The Weekly Trader

WHAT THE INDICATORS ARE SAYING 

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

One-week trend = UP. The bulls decisively won the week, no questions asked. SPX rose from 4391 to 4471 last week, a healthy 80-point advance. The bulls are back in control. Futures are FLAT on Sunday night but that could change in the morning.

SPX 20-day moving average (WEEKLY): UP. SPX rose strongly above its 20-day moving average as the bulls successfully defended. All systems are go this week unless something changes the narrative.

RSI: (S&P 500) @62.45 (WEEKLY) = Neutral to slightly overbought. RSI is still slightly elevated but not at extreme levels. It’s not giving a strong signal in either direction.

MACD (WEEKLY) = MIXED. The weekly MACD is giving mixed signals: The MACD line is below its signal line (bearish) but above the zero line (bullish). Translation: Nothing to see here.

Daily Intraday Volatility (VIX) = 16.30 = VIX has fallen a bit in the last week, reflecting calm and a lack of fear even as inflation rears its ugly head. All is well on Wall Street, says the VIX.

Comment:  The sell-off from a couple of weeks ago has been forgotten. The bulls took control last week and now almost everyone appears bullish again. What can I say? It’s the reason I don’t make predictions: No one can tell you what the market is going to do day-to-day, but at least the indicators give us clues.

Right now the indicators are saying that the trend is up and SPX is only slightly overbought. According to technical analysis, unless something comes out of left field (like a unexpected negative economic report), the market is headed higher.

Eventually, inflation is going to affect the market, especially if the Fed has to raise interest rates. That would be a game-changer. For now, however, sit back and enjoy the bull party. As I said last week, this could be the calm before the storm, or just the calm. Enjoy these up trending days as one day it will end. Until it does, however, full spead ahead!

Bottom line: I don’t see any red flags this week. The market could drift all week in either direction but there are no clues (yet) or a major event that could affect the market. (Then again, I don’t have a crystal ball so anything is possible.)

___________________________________________________________

Stock evaluation program from Barchart: https://bit.ly/3v9Nj9G 

For daily results of multiple indicators, read Yardeni Research: https://goo.gl/eT3fzA

For insightful analysis of the stock market, read Lance Roberts’ latest newsletter:www.realinvestmentadvice.com

For insightful analysis of economic conditions, read Wolf Richter: https://wolfstreet.com

WHAT THE INDICATORS ARE SAYING 

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

One-week trend = FLAT. The bulls won the week because they were able to stop the market from declining further. SPX rose from 4357 to 4391 last week, a 34 point advance. It was a vicious back and forth battle, making some investors dizzy. Futures are LOWER on Sunday night (but that could change in the morning).

SPX 20-day moving average (WEEKLY): FLAT. SPX rose slightly above its 20-day moving average (i.e., now it’s a support level), repairing some of the damage from last week. It’s too early for the bulls to declare victory, but retaking the 20-day was a good start.

RSI: (S&P 500) @57.84 (WEEKLY) = Neutral to slightly overbought. RSI is still slightly elevated but not at extreme levels. All one can do is wait and watch.

MACD (WEEKLY) = MIXED. The weekly MACD is giving mixed signals: The MACD line is below its signal line (bearish) but above the zero line (bullish). MACD on the daily chart is below the zero line but moving higher.

Daily Intraday Volatility (VIX) = 18.77 = VIX reflects the sigh of relief the bulls feel, with the VIX barely dropping.

Comment:  The bulls want to forget the selloff of a week ago but the market is still vulnerable. With the indexes still at all-time highs, it wouldn’t take much to send the markets lower. Suggestion: More than ever, have a plan of what to do in a worst-case scenario. Don’t leave yourself vulnerable to a severe selloff.

Meanwhile, the bulls did a good job of stopping the damage, at least temporarily. This week we will have a better idea of who is in control. A lot of outside forces are swirling around, including inflation, which could upset the bullish narrative. That’s why I’m not ready to proclaim that the bulls are out of the woods yet. (Don’t forget we’re still in the historically dangerous month of October).

I don’t see much of a trend nor strong momentum. It could either be the calm before the storm, or just calm (i.e., consolidation). It’s too early to know which.

Bottom line: Another trendless, impossible-to-predict market that can chop you up if you’re not careful…so be careful.

___________________________________________________________

Stock evaluation program from Barchart: https://bit.ly/3v9Nj9G 

For daily results of multiple indicators, read Yardeni Research: https://goo.gl/eT3fzA

For insightful analysis of the stock market, read Lance Roberts’ latest newsletter:www.realinvestmentadvice.com

For insightful analysis of economic conditions, read Wolf Richter: https://wolfstreet.com

WHAT THE INDICATORS ARE SAYING 

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

One-week trend = DOWN. The bears won the week even after Friday’s 500 point Dow rally. SPX plunged from 4455 to 4357 in the last week, a vicious 98 point hit (but it could have been worse. The bulls received a gift of 50 SPX points on Friday.) For the first time in a long time, the bears took control, snapping a 6-month winning streak. Note: There is a lot of activity in the futures market. At the moment, futures are LOWER on Sunday night but that may change in the morning.

SPX 20-day moving average (WEEKLY): DOWN. SPX has dropped below its 20-day moving average on a weekly chart but is still above the 50-, 100-, and 200 MA. However, on the daily chart, it is downright ugly. On the daily, SPX has dropped below the 50- and 100 MA. Since I am a weekly trader, I don’t see a disaster. Instead, I see a red flag on the weekly chart. The bulls should attempt to save the market this week and keep Friday’s rally going on Monday and beyond.

RSI: (S&P 500) @55.67 (WEEKLY) = Neutral to slightly overbought. It was only a week ago that RSI was above 70 and was a warning to anyone who’d listen it was in the danger zone. Now it’s only slightly overbought at 55.67 (which means there is still room for SPX and the other indexes to fall).

MACD (WEEKLY) = LOWER. The weekly MACD is giving mixed signals: The MACD line is below its signal line (bearish) but above the zero line (bullish). However, the daily MACD is awful. MACD is below its signal line and the zero line. The weekly tells me that you shouldn’t panic yet (if you are long). There is still time for the bulls to save this market.

Daily Intraday Volatility (VIX) = 21.15 = VIX has creeped up a bit higher but there is still little fear. It will take more than a 100 drop in the SPX to scare the bulls.

Comment:  It was a terrible week for the bulls but after 13 bullish years, this was not even a hiccup. This week is important as we will find out if the selloff has legs.

The bulls will try to keep the momentum from Friday going into Monday. Here’s what to look for: If the upcoming rally (i.e., multiple rallies) fail(s), that is a huge red flag. However, this is the chance for the bulls to prove the party has not ended.

Unfortunately for the bulls, it’s tough to convince investors that all is well when inflation has reared its ugly head, when the bull market feels exhausted, and when interest rates remain artifically low. There’s a lot of danger signs and yet, the bulls have pulled a rabbit out of hat so many times I wouldn’t count them out.

This is not an easy trading environment. Investors are feeling dizzy and traders are getting whipsawed. Please think about containing risk by trading smaller size and being extra cautious.

Bottom line: Predicting this market is near impossible so I won’t even try. The market is slightly overbought and there is little fear, a recipe for problems. And yet, here we are, 13 years later……… (Tick…tock).

___________________________________________________________

Stock evaluation program from Barchart: https://bit.ly/3v9Nj9G 

For daily results of multiple indicators, read Yardeni Research: https://goo.gl/eT3fzA

For insightful analysis of the stock market, read Lance Roberts’ latest newsletter:www.realinvestmentadvice.com

For insightful analysis of economic conditions, read Wolf Richter: https://wolfstreet.com

WHAT THE INDICATORS ARE SAYING 

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

One-week trend = FLAT. The bears and bulls fought it out all week, and that should continue this week. SPX rose from 4432 to 4455 in the last week, a measly 23 point rally. Nevertheless, it was a vicious, back-and-forth battle for investment control. Futures are HIGHER on Sunday night. As always, direction could change in the morning. 

SPX 20-day moving average (WEEKLY): FLAT. SPX is resting slightly above its 20-day moving average on a weekly chart. The bulls saved the indexes from falling further, but the market is still vulnerable. We are watching the 20-day MA closely for clues. If SPX breaches the 20-day, that would be a red flag.

RSI: (S&P 500) @64.51 (WEEKLY) = Slightly Overbought. RSI has returned to a “normal” overbought level. It could get more overbought (above 70), or swing in an entirely different direction. We must wait and see.

MACD (WEEKLY) = MIXED. MACD is leaning bearish but it’s still above the zero line (i.e., a bullish signal). While MACD is more bearish than in the past, it has not given a sell signal.

Daily Intraday Volatility (VIX) = 17.75 = VIX is still on the low side but a smidgen of fear creeped into the markets over the last two weeks. Still nothing to write home about.

Comment:  The market played out exactly as we anticipated last week. SPX began the week on a sour note, but that only lasted a day. Before, during, and after the Fed meeting, the market miraculously went higher and higher. At the Fed meeting, Fed Chairman Powell said that inflation was under control and they are watching. Nothing to see here…so move on.

Now that the Fed meeting is behind us, the true market sentiment may appear. There are reasons for optimism and also reasons for nervousness. The bears and bulls have been fighting it out for months and that should continue. There is no way we can predict what the market will do in the near future.

I suggest relying on the indicators and oscillators for clues, and not opinion. Although it appears as if the bull market is on its last legs, it keeps coming back to surprise nearly everyone. Until the major moving averages are broken, shorting is too risky. And yet, I wouldn’t bet the house on a rally (at least now).

Bottom line: This week is a coin toss.

 

___________________________________________________________

Stock evaluation program from Barchart: https://bit.ly/3v9Nj9G 

For daily results of multiple indicators, read Yardeni Research: https://goo.gl/eT3fzA

For insightful analysis of the stock market, read Lance Roberts’ latest newsletter:www.realinvestmentadvice.com

For insightful analysis of economic conditions, read Wolf Richter: https://wolfstreet.com

WHAT THE INDICATORS ARE SAYING

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

One-week trend = LOWER. The bears took control again last week. SPX fell from 4458 to 4432, an annoying 26 point drop. Futures are LOWER (and moving even lower) on Sunday night. However, in the morning anything is possible. 

SPX 20-day moving average (WEEKLY): Downtrend. SPX is slightly above its 20-day moving average but headed lower. The bulls are desperate to stop the indexes from falling further. The indexes are weaker than two weeks ago but not in imminent danger yet.

RSI: (S&P 500) @63.27 (WEEKLY) = Slightly Overbought. RSI fell dramatically from an extreme 73 reading two weeks ago to “normal” overbought levels. The bulls are bruised but they are still in the game.

MACD (WEEKLY) = Slightly bearish. For the first time in months, MACD fell from its neutral reading and is leaning bearish. It’s too early to proclaim anything except that MACD detected weakness. We will watch it for clues.

Daily Intraday Volatility (VIX) = 20.81 = VIX is still on the low side but a smidgen of fear creeped into the markets over the last two weeks. Nothing to write home about but interesting to watch.

Comment:  The reversal I warned about arrived last Tuesday. The market rallied hard last Monday but gave up its gains the rest of the week. In the past, the bulls typically took back control after even one bad week. This time they struggled.

The market is a little skittish but I looked at the calendar: The Fed is meeting this week and the bulls are looking for Fed Chair Powell to save them. Typically, the markets rally before and right after the Fed meeting, especially when Powell hints that everything is fine and low interest rates will continue as far as the eye can see.

The skunk at the party this week is inflation, and everyone is seeing it. The Fed is pretending there is no inflation and that everything is under control, and for his sake I hope it is. It is guaranteed that questions about inflation will be asked. Powell will have answers.

As you see at the top of this blog, RSI is slightly overbought, MACD dropped a little, and VIX is saying that traders are getting a tiny bit cautious (they are buying more put options for protection). Nothing to worry about yet but be on guard.

Bottom line: No one knows nothing, so don’t even try to guess. The market is not as bullish like in the old days, momentum is weakening slightly, and investors are cautiously optimistic. Jerome, the ball is in your court. We can’t wait to hear your soothing words.

___________________________________________________________

Stock evaluation program from Barchart: https://bit.ly/3v9Nj9G 

For daily results of multiple indicators, read Yardeni Research: https://goo.gl/eT3fzA

For insightful analysis of the stock market, read Lance Roberts’ latest newsletter:www.realinvestmentadvice.com

For insightful analysis of economic conditions, read Wolf Richter: https://wolfstreet.com