The Weekly Trader

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

One-month trend = Bullish. SPX started off strong last week, but then plunged the next day, taking quite a few stocks with it. SPX drifted the rest of the week but is still near all-time highs. However, I see a triple top. The futures are higher on Sunday night, but that could change in the morning. SPX was at 3585 on Friday’s close.

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

RSI: (S&P 500) @ 63.57 (Daily) = Overbought. RSI is creeping higher, but not at extreme levels (yet).

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

Daily Intraday Volatility (VIX): 23.10 = Low. VIX is well below its 200-day moving average, reflecting a lack of fear (unless you are shorting indexes). 

Comment: The market broke higher last week before pulling back from overbought levels. A triple top has developed, but it does not mean the market will plunge anytime soon. Possible, but impossible to predict.

The market is still in an uptrend while the virus rages out of control, and the economy suffers. No one can say when reality returns to the market (it’s been a long time), but as I’ve repeatedly said, trade cautiously.

This week, watch the rallies closely. If the rallies have “legs,” and continue to move higher, that is bullish. However, if the rallies reverse direction or fail to make new highs, that would be bearish. In particular, see if the indexes can break through resistance.

Anyone holding indexes long should be pleased. Those who own individual stocks have had a rougher ride in the last few weeks. It’s an unpredictable environment, especially if you own individual stocks.

Bottom line: Let’s see if the indexes can break through resistance and make new highs. If not, it could be dangerous for the bulls.

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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: https://wolfstreet.comEdit

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

One-month trend = Bullish. SPX rallied much higher last week, rising above all moving averages and retesting all time highs. SPX is spiking higher on Sunday night, wiping out traders who are heavily shorting the indexes. SPX is at 3509 on Sunday night, but the futures market is pointing to a 50 point rally at the open. 

Mid-term (50- and 100-day MA) = Bullish. The S&P 500 bounced back above its 50- and 100-day MA. 

RSI: (S&P 500) @ 60.03 (Daily) = Slightly Overbought. RSI went from oversold to overbought in one week. 

MACD = Bearish. MACD is at its zero line but pointing higher. It is also above its 9-day Signal Line

Daily Intraday Volatility (VIX): 24.86 = Lower. VIX plunged below its 200-day moving average, reflecting a lack of fear (unless you are shorting). 

Comment: As I repeatedly warned last week, this is a dangerous, unpredictable market. If you’re on the wrong side, you can get shredded. It was impossible to predict market direction last week. As it turned out, the market rallied all last week, and is expected to rally strongly on Monday at the open. 

I wish I could proclaim the bull market is back but the indexes have moved up too high and too fast, making it a very dangerous market. A reversal can occur at anytime, so trade at your own risk. Trade small if you participate. 

Bottom line: The market is going to rally strongly at the Monday morning open, with strong volume. Don’t dare short this market at first, although shorting opportunities will appear in the near future. In my opinion, it’s dangerous on both sides, so be careful if you are trading. 

__________________________________________________________

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.comEdit

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

One-month trend = Bearish. SPX is above its 200-day MA but pointing lower as the market plunged last week. SPX closed at 3269 at the close on Friday, a huge drop from a week before. Note: SPX futures were lower earlier Sunday night, but are now higher. Wait until the premarket to be sure.

Mid-term (50- and 100-day MA) = Bearish. The S&P 500 sliced through the 50- and 100-day like it was butter.

RSI: (S&P 500) @ 37.05 (Daily) = Oversold. RSI went from slightly overbought to oversold in one week. The market could get more oversold or it could bounce. Anything is possible.

MACD = Bearish. MACD fell slightly below its zero line and is also below its 9-day Signal Line. MACD is reflecting the current bearishness.

Daily Intraday Volatility (VIX): 38.02 = Higher. VIX spiked higher, rising above its 200-day moving average as fear entered the market for the first time in months.

Comment: Last week brought us a lot of lessons as reality finally overwhelmed the market. Although traders and investors were hopeful, the stock market was no match for the virus and tough economic conditions. Market veterans saw this coming for weeks as the bull market finally ran out of steam all last week.

It is unknown if the bull market is over or if another rally is in the cards. Although the market looks dangerous and unstable at the moment (and futures are falling on Sunday night), the market has reached overbought levels. It is not at extreme levels yet, meaning the market has room to fall even more before reversing.

As I wrote last week, with an election looming and a virus spreading, it’s dangerous to take one side or the other, as anything can happen this week. Most pros will hedge (or hide) rather than commit to one side or the other. If you don’t know how to hedge, sitting on the sidelines is not a bad strategy as it’s easy to get chopped up.

Bottom line: No one can predict what is going to happen to the market this week, so don’t even try. I assume volatility will increase. These are historic times, and it will be a historic week. Be prepared for any scenario.

Here is a more detailed analysis about the market from Lance Roberts: 

Lance Roberts @ realinvestmentadvice.com explores why the stock market plunged last week: https://bit.ly/3mJMJdO

__________________________________________________________

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

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

One-month trend = Neutral to Bullish. SPX is well above its 200-day MA, a bullish signal, but the rally is still treading water after making all-time highs a few weeks ago. SPX closed at 3465 at the close on Friday, a slight drop from a week ago. Note: SPX futures are lower on Sunday night.

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

RSI: (S&P 500) @ 55.75 (Daily) = Slightly Overbought. RSI is overbought but not at extreme levels. 

MACD = Neutral. MACD is above its zero line but even with its 9-day Signal Line. MACD fell from its bullish position and is moving sideways.

Daily Intraday Volatility (VIX): 27.55 = Low. VIX is still below its 200-day moving average, indicating that volatility is low, and that fear is nowhere to be found.

Comment: Expect an unpredictable market as the election looms. The algos are aggressively defending any selloffs, but reality is getting in the way. On one hand, the virus is ruining the lives and livelihoods of millions. The economy is teetering over a cliff with too many suffering.

On the other hand, the market is near its all time highs. They can’t both be right. As a trend trader, I’m finding it difficult to find good trades. Therefore, I’m on the sidelines and waiting. I assume there will be more opportunities after the election.

Although it’s a challenge, most investors are holding. I have to give investors a lot of credit. They did not flinch for the last decade, especially during the last year, and it paid off well for them. No one, and I mean no one, can predict what is going to happen in the near future. Many will guess, but no one knows for sure.

My advice: Wait and watch until after the election. I’m not comfortable with the market being at all time highs with so many problems in the economy, and in the world. Then again, logic and common sense didn’t win out over the last year, or even the last four years. That’s why trying to guess what the market will do in the next few weeks or months is a parlor game, one that I will not participate in.

Here is a more detailed analysis about the market from Lance Roberts: 

Lance Roberts @ realinvestmentadvice.com focuses on the stimulus package to make sense of a nonsensical market: https://bit.ly/35rdGf2

__________________________________________________________

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

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

One-month trend = Neutral to Bullish. SPX is well above its 200-day MA, a bullish signal, but the rally stalled last week after making all-time highs. SPX closed at 3483.81 at the close on Friday. Note: SPX futures are higher on Sunday night. Let’s see if the bulls can take control.

Mid-term (50- and 100-day MA) = Neutral to Bullish. The S&P 500 is still above its 50-day MA. So far, it has remained above.

RSI: (S&P 500) @ 58.64 (Daily) = Slightly Overbought. RSI fell back a little. It is overbought but not at extreme levels.

MACD = Bullish. MACD is above its zero line and is above its 9-day Signal Line. MACD came out of the doldrums and is pointing to a more bullish scenario.

Daily Intraday Volatility (VIX): 27.41 = Low. VIX is still below its 200-day moving average, indicating that volatility is low, and that fear is still missing.

Comment: These are strange times and a strange market. Market veterans complained that they’ve never seen anything like it. Some have suggested there is an invisible hand (i.e. algos backed by the Fed) that is keeping the market propped up. I don’t have evidence of that but admittedly, the market refuses to fall for very long even as the economy shows signs of despair.

All bets are off when it comes to predicting what is going to happen two weeks before an election. I won’t even try. The facts: SPX is slightly higher on Sunday night. That means the odds are a little better than even that we will rally at the open. If we don’t, that would be significant. Oh, there are rumors of a stimulus deal. Perhaps that is raising hopes, but I follow the market, not the news.

Bottom line: It’s not easy following the trend two weeks before an election!

Here is a more detailed analysis about the market from Lance Roberts: 

Lance Roberts @ realinvestmentadvice.com wrote how the market stumbled last week on the failed stimulus talks. (This week could be a different story): https://bit.ly/3o7m24m

__________________________________________________________

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