unlikely), .25% (likely), or not at all (unlikely).
The strange part is that, if the Fed cuts, it will be the Fed’s first rate cut in over a decade, at the same time that the S&P just hit an all-time high. You almost have to read that twice: The Fed is cutting interest rates while the indexes are at all-time highs. Either the Fed knows something we don’t, or they are succumbing to political pressure, or both.
All I know is that when, not if, the next recession comes (and there are signs it’s getting closer), the Fed will have less tools than in the past to reduce the pain. I imagine they will cut to 0% if they panic.
Although the Fed may or may not give the markets a boost this week depending on what they do, with indexes at all-time highs, with VIX in the basement, and RSI climbing towards 70 again, a major pullback is coming soon (no one can predict when but it’s coming). Add in the fact that because September and October are typically rough months for the market, a dislocation is extremely likely.
Bottom line: The Fed controls the market this week, so follow the leader. Even if the Fed gives Wall Street what it wants, a pullback is coming. The unknown question is how overbought we’ll get before we reverse direction.
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