S&P 500 is above its 200-day moving average = Bullish
S&P 500 is even with its 50-day moving average = Neutral
S&P 500 one-month trend = Multiple Short-term Trend Reversals (Neutral)
RSI: (S&P 500) @56.31 = Neutral
MACD: Below zero line but slightly above signal line (Neutral)
Daily Intraday Volatility: 16.30 (Subdued). Volatility is on the low side.
Comment: So now we know what happens when the indexes fall below their 200-day moving averages! The next time the 200-day is breached, expect to see Jerome Powell or others appear on TV to say something sweet about interest rates. Voila! The market suddenly reversed direction and rallied strongly not just the day Powell spoke, but all week. Wow!
As you know from reading my blog, I expected a strong rally during the week. But even the most bullish analyst (nor I) could have predicted the rally would last the entire week. That was extremely impressive, but also brings us back to even more dangerous territory.
Now investors know that if the market falls by too much (below the 200-day moving average), the Fed has got their back. One of these days the market will fall, the Fed will appear with soothing promises, and the market will keep falling. That is when we’ll know it’s going to go from bad to worse.
Meanwhile, looking at the indicators above, in one week we went from bearish to neutral (RSI gave us an oversold reading last week which correctly hinted there would be a rally). Now RSI is back to neutral. SPX is well above its 200-day moving average and a couple of points above its 50-day moving average.
If I had to guess, I’d say we went too far too fast last week, and that the indexes will struggle to move much higher this week. Since I don’t like to guess, all we can do is watch and see if this market has the power to stay above its 50-day moving average. The futures are slightly higher Sunday night but that should change by the opening bell.
Bottom line: It’s going to take extraordinary strength to bring this market much higher, but anything is possible. Investors have an extremely distorted view of the world thanks to the Fed. One of these days this game the Fed is playing is going to backfire and bullish investors are going to pay the price. That day is drawing nearer. Oh, I forgot to mention that the jobs numbers was very disappointing on Friday and there are other signs that a recession is near or already here.
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