Bullish or Bearish? Week of June 17, 2019

S&P 500 is above its 200-day moving average = Bullish  

S&P 500 is slightly above its 50-day moving average = Neutral

S&P 500 one-month trend = Multiple Short-term Trend Reversals (Inconclusive)

RSI: (S&P 500) @57.65 = Neutral

MACD: Below zero line but slightly above signal line (Neutral)

Daily Intraday Volatility: 15.28 (Subdued). Volatility is still on the low side.

Comment: The Fed has their two-day FOMC meeting on Tuesday and Wednesday, followed by a press conference on Wednesday afternoon. The consensus is there will be NO rate cut at this meeting, but Powell’s words will be closely scrutinized. No one can predict what Powell is going to say, or how the market will react. It really could go either way, so expect volatility during the week, and especially after he speaks.

My prediction: He won’t cut rates but he will say that he will in the future depending on market conditions.

Meanwhile, the best analysis I’ve seen on how to manage the current market environment comes from a piece that Lance Roberts wrote: https://bit.ly/2WIp3cq

Bottom line: It is going to be a tricky week for traders and investors, so stay alert, or wait until the dust clears. Wall Street really wants Powell to cut rates, and if he doesn’t deliver now or in the future, Wall Street won’t be pleased.

_____________________________________________________

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


Bullish or Bearish? Week of June 10, 2019

S&P 500 is above its 200-day moving average = Bullish  

S&P 500 is even with its 50-day moving average = Neutral

S&P 500 one-month trend = Multiple Short-term Trend Reversals (Neutral)

RSI: (S&P 500) @56.31 = Neutral

MACD: Below zero line but slightly above signal line (Neutral)

Daily Intraday Volatility: 16.30 (Subdued). Volatility is on the low side.

Comment: So now we know what happens when the indexes fall below their 200-day moving averages! The next time the 200-day is breached, expect to see Jerome Powell or others appear on TV to say something sweet about interest rates. Voila! The market suddenly reversed direction and rallied strongly not just the day Powell spoke, but all week. Wow!

As you know from reading my blog, I expected a strong rally during the week. But even the most bullish analyst (nor I) could have predicted the rally would last the entire week. That was extremely impressive, but also brings us back to even more dangerous territory.

Now investors know that if the market falls by too much (below the 200-day moving average), the Fed has got their back. One of these days the market will fall, the Fed will appear with soothing promises, and the market will keep falling. That is when we’ll know it’s going to go from bad to worse.

Meanwhile, looking at the indicators above, in one week we went from bearish to neutral (RSI gave us an oversold reading last week which correctly hinted there would be a rally). Now RSI is back to neutral. SPX is well above its 200-day moving average and a couple of points above its 50-day moving average.

If I had to guess, I’d say we went too far too fast last week, and that the indexes will struggle to move much higher this week. Since I don’t like to guess, all we can do is watch and see if this market has the power to stay above its 50-day moving average. The futures are slightly higher Sunday night but that should change by the opening bell.

Bottom line: It’s going to take extraordinary strength to bring this market much higher, but anything is possible. Investors have an extremely distorted view of the world thanks to the Fed. One of these days this game the Fed is playing is going to backfire and bullish investors are going to pay the price. That day is drawing nearer. Oh, I forgot to mention that the jobs numbers was very disappointing on Friday and there are other signs that a recession is near or already here.

_____________________________________________________

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


Bullish or Bearish? Week of June 3, 2019

S&P 500 is slightly below its 200-day moving average = Bearish 

S&P 500 is below its 100-day moving average = Bearish

S&P 500 one-month trend = Short-term Trend Reversal (Bearish)

RSI: (S&P 500) @30.84 = Oversold (Bullish)

MACD: Below zero line and below signal line (Bearish)

Daily Intraday Volatility: 18.71 (Subdued). Volatility is still on the low side, which means there are many opportunities for volatility spikes in the coming weeks.

Comment: If you’ve been reading this blog over the last few weeks, you’d know that the indicators above correctly forecast the trend change last week. We went from mildly bullish to bearish within days, and with help from the tariffs, the market plunged on Friday.

And just like that, everything has turned negative except RSI, which is telling us we are oversold. As expected, the futures are lower on Sunday night but there should be a brave attempt by the algos and their bullish friends to keep the indexes above their 200-day moving averages. Therefore, be prepared for a rally on Monday and at various times during the week. The key is whether the rally will continue, or fail. Another failed rally will be an extremely negative sign for the overall market.

As I wrote last week, investors are feeling a little anxious but there is no panic yet as they believe the Fed will bail them out. This is a very dangerous belief. There are many signs a recession is drawing closer, and although the market has been falling, we’re still near all-time highs.

What does this mean? Even though the market is short-term oversold, and even though we might have bounces, the market is in the danger zone. A massive correction or crash is possible, so be prepared. It’s been a long time since I’ve seen such a dangerous market. It’s possible we’ll get out of this unscathed but the odds are there will be a lot of pain in the near future.

Bottom line: Volatility should return to the market this week although the algos will do anything in their power to keep it subdued. This is a very important week to observe. Will the indexes stay above or below their 200-day moving averages? We will know the answer by the end of the week.

_____________________________________________________

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


Bullish or Bearish? Week of May 27, 2019

S&P 500 is above its 200-day moving average = Bullish 

S&P 500 is below its 50-day moving average = Bearish

S&P 500 one-month trend = Short-term Trend Reversal (Bearish)

RSI: (S&P 500) @40.93 = Neutral

MACD: Below zero line and below signal line (Bearish)

Daily Intraday Volatility: 15.52 (Bearish). Volatility is still in the basement even as the indexes fell. This divergence will be resolved soon.

Comment: The S&P 500 fell below its 50-day moving average during the week, a bearish development, and yet, volatility was very subdued. In the near future, volatility is going to spike or the markets are going to rally, but this divergence can’t last for long.

The indicators above are telling us that winter could be coming to the stock market in the next few weeks, if not sooner, so be prepared. The drop below the 50-day moving average is an early warning sign. In addition, the trade war, multiple geopolitical problems, and economic warning signs (car sales and real estate slowdown) need to be watched closely. 

I have also observed that some of the strategies that worked in the past (such as chasing momentum stocks) have stopped working over the last few months. This is a clue to me that the market is going through a transition. I am guessing that the bull market is coming to an end, but I won’t be sure until I see further deterioration of the indexes. The next two weeks should give important clues. 

It is also a concern that so many investors are expecting a pullback but almost no one is selling. The Fed has convinced investors that no matter what happens in the market, the Fed will use their tools to reverse any correction or crash. It is very risky to believe that the Fed always has your back, and that the market will “always go up.” Yes, people are saying that a lot lately, and that is very scary because it’s not true. Markets do not “always go up.”

Bottom line: Once again, be prepared for anything. For now, use hedge strategies if you’re a trader, diversify if you’re an investor, and keep a healthy supply of cash in case a worst case scenario occurs. Futures are flat to higher on Monday night, which could be the calm before the storm.

_____________________________________________________

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


Bullish or Bearish? Week of May 20, 2019

S&P 500 is above its 200-day moving average = Bullish 

S&P 500 is slightly below its 50-day moving average = Neutral

S&P 500 one-month trend = Short-term Trend Reversal (Bearish)

RSI: (S&P 500) @45.59 = Neutral

MACD: Below zero line and below signal line (Bearish)

Daily Intraday Volatility: 15.96 (Bearish). Volatility is still low although there were a number of intraday spikes last week.

Comment: The indicators turned slightly negative last week, with MACD turning down and SPX falling slightly below its 50-day moving average. In addition, investor sentiment is at sky-high levels, and few investors feel anything but overconfident. If the market does pull back, investors are certain it will “come back” as it’s done several times in the past. What a recipe for trouble!

In reality, no one can predict what the market will do this week except to say that volatility has returned. With a number of geopolitical events swirling around, and a number of Fed members speaking on Monday night, anything can happen. With the market at all time highs, it’s not a bad idea to increase cash levels (no, it does not mean to sell everything).

A number of analysts I follow did turn short-term bearish over the weekend, and although the market could test all-time highs, the odds are good we’ll go lower during the week, but I wouldn’t bet the mortgage or rent on it.

Bottom line: The increased volatility has made predicting extremely difficult, especially intraday. I’ll be watching to see if the Fed says something sweet on Monday night to rally the markets higher on Tuesday (or so investors hope). I’ll also be watching to see if the 50-day moving average can hold. If not, it could get ugly very fast.

_____________________________________________________

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


Bullish or Bearish? Week of May 13, 2019

S&P 500 is above its 200-day moving average = Bullish 

S&P 500 is slightly above its 50-day moving average = Neutral

S&P 500 one-month trend = Short-term Trend Reversal (Bearish)

RSI: (S&P 500) @46.24 = Neutral

MACD: Above zero line but below signal line (Bearish)

Daily Intraday Volatility: 16.04 (Bearish). Volatility is still low although there were a number of intraday spikes last week.

Comment: The indicators above turned from bullish to neutral or bearish, which is reflected in the Sunday night futures market (-1%). Last week was not pleasant for the bulls, and would have been worse except for a last-minute save by the White House (who said the talks with China are going well) on Friday afternoon.

So now we have an overbought market, conflicts with China, Iran, and Venuzuela, and a lack of buyers. At the very least, we should have a volatile week. At worst, it could get ugly. The bulls will be hoping for an afternoon save on Monday, but it’s unlikely anything but a true agreement with China will appease the global markets.

What to look for: See if the S&P 500 can remain above its 50-day moving average this week. If it can’t, the 100- and 200- are within reach in the coming weeks.

Bottom line: Prepare for higher volatility and a potential selloff, if only for a week. This is not necessarily the start of a bear market, but it’s obvious the bull market is nearing an end (but it likely has a few more moves left before it finally says goodbye).

_____________________________________________________

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


Bullish or Bearish? Week of May 6, 2019

S&P 500 is above its 200-day moving average = Bullish 

S&P 500 is above its 50-day moving average = Bullish

S&P 500 one-month trend = Uptrend (Bullish)

RSI: (S&P 500) @66.67 = Overbought (Bearish) but will drop fast on Monday morning.

MACD: Above zero line but even with its signal line (Neutral)

Daily Intraday Volatility: Low (VIX remains in the basement at 12.87 with a spike expected on Monday morning)

Comment: The market indexes hit all time highs on Friday after a couple of rough days midweek (perhaps because the Fed didn’t lower interest rates). On Friday, as the bulls celebrated, few took money off the table except for millions of mutual fund investors who keep cashing out every week. In fact, based on my analysis and some excellent articles from Lance Roberts and Wolf Richter (and others), it appears as if stock buybacks are primarily keeping this market elevated (along with the buy-on-the-dip algos). Even more scary, the market hit its all time highs on extremely low volume and plenty of hubris. Early in the week, RSI hit 74, which was a flashing red warning sign, and sure enough, the market fell, bringing RSI back to earth (but still overbought).

Based on the Sunday night futures market, the indexes will open 2% lower. Of course the buy on the dippers will enter sometime in the first hour, and that’s when it will get interesting. It’s unknown right now if the market will continue plunging, or if it recovers before lunch. If it starts to get ugly, either the Fed or the White House should step in with positive announcements. One day this blatant manipulation won’t work, but for 10 years, it has, so plan accordingly.

Bottom line: This is not the time to declare that the bull market is over, but that day is coming sooner rather than later. Nevertheless, one Monday morning selloff means little right now. However, pay attention to the market close for clues as to what might happen the rest of the week. As a trader, I’m just glad volatility has returned, if only for a few days.

_____________________________________________________

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


Bullish or Bearish? Week of April 29, 2019

S&P 500 is above its 200-day moving average = Bullish 

S&P 500 is above its 50-day moving average = Bullish

S&P 500 one-month trend = Uptrend (Bullish)

RSI: (S&P 500) @72.28 = Extremely Overbought (Bearish)

MACD: Above zero line but even with its signal line (Neutral)

Daily Intraday Volatility: Low (VIX remains in the basement at 12.73)

Comment: The S&P 500 nudged its way higher to all-time highs last week with SPX touching 2940 before retreating slightly. The big money was made in individual stocks (with a number of winners and losers) while volatility in the indexes remains extremely low.

This is the week of the Fed meeting and it should be interesting. Although GDP was a strong 3.2, a number of experts proclaim the number is actually much lower (based on the way inflation is calculated. More on this later). The indexes did rise near the end of the day on Friday but it wasn’t a huge rally. Bond market yields got crushed (and bonds rallied), which is a clue the bond market doesn’t believe the economy is as strong as advertised.

And that is why the Fed meeting will be very interesting. There are rumors the Fed might actually cut rates at this coming meeting. No one knows for sure what they will do, but it’s unlikely they will raise rates (according to the experts). All we can do is watch and wait.

With the market at all-time highs, with RSI telling us the market is extremely overbought, and with investors bullish again, it wouldn’t take much to send this market lower. Nevertheless, the Fed and the White House are determined to keep this rally going, so it’s risky to short the indexes.

For a much deeper analysis of the current market environment and steps you should take to protect your portfolio, read Lance Robert’s latest piece, The Bull is Back, but Will it Stay?: https://bit.ly/2VvPKUV

Bottom line: With the Fed meeting this week, the odds are good there will be some whiplash. No one knows how the market will react to the Fed, but the odds are also good the Fed will be very accommodating. The danger is that the market bubble will continue to grow, increasing the risks of a major dislocation in the future.

_____________________________________________________

What to Watch For This Week (week’s calendar at end of article): https://cnb.cx/2W7Tadz

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


Bullish or Bearish? Week of April 22, 2019

S&P 500 is above its 200-day moving average = Bullish 

S&P 500 is above its 50-day moving average = Bullish

S&P 500 one-month trend = Uptrend (Bullish)

RSI: (S&P 500) @67.05 = Overbought (Bearish)

MACD: Above zero line but even with its signal line (Neutral)

Daily Intraday Volatility: Low (VIX is in the basement again at 12.09)

Comment: The market (SPX) hardly moved in the last week, ending the week close to where it started. Volume was extremely low, which tells me most investors are taking a “wait and see” approach.

The indexes are near their all-time highs, volume is low, volatility is extremely low, the market is overbought, and we’re close to the longest bull market in history. In addition, investors are starting to get bullish again (they always do at tops), which is a danger sign. I spoke to a few investors who believe the market is nearly invincible (and if it does plunge in the near future, it will “come back,” they say.)

Since I’m not in the prediction business, I can’t tell you what the market is going to do this week. But I can tell you that the danger signs are getting stronger. For now, with the market near its all time highs, we need to see if the bulls can blast through SPX 2900 and stay above. If it can, then SPX 3000 is within reach.

However, if the market fails to rise much higher than SPX 2900, I would not be surprised to see a substantial pullback. For now, however, it’s wise to “sit and wait” along with everyone else until the market makes up its mind which direction it wants to go.

Bottom line: This is the time to be patient and watch the clues, the trend, and your favorite indicators. Keep in mind these are very unusual times so be prepared for the unexpected. Some old-timers told me they have never seen a market this complacent.

_____________________________________________________

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


Bullish or Bearish? Week of April 15, 2019

Here are the most recent market indicators:

S&P 500 is above its 200-day moving average = Bullish 

S&P 500 is above its 50-day moving average = Bullish

S&P 500 one-month trend = Uptrend (Bullish)

RSI: (S&P 500) @69.39 = Overbought (Bearish)

MACD: Above zero line but even with its signal line (Neutral)

Daily Intraday Volatility: Low (VIX is in the basement again at 12)

Comment: Last week, the market meandered around for four days until Friday, when it broke out to SPX 2900. Not surprisingly, institutional money managers are downright giddy and investors are bullish again (according to AAII and Investors Intelligence sentiment surveys). Typically, investors get bullish at tops and bearish at bottoms, so it’s best to be cautious at these overbought levels.

It’s emotionally difficult to sit on the sidelines when the market is sitting near all-time highs and other investors are making money. It might be difficult, but taking profits and increasing cash is exactly what prudent investors do. This ride to the top is fun, but one of these days there will an elevator ride to the bottom. Until then, be cautious. No one knows if the indexes will break out to all-time highs or retreat. Suggestions: Prepare for both scenarios by taking money off the table. Then diversify or hedge.

Bottom line: I have no idea what is going to happen this week (it’s also a four-day week). The odds are good that the bull market will continue a bit longer, which is the ideal time to take profits. As short sellers have learned the hard way over the last ten years, just because the market is overbought (it is extremely overbought right now) doesn’t mean it will reverse direction anytime soon. In fact, betting on the reversal has been a lonely and unprofitable exercise, at least for nearly ten years.

However, when the indexes do reverse direction one day in the future, it is going to be an epic plunge, one that could last years. That is why it’s so important to read about bear markets, to read books about and by Jesse Livermore, and to prepare for what will happen sometime in the future. Don’t forget that Livermore went broke at least three times betting against bull markets that were fueled by illegal (legal at the time, however) insider manipulation and buybacks, and questionable option strategies.

Don’t think we could crash again? Read the following thought-provoking piece by Lance Roberts, who points out that stock buybacks fed the latest 10-year bull market, but could also cause its demise. Here is a link to his must-read column: https://bit.ly/2UhXTrq

_____________________________________________________

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