Here is what the technical indicators are telling us this week:
One-month trend = Neutral. As expected, the algos pushed the indexes above its 200-day MA last week, which is a slightly bullish sign. Let’s see how long it lasts. Note: SPX is at 3130 on Sunday night. The 200-day is at 3022.84.
Mid-term (50 and 100-day MA): The S&P 500 is slightly above its 50- and 100-day MA = Neutral.
RSI: (S&P 500) @ 56.37 = Slightly overbought = Neutral.
MACD: MACD is above its zero line and and even with its 9-day Signal Line = Neutral
Daily Intraday Volatility (VIX): 27.68 = VIX didn’t move much in the last week = Neutral.
As you can see above, we are in a holding pattern. Everything is in neutral for the second week on a row. That means it could be the calm before the storm (if you’re bearish), or happy days are here again (if you’re bullish).
When I look at reality, I am still having trouble finding good financial news. The employment numbers were not as rosy as Wall Street led you to believe (read Wolf Richter @Wolf Street below for a more thorough analysis). The virus keeps expanding with no end in sight. And the market is moving sideways, slightly above its 200-day moving average.
As the elections get closer, volatility should increase, and that could cause havoc with the market. I can’t predict what is going to happen in the near future because the algos and Central Banks are running the show, but if I had to place a bet, I’d say this is the calm before the storm. I just don’t know when the storm is coming!
Bottom line: We are at war with a virus so please stay safe and follow the rules. Below is a more detailed analysis of the market environment:
Lance Roberts @ realinvestmentadvice.com lists 15 rules for investors that are very helpful: https://bit.ly/2YZg7n6
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