Jan22

Bullish or Bearish? Week of January 23, 2023

Short-term trend (DAILY CHART)   SLIGHTLY LOWER: Last week, SPX fell from 3,999 to 3972 , but it could have been a whole lot worse, until the Friday rally. Resistance is at SPX 4,000, and until SPX breaks above this level, and stays above, caution is advised. The daily chart is a mess, as it tried and failed to break out of its trading range. SPX is at its 200-day moving average, so anything is possible. Futures are slightly higher on Monday morning, but that could change in the morning.

Long-term trend (WEEKLY CHART) – UNCLEAR. Once again, SPX on the weekly chart is in a trading range, which is not an easy trading or investing environment.

MACD (WEEKLY) = POSITIVE. MACD is struggling to rise above the zero line and turn positive. For now, wait and see as MACD has continued to give mixed results.

RSI: (S&P 500) @56 (DAILY) NEUTRAL.  The market sold off early last week but recovered on Friday. RSI reflects the indecision as it's in neutral territory.

Comment: Last week started off poorly, but by the end of the week, the indexes were nearly back to even, thanks to a strong Friday. This week, many companies are reporting earnings, which should increase volatility. Adding to the uncertainty, market watchers are wondering if the Fed is going to slow down or stop raising interest rates. The consensus is that the Fed will raise by 25 basis points.

This is a good week to stand back and evaluate what you own and the overall market. Investors got addicted to the easy Fed money, and now it's hard wean off of it.

Bottom line: It's impossible to predict what will happen this week, but the higher interest rates go, the more pain inflicted on many stocks.

Note: My latest MarketWatch article is posted here: http://bit.ly/3XIk5fK You can read it on MarketWatch or go to Articles (above) and view the entire column.