The Weekly Trader

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

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

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

___________________________________________________________

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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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

___________________________________________________________

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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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

___________________________________________________________

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