This is what the technical indicators are telling us this week:
One-month trend = Broken and Bearish. SPX is above its 200-day MA but the broken uptrend has not recovered yet. Note: SPX closed at 3319 at the close on Friday, lower from a week ago, and below its 50-day MA, which is at 3342. On Sunday night, all the major index futures are flat, but that could change in the morning.
Mid-term (50- and 100-day MA) = Bearish. The S&P 500 fell below its 50-day MA last week. Let’s see if the indexes can fight their way above the 50-day, and stay there.
RSI: (S&P 500) @ 42.74 (Daily) = Slightly oversold. The RSI hardly moved in the last week. There was some institutional selling during the week.
MACD = Neutral to Bearish. MACD is barely above its zero line and has dropped below its 9-day Signal Line.
Daily Intraday Volatility (VIX): 25.83 = Neutral. VIX is slightly below its 200-day moving average, which tells me there is still little fear.
Comments: The market played out just as we anticipated last week with an attempt to rally on the Fed meeting days. But on the other days, the bulls were holding on for dear life. The market has definitely taken a turn for the worse, with a big caveat.
The bulls need to take control this week or it could be a slippery slope downward. As usual, no one can predict the future, but I can tell you last week was brutal, especially for the FAANG stocks, including crowd favorites Amazon and Apple.
If you study market history, you know when the market leaders fall, that often signals the end of a bull market. I’m not saying we’re there yet, but watch the leaders closely over the next few weeks and months to see how they act.
Bottom line: The market has turned treacherous with a lot of twists and turns waiting to confuse and distract unsuspecting bulls and bears.
Below is further market analysis by Lance Roberts:
Lance Roberts @ realinvestmentadvice.com says the correction may continue as the election looms, so take steps to reduce risk (good advice): https://bit.ly/3cflAv4
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:www.wolfstreet.com