This is what the technical indicators are telling us this week:
One-month trend = Bullish. SPX started off strong last week, but then plunged the next day, taking quite a few stocks with it. SPX drifted the rest of the week but is still near all-time highs. However, I see a triple top. The futures are higher on Sunday night, but that could change in the morning. SPX was at 3585 on Friday’s close.
Mid-term (50- and 100-day MA) = Bullish. The S&P 500 is well above its 50- and 100-day MA.
RSI: (S&P 500) @ 63.57 (Daily) = Overbought. RSI is creeping higher, but not at extreme levels (yet).
MACD = Bullish. MACD is above its zero line and also above its 9-day Signal Line.
Daily Intraday Volatility (VIX): 23.10 = Low. VIX is well below its 200-day moving average, reflecting a lack of fear (unless you are shorting indexes).
Comment: The market broke higher last week before pulling back from overbought levels. A triple top has developed, but it does not mean the market will plunge anytime soon. Possible, but impossible to predict.
The market is still in an uptrend while the virus rages out of control, and the economy suffers. No one can say when reality returns to the market (it’s been a long time), but as I’ve repeatedly said, trade cautiously.
This week, watch the rallies closely. If the rallies have “legs,” and continue to move higher, that is bullish. However, if the rallies reverse direction or fail to make new highs, that would be bearish. In particular, see if the indexes can break through resistance.
Anyone holding indexes long should be pleased. Those who own individual stocks have had a rougher ride in the last few weeks. It’s an unpredictable environment, especially if you own individual stocks.
Bottom line: Let’s see if the indexes can break through resistance and make new highs. If not, it could be dangerous for the bulls.
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