The Weekly Trader

Here are the most recent market indicators:

S&P 500 is below its 200-day moving average = Bearish 

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

S&P 500 one-month trend = Uptrend (with pivots)

RSI: (S&P 500) @59.92 = Slightly Overbought (Bearish)

Daily Intraday Volatility: Moderate

Comment: Last week, the market began on the wrong foot (lower) but during the rest of the week, at any sign of a selloff, the algos entered to rescue the market. Because of low volume and lack of enthusiasm, the rescue operation was successful, and the market ended nearly where it started.

The Fed has a meeting this week so that should increase volatility slightly. It’s unlikely the Fed will say anything to upset the market, so as long as volatility remains low, and with help from the algos, the odds are good the market will be flat to higher this week. Obviously, anything is possible, but Fed Chairman Powell appears willing to keep the party going a while longer (even though economic bad news is swirling around and coming closer).

Bottom line: Let’s see if volatility returns to the market. No can predict when it will return, except that it will again.

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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

Here are the most recent market indicators:

S&P 500 is below its 200-day moving average = Bearish 

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

S&P 500 one-month trend = Uptrend (with pivots)

RSI: (S&P 500) @61.98 = Overbought (Bearish)

Daily Intraday Volatility: Moderate to High 

Comment: The market fooled nearly everyone by ripping higher for the last two weeks with help from the algos. Nevertheless, volume was light and the bad news swirling around was ignored. It was quite a performance, and short-sellers felt the pain. We are now reaching overbought levels which means that a shorting opportunity is drawing closer.

That being said, never short a market in a strong uptrend (like now). Wait for an intraday reversal or other clues before attempting to short (or buy puts or inverse ETFs).

Futures are lower on Sunday night so we’ll have to wait and see what this market is made of. If the bulls are right, we’ll keep moving higher for the next few days. But the odds are good that within the next week or so, a major shorting opportunity will appear. After all, at the rate the market is rising, unless you believe the indexes can rise by 150% a year, a pullback is coming.

_____________________________________________________

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 are the most recent market indicators:

S&P 500 is below its 200-day moving average = Bearish 

S&P 500 one-month trend = Major Pivot Points

RSI: (S&P 500) @53.52 = Neutral to Slightly Overbought

Daily Intraday Volatility: Moderate to High 

Comment: With help from the algos and kind words from Chairman Powell, last week the market bounced back from last month’s low and is now in overbought territory.

This is a very pivotal week for the market. This week will help us determine if last week’s rally is the real deal or another manufactured, and unsustainable, head fake. Although the market is short-term overbought, it could get more overbought this week and move beyond SPX 2600. It could also move sideways in a low volatile environment, which is exactly what the financial world wants. Those are the best case scenarios.

In a worst-case scenario, the market will once again fail to surpass SPX 2600, and begin to retreat. If SPX reverses direction and plunges hard, bringing the other indexes along for the ride, that will confirm we are in a bear market. (Note: Sunday night futures are lower, so Monday could be volatile. Nevertheless, it’s the rest of the week that matters.)

There is a lot of bad news swirling around but the market ignored it recently, at least so far. Soon, earnings will be released and if many companies disappoint, reality will once again hit the market like a 2×4 across the face.

No one can predict how the market will react this week, but one thing is for sure: No one agrees what is going to happen. Therefore, avoid guessing and let the market be your guide. Another piece of advice: be sure to have a healthy amount of cash on the side in case of a worst-case scenario.

_____________________________________________________

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 are the most recent market indicators:

S&P 500 is below its 200-day moving average = Bearish 

S&P 500 one-month trend = Downtrend (with major pivots)

RSI: (S&P 500) @46.77= Neutral

Daily Intraday Volatility: Moderate to High 

Comment: In the first week of the year the Dow plunged by over 600 points, then rallied by over 700 points. What a way to start the New Year! There is no evidence the volatility will end anytime soon.

Even with encouraging words from the Fed, and even though they will likely stop raising interest rates, this alleged bear market should continue to wreak havoc on investor’s portfolios. Never forget that in a bear market, even the stocks of great companies (like several of the FAANG stocks) go down.

If you are a long-term investor and can take the pain, and believe the stock of your company will be stronger after the bear market is over, then you will grit your teeth and hold. I still recommend hedging with inverse ETFs, put options, or cash, but that is a decision only you can make. By the way, another hedge in a bear market is gold, which has suddenly come to life. Gold tends to do well in bear markets.

There is always the possibility this is not a bear market but only a correction, and in that case, the indexes will rise above their 50-, 100-, and 200-day moving averages. If that happens, then put away the bear strategies and power on. But the evidence seems clear from numerous sources that this is going to be a difficult, volatile year.

The futures are pointing higher on Sunday night, so let’s watch and see if the indexes can rally higher this week, and whether the rallies can last more than a day or two. If the rallies fail spectacularly, that is more evidence the bear is breathing down our necks. I will wait for the market to make up its mind before I commit heavily to one side or the other.

Note: According to my analysis, the S&P 500 is currently overbought, but it could become more overbought before reversing direction.

_____________________________________________________

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 are the most recent market indicators:

S&P 500 is well below its 200-day moving averages = Bearish 

S&P 500 one-month trend = Downtrend (with a major pivot)

RSI: (S&P 500) @38.99= Mildly Oversold = Bullish 

Daily Intraday Volatility: Moderate to High 

I’ll try and keep this short because of the shortened trading week.

First, as expected, the market bounced back strongly last week, although no one predicted a 1000 point Dow rally in one day. That was amazing. Because RSI had dropped as low as 19.29 on Monday, I was waiting for the monster rally, and the bulls got their wish, at least for a day.

Unfortunately, the rally only bought back 2 days of losses (Source: Lance Roberts), so the downtrend is alive and well with occasional pivots to the upside. In fact, it will be fascinating to watch this week to see if the market can rally higher. As I wrote in my MarketWatch article, watch the rallies, not the declines. If the rallies are weak, and then fail, that is a clue this is more than a correction but a bear market.

Investors are still too hopeful, especially those that own the FAANG stocks. Even though the companies might be excellent, the stocks can still go down much further, and that’s a lesson investors learn the hard way. (I remember in 2007 when everyone owned and loved Citicorp. Investors were in shock when it fell from the 50’s into single digits. Yes, many strong companies fall hard in bear markets).

Bottom line: Until proven otherwise (the indexes will have to rise above their 200-day moving averages), treat this current market as a bear market. Short or sell into rallies, and increase cash positions on rallies. Don’t forget that some of the strongest rallies occur within bear markets, so trade accordingly.

Have a great New Year!

______________________________________________________

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