The Weekly Trader

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.

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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 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.

_______________________________________________________

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

My latest MarketWatch column on what I learned from legendary investor Peter Lynch can be found here: https://on.mktw.net/39VvB0E

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 up, up, and away. SPX rose by 109 points last week, from 4019 to 4128. The Dow futures “were” strongly higher on Sunday night, but reversed direction at 9:00 p.m. ET., and are slightly lower. I have no idea what will happen in the morning.

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

RSI: (S&P 500) @ 70.11 (WEEKLY) = Extremely overbought. RSI is in the danger zone (above 70) and if the overnight futures hold, SPX and the other indexes will get more overbought. This is a warning signal. However, indexes and stocks can get more overbought before reversing.

MACD (WEEKLY) = Neutral. MACD is above its zero line and even with its 9-day Signal Line. MACD is not giving a clear signal. 

Daily Intraday Volatility (VIX): 16.69 = The VIX continues to plunge, once again reflecting the mindless lack of fear in the marketplace.

Barchart Stock Evaluator for SPY (link below): According to this proprietory program, SPY is a 100 percent buy. 

Comment: This is one for the history books. While the three major indexes appear bullish with no end in sight, RSI is a definite red flag. Based on my past readings, when RSI gets this high on SPX, a reversal is looming. Everyone wants to know when it will reverse! No one can say when, but right now, the bulls are playing with fire.

If you are a trader, I wouldn’t be holding for very long, and as for me, I’m not holding over the weekend. If you’re a long-term investor, as long as you know what you own, and are diversified, a short-term plunge shouldn’t shake you up. Nevertheless, caution is advised.

I’ve talked to trading veterans and they can’t believe what they’re seeing. Timing reversals are near impossible. There are also clues this is a bubble, and if true, then no one knows the real value of anything. Scary thoughts, but meanwhile, enjoy the ride while it lasts.

Bottom line: An extremely overbought market that could get more overbought until reality comes out of the blue and smacks the uninformed in the face with a 2×4. This should be an interesting week.

_______________________________________________________

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

My latest MarketWatch column on what I learned from legendary investor Peter Lynch can be found here: https://on.mktw.net/39VvB0E

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 and we’re off to the races, for now. SPX rose by 45 points last week, from 3974 to 4019. Yes, we’re over 4000 SPX points. SPX Futures are strongly higher on Sunday night, and if that holds, the rally continues. Nasdaq is higher Sunday night but not by as much.

Mid-term (50- and 100-day MA) = Bullish: The rally is intact as the indexes move away from its moving averages.

RSI: (S&P 500) @ 66.47 (WEEKLY) = Overbought. RSI rose a few more points with the market. If we get into the danger zone (over 70) this week, I will be paying close attention to signs of a reversal.

MACD (WEEKLY) = Neutral. MACD is above its zero line and even with its 9-day Signal Line. MACD is not giving a clear signal.

Daily Intraday Volatility (VIX): 17.33= The VIX plunged, once again reflecting the mindless lack of fear.

Barchart Stock Evaluator for SPY (link below): According to this proprietory program, SPY is a 100 percent buy.

Comment: Like most traders, I will take advantage of the short-term rallies using day trading or even weekly strategies (i.e. swing trading). But I know from experience that the higher we go, the more dangerous it becomes. No one is expecting a 10 percent correction, and they cannot be predicted.

What do you do if you know a 10 percent plunge is coming? If you are a long-term investor, read the article I wrote for MarketWatch (link above).

It discusses the long-term strategies of master investor Peter Lynch. His advice: Stay the course. Although he didn’t like corrections, he knew they were inevitable and just held onto to what he owned.

On the other hand, if you are trading, then you take advantage of short-term trends or reactions. Traders will likely ride the bullish wave tomorrow and perhaps for a few days longer while preparing to sell at the first sign of problems. It’s not easy being a trader!

In the short-term, the market is signaling “full speed ahead.” In the mid-term, this overbought market should cause some concern. I’m watching RSI closely to see if it surpasses 70. Although the market or stock can remain overbought for long time periods, an overbought market is susceptible to unexpected bad news.

Bottom line: Although the market sky looks blue, danger could be lurking. It doesn’t mean you have to react, or try to predict what will happen. It does mean knowing what you own and having a plan.

_______________________________________________________

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