The Weekly Trader

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

One-month trend = Neutral. SPX is above its 200-day MA but the uptrend stalled over the last two days. Note: SPX is at 3215 on Sunday night, slightly lower from a week ago. The 200-day is at 3041. If SPX falls below 3000, there could be trouble.

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

RSI: (S&P 500) @ 56.45= Neutral.

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

Daily Intraday Volatility (VIX): 25.84 = Neutral. VIX didn’t move much in the last week. 

Comment: On Sunday night, futures are slightly higher but it’s best to wait until the morning to confirm. Last week, the market started off flat to high, but then fell on Thursday and Friday. The Fed is meeting on Tuesday and Wednesday, and traditionally, the market moves higher on the day of the announcement (but these are strange times, so anything is possible).

I hate to keep repeating myself but the financial news keeps getting worse while the market hangs on for dear life. You may have noticed that gold, and bitcoin, have broken out recently. Traders run to gold when there are economic problems. In addition, keep watching the dollar, which has been in a downtrend. People smarter than me believe that could change.

In addition to worsening economic news, the virus keeps spreading, the economic stimulus package has stalled, and the unemployment rate is too high. On the other hand, White House economic advisor Larry Kudlow appeared on TV and promised there would be a “V” shaped recovery.

Once again, let me turn it over to the professional analysts, who have done an excellent job of evaluating the current market. Wolf Richter (below) wrote a series of devastating articles on how the economy, and housing, is worsening.

In addition, here is a detailed analysis of the current stock market from Lance Roberts and Sven Henrich:

Lance Roberts @ realinvestmentadvice.com writes about “The Cobra Effect.” Must reading: https://bit.ly/32SbcXE

Sven Henrich @Northman Trader says this is the biggest financial bubble ever. Be sure to see his video: https://bit.ly/2CPC6on

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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

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

One-month trend = Neutral. Once again, the algos have pushed the indexes above its 200-day MA, where it has remained in a sideways pattern. Note: SPX is at 3224 on Sunday night, slightly higher from a week ago. The 200-day is at 3033.

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

RSI: (S&P 500) @ 61.24 = Neutral. Slightly overbought

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

Daily Intraday Volatility (VIX): 25.68 = Neutral. VIX didn’t move much in the last week. 

Comment: If this feels like the movie, Groundhog Day, you are right. The indexes moved slightly higher from last week but otherwise, everything has remained the same: The virus is ravaging the country, the economy is in trouble, and the futures are mixed on Sunday night, moving from slightly higher to slightly lower.

Last week, there was one interesting difference. The so-called technical leaders like Microsoft and Netflix failed to rally, and in fact, fell rather sharply. When the technology leaders that brought you to the dance fail to perform, that is a potential clue of a rotation. It’s too early to say the rotation will continue but it needs to be watched.

In other words, based on Bear Market 101, when overbought technology stocks start to falter, and traders look for less popular stocks to chase, it’s a possible topping out clue. I believe technicians call it a “distribution top.” We should find out if they are right this week.

I’m still in awe that with all of the bad news swirling around, the market continues to inch higher. I know the party is going to end fairly soon, and everyone else seems to know it too. And yet, no one is selling because of one reason: Everyone believes they can get out in time.

Read the analysis from Lance Roberts and Sven Henrich below, as well as Wolf Richter, who do an excellent job of analyzing what’s really going on in the market and real economy.

My advice is to be careful out there. Eventually, reality and the market will meet, and only one can be right.

Here is an detailed analysis of the current market by two professionals: 

Lance Roberts @ realinvestmentadvice.com cleverly points out the bull market continues, that is, a bull market in viruses: https://bit.ly/3eIZm4u

Sven Henrich @Northman Trader raises doubts about the so-called “V” shaped recovery: https://bit.ly/399Dn5x

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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

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

One-month trend = Neutral. As expected, the algos continued to push the indexes slightly above its 200-day MA, where it has remained. Note: SPX is at 3185 on Sunday night, slightly higher from a week ago. The 200-day is at 3027.18. 

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

RSI: (S&P 500) @ 59.34 = Neutral. Slightly overbought.

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

Daily Intraday Volatility (VIX): 27.29 = Neutral. VIX didn’t move much in the last week.

Comment: The futures on Sunday night are higher, following in the footsteps of its impressive Friday afternoon rally. Technicians are warning of a correction or worse as their signals say that certain stocks, especially Google, Amazon, Microsoft, Apple, and Facebook are overbought. Wolf Richter @WolfStreet.com (link below) also discusses how these stocks are holding the market together.

The market keeps pushing higher but the virus does not let up. I wish I could ignore the virus but it is really ravaging people’s lives and livelihood, causing havoc with the economy. For some reason, the stock market has ignored it, and continues to do so as I write this.

But one day, out of the blue, the market will react, and it won’t be pretty. The market is overbought and getting more overbought. As Wolf and others have said, these five stocks have become the market.

We also can’t ignore the power of the algos, who initiate bull raids during the day at the slightest hint of a selloff. It happened again on Friday.

No one can predict the future, and this market could keep going up all week. But to win the stock market game, you must look for any clues that the party is over and the guests have overstayed their visit. We are close, very close, I suspect.

Bottom line: Be cautious out there as bad news is still looming, which the market has conveniently ignored. No one knows how long there will be a disconnect between the real economy and the stock market. When the market eventually smells the coffee, it will not be a pretty sight.

Here is an excellent analysis of the current market by two professionals:

Lance Roberts @ realinvestmentadvice.com sums up the current market with a title, “This is nuts…Again”: https://bit.ly/3fp00F8

Sven Henrich @Northman Trader discusses the current overbought market in an interesting video: https://bit.ly/2AW7vEO

__________________________________________________________

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

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

__________________________________________________________

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

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

__________________________________________________________

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