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 even with its signal line = Neutral
S&P 500 support @ 2368 (50-day moving average)
Sentiment Indicators (+RSI)
II survey: (May 9): 58.7% Bulls; 17.3% Bears = Bearish
AAII survey: (May 10): 32.7% Bulls; 30.2% Bears = Neutral
VIX: @ 10.40 = Bearish
RSI: (S&P 500) @ 58.16 = Neutral
Comment: The market has been flat and boring, and very deceiving. The VIX has been in the basement, breaking a number of records for being so low for so long. If you are trading, all you can do is wait for volatility to appear, and it will one day. It could be days or weeks, or longer, but when volatility appears, traders will get back to work again.
Many investors, however, are feeling pretty confident. Margin levels are at all-time highs and index funds are more popular than ever. So far, the strategy is working. A few experts have warned that the market is in the danger zone, but few are listening.
When I look at the overall market, I see the danger signs, which is why I like holding a healthy amount of cash. I am also patient enough to wait for the market to make up its mind which way it will go, and for volatility to return. In fact, I’m curious how long this low-volatility environment can continue. Hint: Not indefinitely. Until then, be careful out there.