Bullish or Bearish? Week of July 6, 2020

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

One-month trend = Neutral. As expected, the algos pushed the indexes above its 200-day MA last week, which is a slightly bullish sign. Let’s see how long it lasts. Note: SPX is at 3130 on Sunday night. The 200-day is at 3022.84.

Mid-term (50 and 100-day MA): The S&P 500 is slightly above its 50- and 100-day MA = Neutral. 

RSI: (S&P 500) @ 56.37 = Slightly overbought = Neutral. 

MACD: MACD is above its zero line and and even with its 9-day Signal Line = Neutral

Daily Intraday Volatility (VIX): 27.68 = VIX didn’t move much in the last week = Neutral. 

Comment:

As you can see above, we are in a holding pattern. Everything is in neutral for the second week on a row. That means it could be the calm before the storm (if you’re bearish), or happy days are here again (if you’re bullish).

When I look at reality, I am still having trouble finding good financial news. The employment numbers were not as rosy as Wall Street led you to believe (read Wolf Richter @Wolf Street below for a more thorough analysis). The virus keeps expanding with no end in sight. And the market is moving sideways, slightly above its 200-day moving average.

As the elections get closer, volatility should increase, and that could cause havoc with the market. I can’t predict what is going to happen in the near future because the algos and Central Banks are running the show, but if I had to place a bet, I’d say this is the calm before the storm. I just don’t know when the storm is coming!

Bottom line: We are at war with a virus so please stay safe and follow the rules. Below is a more detailed analysis of the market environment:

Lance Roberts @ realinvestmentadvice.com lists 15 rules for investors that are very helpful: https://bit.ly/2YZg7n6

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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 29, 2020

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

One-month trend = SPX is slightly BELOW its 200-day moving average = NeutralSPX has failed to stay above its 200-day MA, which is a bearish sign. I am certain the Fed, and its algo friends, will try and rescue the market once again.

Mid-term (50 and 100-day MA): The S&P 500 is still in a sideways pattern = Neutral.

RSI: (S&P 500) @ 45.65 = Slightly oversold = Neutral. 

MACD: MACD is above its zero line and and slightly below its 9-day Signal Line = Neutral

Daily Intraday Volatility (VIX): 34.73 = VIX didn’t move much in the last week = Neutral. 

Comment: The overbought market had a chance to get more overbought last week, but reality interfered. It might be the virus, the political climate, or awful economic news, but the market fell back below its 200-day moving average on Friday. That was a negative sign. In addition, every rally was met with more selling, another clue that something changed last week.

And yet, I am certain the Fed will do whatever it takes to pump the market higher this week even while the bad news keeps coming. The virus news is the most damaging to the economy, and to the stock market. No one can predict who is going to win this battle this week, although the futures are slightly lower on Sunday night.

In addition to the worrisome news that never seems to stop, many investors and traders are convinced the market will never go down, and if it does, it will bounce back. Any experienced trader knows what once you are certain what’s going to happen to the market, usually the opposite occurs.

Only three months ago the market had a huge correction, and perhaps entered into a bear market. Then we had a monster rally, which could very well be a bear market rally. If that is true, if we are really in a bear market, and this recent rally is only temporary, then look out below.

I’m not predicting that is going to happen, but you better be prepared for any scenario. Personally, I’m amazed that the market is still this high considering everything that has been happening. It’s too early to short (maybe), but it’s a little late to go long.

Bottom line: The market is starting the week with a negative bias, which is not surprising considering everything happening in the world. The Fed appears to be the main entity pushing the market higher almost every day. I sure hope they know what they are doing.

Below is a more detailed analysis of the current market environment:

Sven Henrich @ Northman Trader doesn’t hold back his anger at the Fed for playing games with the stock market: https://bit.ly/3iakGTh

Lance Roberts @ realinvestmentadvice.com analyzes the market from a fundamental perspective, and doesn’t like what he sees: https://bit.ly/3eJAJFr

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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 22, 2020

Here is a more detailed analysis of the current market: 

One-month trend = SPX is slightly above its 200-day moving average = NeutralSPX is struggling to rise well above its 200-day MA, and if it does, the market has room to climb higher. If it falls below this week, it would be a negative sign.

Mid-term: The S&P 500 is still in a sideways pattern = Neutral. Perhaps it will be resolved this week.

RSI: (S&P 500) @ 55.12 = Slightly overbought = Neutral. 

MACD: MACD is above its zero line and and even with its 9-day Signal Line = Neutral

Daily Intraday Volatility (VIX): 35.12 = VIX didn’t move at all in the last week = Neutral.

Comment: I’m really struggling to find good news to report. The rising virus numbers, protests, upcoming election, job losses, and economic damage isn’t going away anytime soon. Wait! There is some good news, the only good news I can report: The stock market is near its all time highs.

It’s hard to believe the stock market has ignored all of the bad news swirling about and is slowly grinding higher. Based on the indicators I use, the mountain is steep and getting harder to climb.

Friday was one of the most bearish days I’ve seen in a while. The Dow opened higher by over 300 points, struggled all day, but closed down 200 points. A bearish intraday reversal is a very negative sign.

The indicators above are telling us nothing significant as we wait until the market makes up its mind this week. It’s anyone’s guess which direction we will go.

Another troubling sign is the huge number of beginner traders who have entered the market near all time highs. That is typically a sign we are at or near the top. Only time will tell.

The average investor believes “I will get out in time before the crash.” It appears as if almost everyone is expecting another crash near or after the election, but that everyone thinks they will get out with their profits intact. I’ve heard this story before.

Bottom line: The market is struggling to move higher as the bad news keeps growing. Either the stock market is right and good economic news is coming soon, or the economy is right and reality will hit the market like a 2×4 in the face.

Below is Wolf Richter’s take on the market (Hint: He’s shorting. FYI, in January he correctly predicted the market would plunge).

Wolf Richter @wolfstreet.com who hates to short, wrote an excellent piece on why he has started new short positions: https://bit.ly/2Ngaz0P

Lance Roberts @ realinvestmentadvice.com agrees the bulls are in control….for now: https://bit.ly/2AWuYFQ

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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 15, 2020

One-month trend = Stalled Uptrend. SPX is slightly above its 200-day moving average = Neutral. SPX was in a strong uptrend until Thursday’s 1800 point drop in the Dow. Reality finally returned.

Mid-term: The S&P 500 was in a strong uptrend until last week’s pullback = Neutral.

RSI: (S&P 500) @ 51.72 = Don’t ignore RSI. It went from over 70 early last week back to neutral = Neutral.

MACD: MACD is above its zero line and and is slightly below its 9-day Signal Line = Neutral

Daily Intraday Volatility (VIX): 35.09 = VIX spiked last week, signaling that a little bit of fear crept into the market.

Comment: The signals last week were flashing red. First, there was RSI, which went above 70. As I wrote last week, anytime RSI moves above 70 on SPX, it’s a danger sign.

In addition to RSI, all of the indexes were bullish while the economy was struggling and the virus was spreading. There was no warning for the Thursday selloff, which is typical for corrections. Another warning sign: The hosts on several financial programs were outright giddy, including one well-known tout who acted as if the market would never go down.

Sunday night, the futures are telling us the market may open lower, but wait until the opening before trading. The market could go either way.

The powers that be, including the Fed, does not want to see another big selloff, but I would not be surprised to see us hit the March lows in the next few months. And yet, the algos will do everything in their power to suppress volatility and keep the rally going.

The big question is whether SPX can hold the 200-day moving average this week. If it can, then all is well for the rest of the week. If it can’t, then it’s going to be a very unpleasant week if you are bullish.

Bottom line: it’s anyone’s guess which direction we are going this week except to say that we went up too fast, and too far. Thursday brought a dose of reality to the markets, so let’s see if that was enough to slow the momentum. Once again, be on guard as we could go either way, and no one but the market itself knows the winning side.

Here is a more detailed analysis of the current market: 

Lance Roberts @ realinvestmentadvice.com analyzes the market from a realistic perspective: https://bit.ly/2YvnSzQ

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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 8, 2020

One-month trend = Uptrend. SPX is above its 200-day moving average= Bullish. Very impressive, I must admit.

Mid-term: The S&P 500 has been in a lengthy uptrend = Bullish.

RSI: (S&P 500) @ 72.48 = Extremely Overbought. RSI is telling us the market is way overbought. Caution is advised.

MACD: MACD is above its zero line and above its 9-day Signal Line = Bullish

Daily Intraday Volatility (VIX): 24.52 = VIX keeps falling but not extreme yet = Neutral

Comment: Last week I thought that reality was going to hit the market, but it was not to be. The indexes continued to climb higher and higher, and even though it feels like the world is falling apart, the stock market acts as if all is well.

On Friday, the market supposedly rallied because the unemployment rate is only 13%, the worst since the Great Depression, but some thought it could have been worse. Hmmm.

Everything looks delightful for the market except for RSI, which is flashing a very strong warning sign. We are more overbought than even in March. Although you never fight the tape, I also don’t ignore RSI, which tells us the party will be ending in the near future. Sunday night, futures are higher, but let’s see what happens at the opening.

Enjoy the good times while they last, but they won’t last. Retail investors, and now hedge funds, are joining in for the fun. Everyone is sure the Fed has their back, and even if the market plunges, the Fed will save us (or so they say).

In fact, there is little fear, which reminds me of a Jesse Livermore saying, something about people are greedy when they should be afraid and afraid when they should be greedy. (Warren Buffett said something similar).

Bottom line: I sense a lot of greed right now.

Here is a more detailed analysis of the current market:

Lance Roberts @ realinvestmentadvice.com breaks down the jobs numbers in more detail with this excellent piece: https://bit.ly/3cE3TEh

Sven Henrich (Northman Trader) writes a scathing piece about how the Fed’s misguided policies are going to end in disaster: https://bit.ly/2Ycir8L

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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 1, 2020

One-month trend = Uptrend. SPX has slowly climbed above its 200-day moving average = Bullish. Now the hard work begins: Can the bulls hold the 200-day?

Mid-term: The S&P 500 is in an uptrend after the March crash = Bullish. As mentioned above, the true test is if it can stay above.

RSI: (S&P 500) @ 63.34 = Overbought. As SPX rises, so does the overbought warnings. RSI is not extreme yet, but it will if it rises above 70.

MACD: MACD is above its zero line and slightly above its 9-day Signal Line = Neutral

Daily Intraday Volatility (VIX): 27.51 = Elevated but falling = Neutral. 

Comment: Although I tend to focus only on the stock market, and don’t let the news influence my trading, it’s impossible to ignore what is happening in the United States. With chaos in many cities, depression level unemployment, many businesses failing, and the income of millions plunging, it’s hard to find good news lately. And yet, the stock market keeps climbing.

Something has to give eventually. It’s as if we are trading in the Twilight Zone. Even though the market rises on some days, the rallies are unenthusiastic and weak, yet the numbers look good. There is a lack of institutional buying, so any rally is suspect. And yet, if you talk to retail investors, because the market keeps going higher, many believe the Fed has their back.

Many old-timers have never seen such a disconnect between the market and reality as now. Few seem to be buying, and few are selling. It’s a standoff, and no one knows who will win in the end. Personally, I think the market will be forced to accept reality, but so far, it has not.

The futures plunged early in the evening on Sunday night, but then recovered. It appears as if an algorithm buy program gobbled up stocks in the futures market. It’s too early to say how the market will open, but I would not be surprised to see a selloff during the week. And yet, I wouldn’t bet real money on it. Something just isn’t right.

As mentioned earlier, SPX has risen above its 200-day moving average, an amazing feat that few predicted. The hard work is if they can hold it there. Many bullish technicians already are proclaiming that the bear market is over and a new bull market has begun. I say, not so fast. This is the time to be patient and see what surprises the market has in store for us. In my opinion, it’s too early to declare victory if you are bullish.

Bottom line: These are dangerous and tricky times for the country, the world, and the stock market. Stay alert and be cautious this week and beyond.

Here is an excellent analysis of the current market environment from Lance Roberts:

Lance Roberts @ realinvestmentadvice.com on how a correction is likely with this overbought market: https://bit.ly/36O8gLv

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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 25, 2020

Mid-term: The S&P 500 started off with a bang last week and is now right below its 200-day moving average = Bullish. 

One-month trend = Sideways. SPX has slowly climbed higher during the month = Bullish.

RSI: (S&P 500) @ 57.74 = Mildly overbought. 

MACD: MACD is above its zero line and even with its 9-day Signal Line = Neutral

Daily Intraday Volatility (VIX): 28.16 = Elevated but falling = Neutral. 

Comment: It’s a four-day week after the Memorial Day holiday. It’s a tale of two countries, and two tapes. On one hand, the country is nervous over the high number of virus deaths, and millions are in economic pain. The country is struggling to get back to “normal.” 

On the other hand, the stock market acts as if everything is fine. Futures are up strongly on Monday night. Apparently, the bulls are going to make a play for the S&P 500’s 200-day moving average, and they might get their wish. 

It’s impossible to predict what is going to happen this week so I will leave it to the professionals to give their take. I admit I have no idea which direction we’re going, but the bulls seem to be in control for now. I do know that only one entitiy can be right: either the stock market is signaling that all is well, or the economy is telling us things are dire. 

Bottom line: Be patient during these strange times. Trade less when uncertain. 

I turn to Lance Roberts, Wolf Richter, and Sven Henrich for their excellent analysis: 

Lance Roberts @ realinvestmentadvice.com on how the market is “stuck in the middle.”: https://bit.ly/2LZd4Ec

Sven Henrich @ Northman Trader on how the market is oblivious to reality, and another Straight Talk video: https://bit.ly/2zvBbYr

Wolf Richter @ wolf street.com on the Hertz bankruptcy and other economic warning signs: https://bit.ly/3d4B0lv

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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

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Bullish or Bearish? Week of May 18, 2020

Mid-term: The S&P 500 had a lackluster week, unable to rise above its 200-day moving average. Unless something changes this week, it’s still a bear market (by my definition). Futures are higher on Sunday night so maybe the bulls can push it to SPX 3000.

One-month trend = Sideways. SPX has worked hard but has gone nowhere in the last month. It’s either going to break out or break down.

RSI: (S&P 500) @ 52.71 = Neutral. The market could go in either direction this week. 

MACD: MACD is above its zero line and even with its 9-day Signal Line = Neutral

Daily Intraday Volatility (VIX): 31.89 = Relatively High. Volatility remains elevated but much lower than a month ago. Volatile trading days are still expected. 

Comment: I wish I had something exciting to say but I don’t. Jerome Powell gave a harsh assessment of the economy on Thursday, and the market sold off quickly. On Sunday night he backtracked and said things are looking brighter. Which is it?

As Lance Roberts said last week, either the economy is right and we’re in deep trouble, or the stock market is right and the worst is over. But both the stock market and economy can’t be right.

The market has been drifting sideways for nearly a month with low volume and lack of institutional participation. We can continue drifting for a while longer until the market either plunges or rallies. No one can predict which, so the best strategy is sit and wait for the next trend.

Bottom line: It appears as if the economy is getting worse while the stock market keeps climbing. Unusual is an understatement. If trading, be patient and don’t try to force trades. Sometimes the best trade is not trading at all. Let’s hope we get some clarity this week.

Here are two additional and more detailed analysis of the current market:

Lance Roberts @ realinvestmentadvice.com sees a seasonal sell signal: https://bit.ly/36f5wqf

Sven Henrich @ Northman Trader with a Straight Talk video on the current market: https://bit.ly/3g0Et6n

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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

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Bullish or Bearish? Week of May 11, 2020

Mid-term: The S&P 500 continued to move higher, coming ever closer to the almighty 200-day moving average. This is another pivotal week. Can SPX surpass the 200-day (and stay above)? If it can, it’s bullish. If not, it’s bearish.

One-month trend = Bullish. SPX has worked hard, with the Fed’s help, to rally right below its 100 and 200-day moving averages. The economy is in shambles but the market spikes higher. Both can’t be right (more on this later).

RSI: (S&P 500) @ 58.29 = Neutral. The market could go in either direction this week.

MACD: MACD is above its zero line and even with its 9-day Signal Line = Neutral

Daily Intraday Volatility (VIX): 27.99 = Relatively High. Volatility remains elevated but much lower than a month ago. Volatile trading days are still expected.

Comment: Most people are shaking their head at last week’s market action. The unemployment rate and job losses were the worst since the Great Depression, and some economists say it’s even worse than you think. Meanwhile, the stock market rose back near its previous highs (Nasdaq already did).

As Lance Roberts says, either we have a depressionary economy or that things couldn’t be better, according to the stock market. Both can’t be right, and we should know soon who it is.

It’s no secret that the Fed has been pouring trillions into the stock market using a variety of methods. No one knows how long they will do that, and how long it will be successful. Common sense says reality will hit one of these days, but then again, logic has taken a vacation.

Bottom line: My gut feeling says the worst is coming, and reality will be arriving at the stock market near you. But with the Fed ready to pump up any selloff, anything is possible. Read the excellent blogs below for excellent discussions on the current stock market.

The following is a must-read interview with Larry McDonald, publisher of the “Bears Trap Report.” In summary, he says, buy silver and other commodities, and sell stocks: https://bit.ly/2zu2Dp3

Lance Roberts @ realinvestmentadvice.com on how a depressionary economy and rising stock market can’t both be right: https://bit.ly/2yBfR3D

Sven Henrich @ Northman Trader with an informative video discussion with three market gurus: https://bit.ly/3blIzmn

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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 4, 2020

Mid-term: The S&P 500 spurted higher last week but is still slightly below its 200-day moving average = BearishThe longer it remains below its 200-day MA, the more bearish it is. It must rise above the 200-day MA and stay above for the bulls to take control.

One-month trend = Bullish. SPX has worked hard, with the Fed’s help, to rally above its 50-day moving average. Nevertheless, at this writing, it has still not risen above its 100-day or 200-day MA. Until then, the bear case is still possible, and in play.

RSI: (S&P 500) @ 52.53 = Neutral. The market could go in either direction this week but futures are lower on Sunday night.

MACD: MACD is slightly above its zero line and slightly above its 9-day Signal Line = Neutral to Bullish

Daily Intraday Volatility (VIX): 37.19 = Relatively High. Volatility remains elevated. Expect volatile trading days. 

Comment: The indexes started the week with a spectacular rally (small caps rallied 10% in 3 days) before and during the Fed meeting. Just when it appeared as if SPX would rise above its 200-day moving average (and also while hitting key Fibonacci technical levels), SPX retreated (they gave back nearly all of the gains). On Sunday night, the futures are lower and it appears as if the rally has run out of steam, at least for now.

As the market climbed higher last week, traders wondered if that was a bear market rally, another word for a Bull Trap. That is when the bulls believe the worst is over and they buy at the top of a rally, only to watch it reverse direction.

I spoke to a buy and hold investor friend of mine who has all of his money in various indexes. He was down as much as 30% a month ago and now is down only 13%. He is thinking of selling but “only when I get back to even.” You heard it here first: Many investors are not going to sell until they get ALL of their money back.

For my friend’s sake, I hope he succeeds. But I have seen this scenario before with individual stocks. You lose money, you get 75% of the money back, and you get greedy. You want 100% of your money back so you don’t sell. Then the stock plunges. I’m not predicting this will happen to the SPX, but it’s possible. After all, the economy is not in a good place and we have not solved the virus problem.

Bottom line: This will be another fascinating week. The Fed helped the market last week with monetary and fiscal injections, and helped to smash the bears…for three days. This week we will find out who really has the winning hand. I’m also curious if the Fed jumps in again to “save” the market if it starts to get ugly again. We shall see.

Once again, I recommend that you read the following pieces. Be sure to watch the video from Sven, which gives a bearish analysis of the market environment:

Sven Henrich @ Northman Trader on the failed rally last week: https://bit.ly/3fcdCUG

Lance Roberts @ realinvestmentadvice.com on why selling in May makes sense this year: https://bit.ly/2WlZmjD

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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