The Weekly Trader

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

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

S&P 500 one-month trend: SPX is in a strong uptrend that appears unstoppable, but also unsustainable for the long term.

RSI: (S&P 500) @ 75.73 = SPX is extremely overbought. Caution is advised.

MACD: Above Zero Line and above Signal Line = Bullish

Daily Intraday Volatility: 12.51 = Low (Bearish)

Comment: It’s a shortened holiday week as the stock market closes early on Christmas Eve (1:00 p.m. ET), and all day on Christmas. Volume should be light unless there is unexpected breaking news.

This is the first time I’ve seen RSI this high (75.73) on the S&P 500, which signifies an extremely overbought market. Yes, SPX can remain overbought for a while longer, but the clock is ticking.

The Fed appears to be the main reason for the market’s mind altering rise. With low interest rates and QE4 (the Fed continues to pump liquidity into the market), the market has risen to levels that have many market veterans shaking their heads in disbelief. When this bubble unwinds eventually, it’s unlikely we’ll see numbers like this for many years.

Obviously, there is always the chance I’m wrong (along with others who are warning to be careful). Perhaps the bull market has much more room to run, as almost everyone in the financial media is predicting. It’s possible, which is why you don’t run out and sell everything. It’s also possible we have a blow-off top, which would be a signal to reduce positions dramatically before the market plunges.

In my opinion, the smartest choice is to stay diversified while reducing positions with large gains, and also selling losing positions. Obviously, that’s a choice only you can make.

Money manager Lance Roberts (realinvestmentadvice.com) wrote an excellent piece about the current market meltup and some of the steps you can take to reduce risk in an extremely overbought market: https://bit.ly/2ZcubbB

Meanwhile, have a great holiday and stay safe!

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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


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

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

S&P 500 one-month trend: SPX is in a strong uptrend that appears unstoppable, but also unsustainable for the long term.

RSI: (S&P 500) @ 67.08 = SPX is still overbought. At over 70 RSI, it will be extremely overbought.

MACD: Above Zero Line and above Signal Line = Bullish

Daily Intraday Volatility: 12.63 = Low (Bearish)

Comment: The market meandered around last week with one big rally, which brought the indexes back to overbought. RSI is near 70, which is always a warning sign, and VIX remains in the basement.

The trade deal appears to be completed, but no one knows for sure. The market had a muted reaction to the news on Friday. By the way, the market also had a muted reaction to the Fed meeting (except for the one-day rally).

By any measure, the indexes are overbought, and that could continue through the holidays. Nevertheless, no one knows what is going to happen because we are in uncharted territory. I won’t even attempt to guess which direction the indexes are going this week. However, common sense tells me if you have extreme profits on any index or stock, it would not be a bad idea to take some money off the table. That being said, everyone is waiting for the “Santa Claus rally,” and the odds are good the market will not disappoint.

Bottom line: A Santa Claus rally is possible, even likely, but that does not reduce the increased risks as the market bubble expands. One day the market will have a date with reality, but we’re not there yet, but as I’ve repeatedly said, that day is coming (one day).

For a scathing opinion on the Fed’s actions regarding lower interest rates and QE, here is a fascinating read by Sven Henrich (Northman Trader). His seething anger at the Fed is evident as you keep reading: https://bit.ly/2El0QSC

_____________________________________________________________

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


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

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

S&P 500 one-month trend: SPX is in a strong uptrend that appears unstoppable, but also unsustainable for the long term.

RSI: (S&P 500) @ 63.98 = SPX is still overbought. At over 70 RSI, it will be extremely overbought.

MACD: Above Zero Line and above Signal Line = Bullish

Daily Intraday Volatility: 13.62 = Low (Bearish)

Comment: Last week, SPX sold off for two days, but then rebounded back by the end of the week, fueled by a blockbuster jobs report. RSI is still high but it is off its extreme highs, and VIX is still low but it is off its extreme low. Now that we’re almost back to where we started, all we can do is sit back and look for opportunities, if any.

The Sunday night futures are slightly lower, and aren’t telling us much. At this time, predicting what the market will do over the next week or two is a useless exercise. No one has a clue. The Fed has the market’s back so the odds are with a rally, but anything can happen, especially in the geopolitical world. My best advice is to take it day by day.

Bottom line: The indexes are still overbought but that could change in a heartbeat. Investors are enjoying the ride higher while traders sit and wait for a better risk reward.

For a trader’s perspective, read the following piece by Sven Henrich, Northman Trader, who makes a strong case for selling: https://bit.ly/2RxOrmc, and also this more detailed analysis: https://bit.ly/33YQthD

_____________________________________________________________

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


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

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

S&P 500 one-month trend: SPX is in a strong uptrend that appears unstoppable, but also unsustainable for the long term.

RSI: (S&P 500) @ 69.34 = SPX is overbought. At over 70 RSI, it will be extremely overbought.

MACD: Above Zero Line and above Signal Line = Bullish

Daily Intraday Volatility: 12.62 = Extremely Low (Bearish)

Comment: RSI went above 70 last week before pulling back slightly. The indexes are extremely overbought, and judging by the Sunday night futures, we could become more overbought.

The market is like a game of musical chairs and when the music stops, all hell is going to break loose. No one knows the time or place, or what will be the catalyst. However, if you believe in reality, then this market has a date with destiny sometime in the near future.

Veteran market watchers are in awe, and many have stopped warning others to be careful. At the moment, the market doesn’t care. Fueled by kind words from the Fed, additional quantitative easing, and low interest rates, the market seems unstoppable. And it is, until it isn’t.

Be cautious as we are in rarified air. This market is for short-term traders, long or short. Meanwhile, my article on blow-off tops was just published on MarketWatch: https://on.mktw.net/2OK343V

Bottom line: Stand back and observe. This market is one for the history books.

_____________________________________________________________

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


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

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

S&P 500 one-month trend: SPX is in a strong uptrend that still seems unstoppable for the moment.

RSI: (S&P 500) @ 66.87 = SPX is still overbought. At over 70 RSI, it will be extremely overbought.

MACD: Above Zero Line and above Signal Line = Bullish

Daily Intraday Volatility: 12.34 = Extremely Low (Bearish)

Comment: This will be a shortened week (Thursday holiday and Friday markets close at 1:00 p.m. ET), so I’ll keep it short.

The indexes pulled back slightly during the week, relieving some of the pressure from a severely overbought market. Futures are up on Sunday night, so it’s possible the march higher will continue. As I’ve repeatedly said, shorting the indexes during an uptrend is not recommended.

In addition, I’ve determined that in this current environment, trading individual stocks is more profitable than trading indexes, but that obviously depends on your trading strategy. For me, there hasn’t been enough volatility to lure me back to the indexes, and until there is, I trade individual stocks. (I’d be happy to hear from anyone who is doing well trading indexes).

Speaking of indexes, index buy and holders are doing well by doing nothing but watching the indexes slowly climb higher. Of course, the buy and hold strategy will stop being profitable one day, but for now, index investors look pretty smart. This might continue through this week and beyond. No one knows.

Bottom line: Keep a close eye on the indexes and still be on the lookout for individual stocks (to buy or short).

Have a great Thanksgiving!

FYI: I have a new article coming out on MarketWatch later in the week. I’ll share the link on this space when it’s published.

_____________________________________________________________

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