Here is a more detailed analysis of the current market:
One-month trend = SPX is slightly above its 200-day moving average = Neutral. SPX is struggling to rise well above its 200-day MA, and if it does, the market has room to climb higher. If it falls below this week, it would be a negative sign.
Mid-term: The S&P 500 is still in a sideways pattern = Neutral. Perhaps it will be resolved this week.
RSI: (S&P 500) @ 55.12 = Slightly overbought = Neutral.
MACD: MACD is above its zero line and and even with its 9-day Signal Line = Neutral
Daily Intraday Volatility (VIX): 35.12 = VIX didn’t move at all in the last week = Neutral.
Comment: I’m really struggling to find good news to report. The rising virus numbers, protests, upcoming election, job losses, and economic damage isn’t going away anytime soon. Wait! There is some good news, the only good news I can report: The stock market is near its all time highs.
It’s hard to believe the stock market has ignored all of the bad news swirling about and is slowly grinding higher. Based on the indicators I use, the mountain is steep and getting harder to climb.
Friday was one of the most bearish days I’ve seen in a while. The Dow opened higher by over 300 points, struggled all day, but closed down 200 points. A bearish intraday reversal is a very negative sign.
The indicators above are telling us nothing significant as we wait until the market makes up its mind this week. It’s anyone’s guess which direction we will go.
Another troubling sign is the huge number of beginner traders who have entered the market near all time highs. That is typically a sign we are at or near the top. Only time will tell.
The average investor believes “I will get out in time before the crash.” It appears as if almost everyone is expecting another crash near or after the election, but that everyone thinks they will get out with their profits intact. I’ve heard this story before.
Bottom line: The market is struggling to move higher as the bad news keeps growing. Either the stock market is right and good economic news is coming soon, or the economy is right and reality will hit the market like a 2×4 in the face.
Below is Wolf Richter’s take on the market (Hint: He’s shorting. FYI, in January he correctly predicted the market would plunge).
Wolf Richter @wolfstreet.com who hates to short, wrote an excellent piece on why he has started new short positions: https://bit.ly/2Ngaz0P
Lance Roberts @ realinvestmentadvice.com agrees the bulls are in control….for now: https://bit.ly/2AWuYFQ
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