My latest MarketWatch column: https://goo.gl/AKTldp
Here are the latest technical and sentiment indicators:
Technical Indicators (daily chart)
S&P 500 is above its 50-day MA = Bullish
MACD (S&P 500; 19,39,9) is above its zero line = Bullish
MACD (S&P 500; 19,39,9) is slightly above its signal line = Bullish
Observe: S&P 500 support @ 2400
Sentiment Indicators (+RSI)
II survey: (May 30): 50.0% Bulls; 19.2% Bears = Bearish
AAII survey: (May 31): 26.9% Bulls; 31.5% Bears = Neutral
VIX: @ 9.58= Bearish
RSI: (S&P 500) @ 69.56 = Overbought
Comment: As this unloved bull market continues to rise, there’s a chance we could have a eurphoric breakout over the next few months, and yet, the higher the market goes, the riskier it gets. The current market reminds me of 1999, when exuberance reached extreme levels. Shorting at this level is not advised as any pullback should be an opportunity to “buy on the dip.” Because markets move in cycles, what goes up must come down, but no one can predict when. The inevitable smash will come one day but don’t fight the herd or you will get trampled. Just be ready to get out of the way when the herd goes over the cliff one day.
Bottom line: The technical indicators are flashing buy while the sentiment indicators are flashing caution. Sentiment can get even more extreme (look at bitcoin, for example) before it eventually sours. Follow the uptrend if you wish but be careful not to get trapped. When millions of investors try to get out of their index funds at once, it will not be a pretty sight. (But don’t expect this to happen for a while.)
Here are the latest technical and sentiment indicators:
Technical Indicators (daily chart)
S&P 500 is above its 50-day MA = Bullish
MACD (S&P 500; 19,39,9) is above its zero line = Bullish
MACD (S&P 500; 19,39,9) is slightly above its signal line = Bullish
Observe: S&P 500 support @ 2400
Sentiment Indicators (+RSI)
II survey: (May 23): 51.9% Bulls; 18.3% Bears = Bearish
AAII survey: (May 24): 32.9% Bulls; 30.0% Bears = Neutral
VIX: @ 9.81= Bearish
RSI: (S&P 500) @ 63.05 = Near overbought
Comment: The bull market continues as the S&P surpassed 2400, although not with strong volume or conviction. Nevertheless, the market is in an uptrend, and if there is a pullback, the only strategy that is working is “buy the dip.” One day buying the dip won’t work, but until that day comes, you follow the trend. It’s true we’re getting ever closer to a correction (and bear market), but the inevitable smash could be months away, and perhaps even next year. Meanwhile, every pullback has been a buying opportunity. The ridiculously low VIX is a warning sign, and RSI is near overbought. Otherwise, it looks like blue skies ahead…….(for now).
Here are the latest technical and sentiment indicators:
Technical Indicators (daily chart)
S&P 500 is above its 50-day MA = Bullish
MACD (S&P 500; 19,39,9) is above its zero line = Bullish
MACD (S&P 500; 19,39,9) is below its signal line = Bearish
Observe: S&P 500 resistance @ 2400
Sentiment Indicators (+RSI)
II survey: (May 16): 58.1% Bulls; 17.1% Bears = Bearish
AAII survey: (May 17): 23.9% Bulls; 34.3% Bears = Neutral
VIX: @ 12.04 = Bearish
RSI: (S&P 500) @ 51.05 = Neutral
Comment: Last week was quite interesting as volatility appeared, if only for a day or two. This week I have my eye on the S&P 500. There is major resistance at 2400. If the S&P can blow past 2400 on heavy volume, it would be bullish. On the other hand, if the S&P is unable to surpass 2400 for any length of time, the chances are good there will be a major “topping out” reversal, likely within the next one to two weeks. This kind of market is dangerous because sudden reversals often occur in either direction. Nevertheless, my opinion is meaningless. Only the market is right so be alert. As I recommended over the last few weeks and months, have a healthy amount of cash on the side.
Bottom line: Now is the time to pay close attention to the market.
Here are the latest technical and sentiment indicators:
Technical Indicators (daily chart)
S&P 500 is above its 50-day MA = Bullish
MACD (S&P 500; 19,39,9) is above its zero line = Bullish
MACD (S&P 500; 19,39,9) is even with its signal line = Neutral
S&P 500 support @ 2368 (50-day moving average)
Sentiment Indicators (+RSI)
II survey: (May 9): 58.7% Bulls; 17.3% Bears = Bearish
AAII survey: (May 10): 32.7% Bulls; 30.2% Bears = Neutral
VIX: @ 10.40 = Bearish
RSI: (S&P 500) @ 58.16 = Neutral
Comment: The market has been flat and boring, and very deceiving. The VIX has been in the basement, breaking a number of records for being so low for so long. If you are trading, all you can do is wait for volatility to appear, and it will one day. It could be days or weeks, or longer, but when volatility appears, traders will get back to work again.
Many investors, however, are feeling pretty confident. Margin levels are at all-time highs and index funds are more popular than ever. So far, the strategy is working. A few experts have warned that the market is in the danger zone, but few are listening.
When I look at the overall market, I see the danger signs, which is why I like holding a healthy amount of cash. I am also patient enough to wait for the market to make up its mind which way it will go, and for volatility to return. In fact, I’m curious how long this low-volatility environment can continue. Hint: Not indefinitely. Until then, be careful out there.
Here are the latest technical and sentiment indicators:
Technical Indicators (daily chart)
S&P 500 is above its 50-day MA = Bullish
MACD (S&P 500; 19,39,9) is above its zero line = Bullish
MACD (S&P 500; 19,39,9) is above its signal line = Bullish
S&P 500 support @ 2366 (50-day moving average)
Sentiment Indicators (+RSI)
II survey: (May 2): 58.5% Bulls; 17.9% Bears = Bearish
AAII survey: (May 3): 38.1% Bulls; 29.9% Bears = Neutral
VIX: @ 10.57 = Bearish
RSI: (S&P 500) @ 65.55 = Bearish
Comment: The S&P 500 is at the upper range with resistance at 2400, a few points away. Many technical indicators are bullish while sentiment indicators are warning that the crowd has become overconfident. Nevertheless, if the S&P breaks through resistance, the bulls remain in control. However, the odds are that the market retreats, and will either move sideways or down during the week. Last week, volatility was crushed as the market moved sideways. In a challenging market like this, it’s suggested you keep money on the side to take advantage of extreme conditions, if any.