Bullish or Bearish? Week of October 5, 2020

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

One-month trend = Broken and still damaged. SPX is above its 200-day MA (bullish) but the uptrend remains broken (bearish). On Sunday night, the major index futures are higher. 

Mid-term (50- and 100-day MA) = Bearish. The S&P 500 climbed out of the basement last week but is still below its 50-day MA. It tried hard but failed to rise above its 50-day. Note: SPX 50-day MA is at 3361 on Sunday night.

RSI: (S&P 500) @ 49.68 (Daily) = Neutral. RSI rose slightly in the last week.

MACD = Neutral. MACD is slightly below its zero line but rose slightly above its 9-day Signal Line. 

Daily Intraday Volatility (VIX): 27.63 = Neutral. VIX rose slightly during the week. It is even with its 200-day moving average.

Comments: The indexes made a valiant attempt to rally above their 50-day moving averages, and although they tried hard, they failed to move above. It was a rather wild week, with strong rallies at the open, and several that failed. Technology stocks struggled during the week.

As market observers, all we can do is look at the clues and indicators and make educated decisions what to do. I follow the market rather than try to guess its direction. Admittedly, it’s difficult to follow a market like this, i.e. a market that is not trending.

These are dangerous times, and it’s easy to get on the wrong side of a trend. When the market is this unstable, staying on the sidelines is often a wise move. The other choice is day trading, but take profits fast. Hint: I have found that counter-trend day trades are working, but you have to be nimble.

Bottom line: Most institutions are not buying, but most are also not selling. The algos are pushing the market higher during the day, but the rallies often do not last. These are strange and dangerous times, so trade cautiously.

Extra: SPX is at the bottom of the Darvis box. If SPX fails to rally this week, and falls lower, it can get ugly, and fast. Be on your toes. If you follow the Nicholas Darvis strategy, you will not go long the indexes.

Here are comments from market analyst Lance Roberts:

Lance Roberts @ realinvestmentadvice.com questions whether the bounce last week will last: https://bit.ly/30x2mfX


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

I will notify you of my posts via twitter@michaelsincere

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