Bullish or Bearish? Week of October 25, 2021

WHAT THE INDICATORS ARE SAYING 

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

One-week trend = UP. The bulls continue to run with the ball as SPX rose from 4471 to 4533, another healthy 73-point advance. SPX is getting close to its all-time highs. Futures are slightly LOWER on Sunday night but that could change in the morning. 

SPX 20-day moving average (WEEKLY): UP. SPX is moving farther away from its 20-day MA. The bull run continues. 

RSI: (S&P 500) @66.12 (WEEKLY) = Slightly overbought but not in the danger zone. RSI is elevated but not at extreme levels. 

MACD (WEEKLY) = MIXED. Once again, the weekly MACD is giving mixed signals: The MACD line is below its signal line (bearish) but above the zero line (bullish). However, the signal line is pointing lower but not sure if that is significant. 

Comment:  The Bad News Bears just can’t catch a break. Until the moving averages break support, it may be financial malpractice to short the indexes (my apologies to any professional short-sellers). On the other hand, it’s always possible that a black swan will unexpectedly appear. In 13 years, I think I saw it twice. 

Strong earnings was the reason for the advance, or so I’ve been told. While several indicators show the market as having a “lack of conviction,” the bulls keep scoring points. 

Futures are slightly lower on Sunday night but the only number that counts is the opening. It’s been a very long time since we’ve had a deep correction, as Lance Roberts correctly mentions in his blog. Here’s another one for the record books: From Lance: There is another streak that is also just as problematic. Currently, the S&P 500 index has gone 344-days without violating the 200-dma. Such is the sixth-longest streak going back to 1960.” Wow. 

Wake me up when something happens. Like everyone else, I’m feeling very complacent. (FYI: In reality, complacency is a dangerous emotion, especially if you’re a trader. That’s when the market comes up and bites you when you least expect it!) 

Bottom line: Sit and wait. 

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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

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