Bullish or Bearish? Week of June 8, 2020

One-month trend = Uptrend. SPX is above its 200-day moving average= Bullish. Very impressive, I must admit.

Mid-term: The S&P 500 has been in a lengthy uptrend = Bullish.

RSI: (S&P 500) @ 72.48 = Extremely Overbought. RSI is telling us the market is way overbought. Caution is advised.

MACD: MACD is above its zero line and above its 9-day Signal Line = Bullish

Daily Intraday Volatility (VIX): 24.52 = VIX keeps falling but not extreme yet = Neutral

Comment: Last week I thought that reality was going to hit the market, but it was not to be. The indexes continued to climb higher and higher, and even though it feels like the world is falling apart, the stock market acts as if all is well.

On Friday, the market supposedly rallied because the unemployment rate is only 13%, the worst since the Great Depression, but some thought it could have been worse. Hmmm.

Everything looks delightful for the market except for RSI, which is flashing a very strong warning sign. We are more overbought than even in March. Although you never fight the tape, I also don’t ignore RSI, which tells us the party will be ending in the near future. Sunday night, futures are higher, but let’s see what happens at the opening.

Enjoy the good times while they last, but they won’t last. Retail investors, and now hedge funds, are joining in for the fun. Everyone is sure the Fed has their back, and even if the market plunges, the Fed will save us (or so they say).

In fact, there is little fear, which reminds me of a Jesse Livermore saying, something about people are greedy when they should be afraid and afraid when they should be greedy. (Warren Buffett said something similar).

Bottom line: I sense a lot of greed right now.

Here is a more detailed analysis of the current market:

Lance Roberts @ realinvestmentadvice.com breaks down the jobs numbers in more detail with this excellent piece: https://bit.ly/3cE3TEh

Sven Henrich (Northman Trader) writes a scathing piece about how the Fed’s misguided policies are going to end in disaster: https://bit.ly/2Ycir8L

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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

I will notify you of my posts via twitter@michaelsincere

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