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WHAT THE TECHNICAL INDICATORS ARE TELLING US THIS WEEK
Short-term trend (DAILY CHART) – LOWER. Last week, SPX fell from 3911 to 3825, a relatively mild 86-point pullback. During the bull market, strong rallies continued for weeks and months. In this market environment, we’re lucky to get a rally that lasts a week. On the daily, SPX is below its 50-, 100-, and 200-day moving averages. all negative clues. Note: Futures are LOWER on Tuesday morning.
Long-term trend (WEEKLY CHART) – LOWER. The indexes remain below their 50- and 100-week moving averages. As mentioned last week, this is not a healthy sign. Nevertheless, SPX is above its 200-week MA, the only ray of hope in a sea of red.
MACD (WEEKLY) = LOWER . The WEEKLY MACD is a lagging indicator, so it is reflecting the extremely negative market environment.
RSI: (S&P 500) @44.62 (DAILY) SLIGHTLY OVERSOLD. RSI is slightly oversold, so a mild rally would not be a surprise. Before it’s safe to go long (according to this indicator), RSI needs to reach 30 or below.
Daily Intraday Volatility (VIX) = 26.70= ELEVATED: The VIX is slightly elevated but lower than in the past, reflecting complacency.
Comment: This is a four-day week so I’ll keep this short. Futures are slightly higher but that could change in the morning.
Each week, it becomes clear that we are in a bear market. The failed rallies, daily volatility, and shock from investors are all signs of trouble. Be prepared for a longer-term bear market. Perhaps the only positive clue is that so many people are bearish, it could be bullish! Nevertheless, that is no reason to go long.
Bottom line: This is a very treacherous market environment and many would be wise to stand aside. If you do participate as a trader, trade small.