My latest MarketWatch column: https://goo.gl/AKTldp
Here are the latest technical and sentiment indicators:
Technical Indicators (daily chart)
S&P 500 is above its 50-day MA = Bullish
MACD (S&P 500; 19,39,9) is above its zero line = Bullish
MACD (S&P 500; 19,39,9) is slightly above its signal line = Bullish
Observe: S&P 500 support @ 2400
Sentiment Indicators (+RSI)
II survey: (May 30): 50.0% Bulls; 19.2% Bears = Bearish
AAII survey: (May 31): 26.9% Bulls; 31.5% Bears = Neutral
VIX: @ 9.58= Bearish
RSI: (S&P 500) @ 69.56 = Overbought
Comment: As this unloved bull market continues to rise, there’s a chance we could have a eurphoric breakout over the next few months, and yet, the higher the market goes, the riskier it gets. The current market reminds me of 1999, when exuberance reached extreme levels. Shorting at this level is not advised as any pullback should be an opportunity to “buy on the dip.” Because markets move in cycles, what goes up must come down, but no one can predict when. The inevitable smash will come one day but don’t fight the herd or you will get trampled. Just be ready to get out of the way when the herd goes over the cliff one day.
Bottom line: The technical indicators are flashing buy while the sentiment indicators are flashing caution. Sentiment can get even more extreme (look at bitcoin, for example) before it eventually sours. Follow the uptrend if you wish but be careful not to get trapped. When millions of investors try to get out of their index funds at once, it will not be a pretty sight. (But don’t expect this to happen for a while.)
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