Bullish or Bearish? Week of March 1, 2021

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Here is a Barnes and Noble link to the book: https://bit.ly/3rbr28Q Let me know what you think if you buy it, and THANKS! 

This is what the technical indicators are telling us this week: 

One-month trend = Bearish. The short-term trend broke last week when the S&P 500 plunged, ending at 3811, lower by a whopping 95 points from a week before. Nevertheless, on Sunday night, the S&P 500 futures are higher (but that could change at the open). SPX is resting on its 50-day moving average. If it falls below and stays below, that is a red flag.

Mid-term (50- and 100-day MA) = Neutral to Bearish. The S&P 500 is now on its 50-day moving average. It will attempt to rally from this precarious position.

RSI: (S&P 500) @ 59.36 (WEEKLY) = Overbought. Even with the selloff last week, RSI is overbought. If RSI is to be believed, more pain is possible during the week.

MACD (WEEKLY) = Neutral. MACD is above its zero line and even with its 9-day Signal Line. It could go in either direction.

Daily Intraday Volatility (VIX): 27.95= VIX spiked higher last week but fear is still contained. With the futures higher on Sunday night, fearless buyers should return looking for bargains.

Comment: The only hint of danger last week was RSI and VIX, which signaled the market was overbought, and that fear was in short supply. It was a dangerous combination. As if on cue, the market fell for the second week in a row. This is an important week.

This week, we should find out who is in control as the bulls and bears fight it out. While the futures are higher Sunday night, and a rally might occur at the open, watch for a Failed Rally. If the indexes are unable to move strongly higher in the morning, it could get ugly fast.

However, for 10 years, whenever there was a whiff of a pullback, the market was able to recover (thanks primarily to the Fed and QE as well as low interest rates). Although the market is vulnerable at the moment, there is no need to be unreasonably bearish at this time.

What to look for this week: See if the indexes can stay above their 50-day moving average. Watch if the rallies have upward momentum or fail. If there is a failure at the 50-day, or a failed rally on Monday or during the week, then the bears may take control.

Note: In my new book I introduce a number of different ways of identifying the market each day. On occasion, I will include those into my analysis.


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: https://wolfstreet.com

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