The Weekly Trader

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

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

S&P 500 one-month trend: “V” Shaped Rally and Triple Top (one year) at Resistance. It could go in either direction but is hitting major resistance at all-time highs.

RSI: (S&P 500) @69.13 = Overbought

MACD: Above Zero Line and above Signal Line (Bullish)

Daily Intraday Volatility: 13.28 (Subdued). Volatility is in the basement, which will not last forever.

Comment: The shortened holiday week is disorientating, but now it’s back to business. The algos were able to keep volatility subdued last week, in fact, the VIX is ridiculously low once again. Also, RSI is in the overbought zone (over 70 is overbought). Investors are feeling giddy right now but I get the feeling there could be sand beneath their feet.

Although the market could squeak higher this week, with an overbought market, sky-high investor sentiment, and extremely low volatility, the odds are good we are headed lower. Sunday night futures aren’t telling us much (slightly lower), but do not be surprised if there is a selloff this week. It’s not a prediction, but based on the clues and indicators above, a selloff is likely. The real question is how fast it bounces back if I’m right.

Bottom line: The algos will try to keep the party going longer but the indicators and clues are pointing to trouble ahead. Be prepared for any scenario, and if you are shorting, do it AFTER the market breaks, not before. Look and see if the algos save the day once again. One thing for sure: Until investors feel true fear, the algos remain in control.

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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 moving average = Bullish

S&P 500 one-month trend: “V” Shaped Rally and Triple Top (one year) at Resistance. It could go in either direction but the odds are higher based on Sunday night futures.

RSI: (S&P 500) @62.37 = Slightly overbought

MACD: Above Zero Line and above Signal Line (Bullish)

Daily Intraday Volatility: 15.08 (Subdued). Volatility remains on the low side.

Last week, I thought it was going to be a wild and unpredictable week, but it was subdued with low volatility. This holiday week is starting off with a bang as the market attempts to hit its all time highs. It might do it this week, but next week could be a different story. I’ll be looking to see if the opening rally holds all day, which would be bullish.

Bottom line: Don’t fight a strong rally, and although we are overbought and in a market bubble, it can get bigger before it eventually pops. That’s why you never short a rally while it’s moving higher.

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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 moving average = Bullish

S&P 500 one-month trend: “V” Shaped Rally and Triple Top (one year) at Resistance. It could go in either direction.

RSI: (S&P 500) @67.53 = Overbought (Bearish)

MACD: Above Zero Line and above Signal Line (Bullish)

Daily Intraday Volatility: 15.40 (Subdued). Volatility is still on the low side.

Comment: As expected, Fed Chair Powell did not cut rates but gave hope to the bulls by insinuating that he might cut rates. The bulls ran with it, running the market higher on low volume. The Dow just had the best June in 80 years. Unfortunately, we are also overbought on the indexes as SPX hit resistance, creating a V-shaped rally and triple top (one year). What could possibly go wrong?

Well, a lot of things could go wrong, which is why this is going to be an interesting week. Powell speaks on Tuesday, and the Group of Seven meet on Friday and Saturday, with the highlight being the Trump-Xi meeting. There is pressure from all sides for Powell to cut rates, although he never promised anything. The algos will try to keep the markets calm but there will be a lot of cross currents, and volatility should increase (it might even explode one day). Powell has the power to disappoint the markets if he so desires, and obviously everyone will be watching the Trump-Xi meeting closely.

Bottom line: It should be a wild and unpredictable week. The market is overbought so if something goes wrong, the markets will fall swiftly. The market is at resistance so it will need a strong push to surpass the all-time highs. Get out the popcorn because we could go in either direction, and more than likely, we will!

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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 slightly above its 50-day moving average = Neutral

S&P 500 one-month trend = Multiple Short-term Trend Reversals (Inconclusive)

RSI: (S&P 500) @57.65 = Neutral

MACD: Below zero line but slightly above signal line (Neutral)

Daily Intraday Volatility: 15.28 (Subdued). Volatility is still on the low side.

Comment: The Fed has their two-day FOMC meeting on Tuesday and Wednesday, followed by a press conference on Wednesday afternoon. The consensus is there will be NO rate cut at this meeting, but Powell’s words will be closely scrutinized. No one can predict what Powell is going to say, or how the market will react. It really could go either way, so expect volatility during the week, and especially after he speaks.

My prediction: He won’t cut rates but he will say that he will in the future depending on market conditions.

Meanwhile, the best analysis I’ve seen on how to manage the current market environment comes from a piece that Lance Roberts wrote: https://bit.ly/2WIp3cq

Bottom line: It is going to be a tricky week for traders and investors, so stay alert, or wait until the dust clears. Wall Street really wants Powell to cut rates, and if he doesn’t deliver now or in the future, Wall Street won’t be pleased.

_____________________________________________________

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 even with its 50-day moving average = Neutral

S&P 500 one-month trend = Multiple Short-term Trend Reversals (Neutral)

RSI: (S&P 500) @56.31 = Neutral

MACD: Below zero line but slightly above signal line (Neutral)

Daily Intraday Volatility: 16.30 (Subdued). Volatility is on the low side.

Comment: So now we know what happens when the indexes fall below their 200-day moving averages! The next time the 200-day is breached, expect to see Jerome Powell or others appear on TV to say something sweet about interest rates. Voila! The market suddenly reversed direction and rallied strongly not just the day Powell spoke, but all week. Wow!

As you know from reading my blog, I expected a strong rally during the week. But even the most bullish analyst (nor I) could have predicted the rally would last the entire week. That was extremely impressive, but also brings us back to even more dangerous territory.

Now investors know that if the market falls by too much (below the 200-day moving average), the Fed has got their back. One of these days the market will fall, the Fed will appear with soothing promises, and the market will keep falling. That is when we’ll know it’s going to go from bad to worse.

Meanwhile, looking at the indicators above, in one week we went from bearish to neutral (RSI gave us an oversold reading last week which correctly hinted there would be a rally). Now RSI is back to neutral. SPX is well above its 200-day moving average and a couple of points above its 50-day moving average.

If I had to guess, I’d say we went too far too fast last week, and that the indexes will struggle to move much higher this week. Since I don’t like to guess, all we can do is watch and see if this market has the power to stay above its 50-day moving average. The futures are slightly higher Sunday night but that should change by the opening bell.

Bottom line: It’s going to take extraordinary strength to bring this market much higher, but anything is possible. Investors have an extremely distorted view of the world thanks to the Fed. One of these days this game the Fed is playing is going to backfire and bullish investors are going to pay the price. That day is drawing nearer. Oh, I forgot to mention that the jobs numbers was very disappointing on Friday and there are other signs that a recession is near or already here.

_____________________________________________________

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