WHAT THE INDICATORS ARE SAYING
This is what the technical indicators are telling us this week:
One-week trend = LOWER. SPX fell from 4384 to 4328, a 56-point retreat. SPX is well BELOW its 50-day moving average, not a good sign at all. Futures are sinking on Sunday night (Dow futures are lower by approximately 400 points), but that could change in the morning.
SPX 50-day (WEEKLY) = LOWER. The daily chart is horrendous, but when we look at the weekly chart, we get a longer-term view of the overall market. As you already know from reading the news, the market is in trouble. In the short term, it needs to climb back above the 50-day if it has any chance of a recovery.
RSI: (S&P 500) @42.16 (WEEKLY) OVERSOLD. RSI is on the oversold side but still not at extreme levels yet.
MACD (WEEKLY) = BEARISH: The weekly MACD is below the 9-day signal line and slightly below the zero line. It’s not a pretty sight.
Daily Intraday Volatility (VIX) = 31.99 = ELEVATED: Fear has permeated the hearts and minds of option traders as they continue to gobble put options for protection.
Comment: If you’ve been reading this blog for a while, you will not be surprised that the market is struggling. There were clues of problems for several weeks, and recently, things got worse, not better.
After a 13-year bull market, a correction (or worse) was inevitable. Unfortunately, we’re getting hit with a lot of negative economic news, as well as a steady drumbeat of awful news in the war between Russia and Ukraine.
When you add in spiking oil ($125 a barrel reported on Sunday night), higher interest rates, a humanitarian disaster with no immediate solutions — it’s negative news as far as the eye can see.
As traders, all we can do is try to get clues from the cold, hard indicators and oscillators. In the short-term, the market is struggling. It must retake its 50-day MA if it has any chance of a recovery. If it fails, then the next stop is the 100-day MA on the weekly chart. SPX will have to break 4,000 for that to happen, which appears to be a long way off.
Bottom line: Let’s hope that this war ends soon so that Ukraine is free to pursue its own destiny. Until then, there are no winners.
Stock evaluation program from Barchart: https://bit.ly/3v9Nj9G
For daily results of multiple indicators, read Yardeni Research: https://goo.gl/eT3fzA
For insightful analysis of the stock market, read Lance Roberts’ latest newsletter:www.realinvestmentadvice.com
For insightful analysis of economic conditions, read Wolf Richter: https://wolfstreet.com