Bullish or Bearish? Week of October 11, 2021


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

One-week trend = FLAT. The bulls won the week because they were able to stop the market from declining further. SPX rose from 4357 to 4391 last week, a 34 point advance. It was a vicious back and forth battle, making some investors dizzy. Futures are LOWER on Sunday night (but that could change in the morning).

SPX 20-day moving average (WEEKLY): FLAT. SPX rose slightly above its 20-day moving average (i.e., now it’s a support level), repairing some of the damage from last week. It’s too early for the bulls to declare victory, but retaking the 20-day was a good start.

RSI: (S&P 500) @57.84 (WEEKLY) = Neutral to slightly overbought. RSI is still slightly elevated but not at extreme levels. All one can do is wait and watch.

MACD (WEEKLY) = MIXED. The weekly MACD is giving mixed signals: The MACD line is below its signal line (bearish) but above the zero line (bullish). MACD on the daily chart is below the zero line but moving higher.

Daily Intraday Volatility (VIX) = 18.77 = VIX reflects the sigh of relief the bulls feel, with the VIX barely dropping.

Comment:  The bulls want to forget the selloff of a week ago but the market is still vulnerable. With the indexes still at all-time highs, it wouldn’t take much to send the markets lower. Suggestion: More than ever, have a plan of what to do in a worst-case scenario. Don’t leave yourself vulnerable to a severe selloff.

Meanwhile, the bulls did a good job of stopping the damage, at least temporarily. This week we will have a better idea of who is in control. A lot of outside forces are swirling around, including inflation, which could upset the bullish narrative. That’s why I’m not ready to proclaim that the bulls are out of the woods yet. (Don’t forget we’re still in the historically dangerous month of October).

I don’t see much of a trend nor strong momentum. It could either be the calm before the storm, or just calm (i.e., consolidation). It’s too early to know which.

Bottom line: Another trendless, impossible-to-predict market that can chop you up if you’re not careful…so be careful.


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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

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