This is what the technical indicators are telling us this week:
One-month trend = Bullish. SPX moved well above its 200-day MA, a bullish signal. Although the trend was broken a week ago, SPX reversed direction and is making a play for all time highs.
Mid-term (50- and 100-day MA) = Bullish. The S&P 500 made a strong move above its 50-day MA. We are watching to see if it can remain above. Note: SPX 50-day MA is at 3380 on Sunday night (20 points higher than last week). Futures are slightly lower (on Sunday night).
RSI: (S&P 500) @ 60.72 (Daily) = Slightly Overbought. RSI has risen in the last week but is not at extreme levels (yet).
MACD = Bullish. MACD is slightly above its zero line and is above its 9-day Signal Line.
Daily Intraday Volatility (VIX): 25 = Low. VIX is below its 200-day moving average, indicating that volatility is low, and that fear is nowhere to be seen.
Comments: A week ago, the indexes were struggling, the uptrend was broken, and there was a real risk the market was going to plunge. And just like that, SPX and the other indexes rallied back above their 50-day moving averages, and the all-time highs are within reach.
It goes to show how difficult it is to make predictions about the market.
The reasons people give for the rally are all over the map. To me, all that matters is that the market rallied. Now we need to see if this was a temporary blip or the real deal. Monday is a Federal holiday but the market is open, so it’s possible volume will be light.
The closer we get to the election, the more difficult it will be to make predictions. I also believe volatility will increase from now until the election, and so far I have been right.
Bottom line: Look for opportunities to go long when possible, but be prepared for some violent selloffs at times. It’s not an easy trading environment.
Here is a more detailed analysis about the market from Lance Roberts:
Lance Roberts @ realinvestmentadvice.com explains why the market rallied last week: https://bit.ly/30SfRqE
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: https://wolfstreet.com