The Weekly Trader

Here is a link to my most recent book, Make Money Trading Options, which introduces a new trading strategy for advanced beginners: Amazon link: https://amzn.to/3kqw5zQBarnes and Noble link: https://bit.ly/3rbr28Q Hint: First read my book, Understanding Options, if you are an options beginner: https://amzn.to/2S04nQs

Here is a link to my most recent article on MarketWatch, “Don’t Be a Sitting Duck When This Stock Market Rally Fades”: https://on.mktw.net/3uUEIqK

WHAT THE INDICATORS ARE TELLING US 

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

One-month trend = Volatile. The bears temporarily took control last week.  To be precise, SPX fell by 59 points during the week, from 4232 to 4173, but it could have been a lot worse. After a vicious three-day selloff, the indexes recovered on Thursday and Friday. The market appeared to be headed for the abyss until the dippers stepped in and saved the day. Futures are lower on Sunday night, and bitcoin is getting smashed in the premarket.

Mid-term (50- and 100-day MA) = Bullish: SPX and the other indexes fell to their 50-day moving averages during the week but suddenly reversed direction. Now, the indexes remain well above their 50- and 100-day moving averages. 

RSI: (S&P 500) @ 68.10 (WEEKLY) = Slightly overbought. RSI warned everyone the market was overbought and sure enough, the market plunged last week. Now you know that RSI is reliable when evaluating SPX and other indexes. Pay attention when it reaches overbought territory (above 70).

MACD (WEEKLY) = Bullish. MACD is above its zero line and above its 9-day Signal Line. Until MACD gives a sell signal, the bull market is intact. 

Daily Intraday Volatility (VIX): 18.81 = VIX is out of the basement for the moment as a dose of fear entered after the inflation numbers were released, the highest in 13 years.

Barchart Stock Evaluator for SPY and QQQ (link below): SPY is an 88 percent buy, while QQQ is a 55 percent buy (according to this indicator). Only a week ago both securities were 100 percent buys. A little fear entered the market last week.

Comment: That three-day selloff really spooked investors for the short-term. The selloff might continue into this week as the futures are lower. We are really in uncharted territory and few can accurately predict what is going to happen. Yes, we are overbought, but last week we were really overbought. For specific ideas of what to do, read my article on “Don’t be a Sitting Duck” (link at top).

As I wrote in the article, this is the time to be diversified, and to raise cash if possible. Timing the market is difficult and yet, buying overbought stocks at all-time highs is risky as well.

What I am looking for: I want to see if last week’s two-day rally fails this week. If it does, it could get ugly fast. It’s been a long time since the market has experienced this much volatility, so fasten your seatbelts.

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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:www.realinvestmentadvice.com

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

Here is a link to my most recent book, Make Money Trading Options, which introduces a new trading strategy for beginners: Amazonhttps://amzn.to/3kqw5zQBarnes and Noble link: https://bit.ly/3rbr28Q

WHAT THE INDICATORS ARE TELLING US 

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

One-month trend = Bullish. The bulls took control last week.  To be precise, SPX rose by 51 points, from 4181 to 4232. The market continued on its merry way higher without a fear in the world. The futures are higher on Sunday night.

Mid-term (50- and 100-day MA) = Bullish: The indexes are well above their 50- and 100-day moving averages. 

RSI: (S&P 500) @ 73.18 (WEEKLY) = Extremely overbought. RSI is in the danger zone (above 70 on the weekly), however, indexes and stocks can get more overbought before reversing. 

MACD (WEEKLY) = Bullish. MACD is above its zero line and above its 9-day Signal Line. Until MACD gives a sell signal, the bull market is intact. 

Daily Intraday Volatility (VIX): 16.69 = The VIX is on the low side, reflecting the lack of fear in the market.

Barchart Stock Evaluator for SPY and QQQ (link below): SPY and QQQ are both 100 percent buys (according to this indicator). 

Comment: Because of an animal emergency, I must be brief (and sorry for being late in posting): The bulls are in charge unless something dramatically changes. RSI is giving us a warning sign.

Good luck this week and look for any clues of a reversal.

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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:www.realinvestmentadvice.com

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

Here is a link to my most recent book, Make Money Trading Options, which introduces a new trading strategy for beginners: Amazonhttps://amzn.to/3kqw5zQBarnes and Noble link: https://bit.ly/3rbr28Q

WHAT THE INDICATORS ARE TELLING US 

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

One-month trend = Flat to Slightly Bullish. The market ended exactly where it started last week.  To be precise, SPX rose by 1 point, from 4180 to 4181. Typically, when the Fed meets, the market rallies, so a flat market was unusual. The Dow futures are higher on Sunday night, but that could change in the morning. 

Mid-term (50- and 100-day MA) = Bullish: The indexes are well above their 50- and 100-day moving averages.

RSI: (S&P 500) @ 71.45 (WEEKLY) = Still extremely overbought. RSI is in the danger zone (above 70 on the weekly), however, indexes and stocks can get more overbought before reversing. 

MACD (WEEKLY) = Bullish. MACD is above its zero line and above its 9-day Signal Line. Until MACD gives a sell signal, the bull market is intact. 

Daily Intraday Volatility (VIX): 18.61 = The VIX is still on the low side, only rising slightly due to a couple of selloffs.

Barchart Stock Evaluator for SPY and QQQ (link below): SPY and QQQ are both 100 percent buys (according to this indicator).

Comment: Everyone wants to know if they should sell in May and go away until November. No one can answer that. The market has exhibited a lack of energy, volatility, and volume. Rallies have been muted, and so have selloffs. Some market veterans shake their heads: Many have never seen anything like it.

Jesse Livermore wrote about a market like this a hundred years ago. When “even a skunk can’t make a scent,” he said, he’d take a break and go on vacation. While investors have the luxury of time, traders trying to make their daily bread can fall into the trap of forcing a trade. If the market is not giving you good trade setups, you can scalp for pennies (as some are doing), or just step away and wait for better opportunities. No one can tell you when the market will recover from this recent malaise.

Should you sell in May and go away (and come back in November)? Hint: Often, volatility picks up in September and October, but not in a good way if you are long. With an overbought market, a selloff would not be a huge surprise.

Nevertheless, don’t count the bulls out of the game. They have been in charge for years, and I doubt they will go down without a huge fight (and help from the Fed).

Bottom line: Wait and see if the bulls can take the market higher this week.

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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:www.realinvestmentadvice.com

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

Here is a link to my most recent book, Make Money Trading Options, which introduces a new trading strategy for beginners: Amazonhttps://amzn.to/3kqw5zQBarnes and Noble link: https://bit.ly/3rbr28Q

WHAT THE INDICATORS ARE TELLING US 

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

One-month trend = Bullish. The bears tried to take control last week, but didn’t make much progress.  SPX fell by a measly 5 points, from 4185 to 4180. The Dow futures are flat on Sunday night, but that could change in the morning.

Mid-term (50- and 100-day MA) = Bullish: The indexes took a breather last week but are still in an uptrend.

RSI: (S&P 500) @ 71.42 (WEEKLY) = Extremely overbought. RSI is still in the danger zone (above 70), however, indexes and stocks can get more overbought before reversing. 

MACD (WEEKLY) = Bullish. MACD is above its zero line and above its 9-day Signal Line. Until MACD gives a sell signal, the bull market is intact. 

Daily Intraday Volatility (VIX): 17.33 = The VIX is still on the low side, reflecting the mindless lack of fear by almost everyone participating in the marketplace

Barchart Stock Evaluator for SPY and QQQ (link below): According to this proprietary program, SPY and QQQ are both 100 percent buys. 

Comment: Ignore RSI at your own peril. Although RSI is still in the danger zone (above 70), the bears were unable to take control after a strong pullback early in the week. This week, the bulls have a chance to take over thanks to the Fed meeting (which is typically a bullish affair). Nevertheless, traders should be cautious about trading before and right after a Fed meeting.

The market is overbought by most measures, but that hasn’t stopped the market or some stocks from getting more overbought. The problem is that volatility is low (not good for traders), and institutional volume is almost nonexistent.

I want to remind you of an old Wall Street saying: “Sell in May and come back in November,” Although this axiom will be tested soon, no one can predict the end result. Based on the facts, however, the trend is up but the market is overbought. In addition, volume is low and so is volatility. The verdict? A dangerous, unpredictable market.

Bottom line: The odds are with the bulls this week based only on the Fed meeting. Longer term, there are signs the bull’s 12-year run is stalling out. Add in the calendar, and the odds favor the bears over the next few months, but only slightly.

_______________________________________________________

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:www.realinvestmentadvice.com

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

Here is a link to my most recent book, Make Money Trading Options, which introduces a new trading strategy for beginners: Amazonhttps://amzn.to/3kqw5zQBarnes and Noble link: https://bit.ly/3rbr28Q

WHAT THE INDICATORS ARE TELLING US 

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

One-month trend = Bullish. The bulls remain in control and the trend is still up.  SPX rose by 57 points last week, from 4128 to 4185. The Dow futures are lower on Sunday night, but that could change in the morning, especially if a buy-on-the-dip algo enters.

Mid-term (50- and 100-day MA) = Bullish: The indexes keep moving farther and farther away from its moving averages. 

RSI: (S&P 500) @ 71.83 (WEEKLY) = Extremely overbought. RSI is in the danger zone (above 70), however, indexes and stocks can get more overbought before suddenly reversing. 

MACD (WEEKLY) = Bullish. MACD is above its zero line and above its 9-day Signal Line. Until MACD gives a sell signal, the bull market is intact.

Daily Intraday Volatility (VIX): 16.25 = The VIX continues to head lower, reflecting the mindless lack of fear by almost everyone participating in the marketplace.

Barchart Stock Evaluator for SPY and QQQ (link below): According to this proprietary program, SPY and QQQ are both 100 percent buys. 

Comment: Is there any investor not making money? Except for bondholders, buy and hold investors appear to be raking in the dough, or so they tell me. Many traders, however, are not enjoying the market inaction.

While the market is at all-time highs, the “invisible hand” is keeping the market propped up, and doing a darn good job of it. Short at your own risk. Just buy and hold, hold, hold, and don’t think about the future.

And yet, RSI is telling us that investors are playing with fire. As long as the Fed is keeping interest rates low, and nearly all asset classes are moving higher, what could go wrong?

In reality, a lot could go wrong, but no one can predict when and where, so don’t try. Although the uptrend is intact, and all seems well, RSI is giving a clear warning signal. And yet, we can get more overbought before a reversal. It feels like we’re playing a game of musical chairs, so be careful out there.

Bottom line: We’re going higher until we’re not. (Put another way, we’re in a strong uptrend that cannot be shorted…yet. Until we reverse direction on strong volume, and no one can predict when that will happen, we are going higher.) Although the futures are lower on Sunday night, I’ve seen this scenario before. Volatility and volume have to explode higher before I think it’s the real deal.

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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:www.realinvestmentadvice.com

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