Mid-term: S&P 500 is still well below its 200-day moving average = Bearish. The longer it remains below its 200-day MA, the more bearish it is for the stock market. Until SPX rallies back above, assume we are in a bear market.
One-month trend = Bearish. After a strong downtrend, SPX and the other indexes bounced back last week the fastest since 1931. Consider it a bear market rally until SPX rises above its 200-day moving average.
RSI: (S&P 500) @ 43.58 = Slightly oversold. The market could go in either direction this week so be careful.
MACD: MACD is below its Zero Line but rose slightly above its 9-day Signal Line) = Bearish to Neutral
Daily Intraday Volatility (VIX): 65.54 (Extremely High) = Volatility has skyrocketed as fears increased. Expect volatile trading days until panic and fear subsides.
Comment: It’s going to be another volatile week as the Fed’s infusion of capital into the market competes with bad news about the virus and economy. Even with the rally, we are still oversold (the crash was the fastest and strongest in history).
In a typical bear market, the markets will have a severe plunge like we just experienced, then rally strongly, followed by a longer, more severe pullback that can last months if not years. No one can predict if we will follow this model, but it’s possible.
Unfortunately, many people are still in denial, and are hoping we will return to the old time highs (one financial publication even proclaimed that the bear market was over). Don’t be surprised if we rally strongly on some days but be suspicious.
If you are trading or investing, you must be brutally honest. You may have noticed that many traders are “selling the rally,” which is typical in a bear market. In a bull market, investors and traders will “buy the dip,” but do the opposite in a bear market. Again, the bear market rally could continue into this week (it’s possible although the futures are lower on Sunday night).
Bottom line: No one can predict what is going to happen so all you can do is sit back and be ready for any scenario. With the virus taking up all of the news coverage, which will soon be followed by dreadful employment news, it’s going to be a struggle in the near future. Expect rough times before we see a light at the end of the tunnel.
Bottom line: These are difficult times for everyone. It’s distressing how quickly the economy collapsed, and how so many jobs were lost. I truly hope that the Fed knows what it is doing.
Read the excellent analysis below for a more detailed take on the future.
Sven Henrich (Northman Trader) on the future of the stock market: https://bit.ly/3acjfiH . Be sure to watch the video at the end of the commentary.
Lance Roberts, money manager at (realinvestmentadvice.com), on how the bear market may play out: https://bit.ly/33UPTmE
Finally, although the following video is not related to the stock market, it is worth watching (57 minutes). It’s from a New York doctor who tells exactly how to protect you and your family from the virus by following some basic rules. It will actually reduce your fears as he tells the facts.
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