We’ve been in a Buying Stampede
with 21 days of upward movement and only a few days in the red during the
advance. These stampedes tend to wear
themselves out after 28 days or so and we may be seeing some tiring of the
advance now, but there aren’t many negative signs, so the Index can move
higher.
Here’s a run-down of individual
indicators.
BULLISH INDICATORS
-Sentiment is advanced, but not
in the stratosphere; from a sentiment perspective, the markets can go higher.
-Bollinger Bands are stretched,
but not yet overbought. RSI was overbought for 3 days in late October, but the
current reading of 75 is not overbought. 80 is overbought in my system. I need
to see both Bollinger Bands and RSI overbought at the same time before I get
concerned. Even then, we would look at other indicators to see if a change in
investments was suggested.
-MACD of Breadth is bullish.
-The S&P 500 is not too far
ahead of its Breath, i.e., there isn’t appreciable divergence.
-MACD of S&P 500 Price is
bullish.
-Money Trend is moving up.
-The Smart Money has been
buying, i.e., late-day action is bullish.
-Up moves have been larger than
down moves over the last month.
-Cyclical Industrials (XLI-ETF)
have been outperforming the S&P 500 recently.
-The 5-10-20 Timer system is currently
“BUY”.
-There are no TOP Indicator
warnings now.
NEUTRAL SIGNS
-New-high/new-low data is
turning down, but new-highs are increasing so this indicator is neutral.
-We’ve seen only 3 down-days in
the last 2-weeks. If that drops to 2 down-days over the month, we would say
that is bearish. For now, it’s neutral.
BEAR SIGNS
-Statistical analysis of daily
moves of the S&P 500 show a lot of complacency and suggest a top of some
kind within the month. This used to be a very good indicator; perhaps it will
be again. This isn’t necessarily
indicating a large decline. A normal retreat of 3-5% would probably clear this
indicator.
-The chart indicates we are near
the upper trend line. From here we may follow the upper trend line higher or
pull back a bit, say 3-5%. For now, though, we haven’t seen many signs the
advance will end.
Overall…
My daily sum of 20 Indicators declined
from +10 to +4 on 6 Nov (a positive number is bullish; negatives are bearish)
while the 10-day smoothed sum that negates the daily fluctuations slipped
from +52 to +47. (These numbers sometimes change after I post the blog based on
data that comes in late.) A reminder: Most of these indicators are short-term.
The Intermediate/Long-Term
indicators are HOLD. The Price indicator is bullish, while VIX, Volume, and
Sentiment indicators are neutral.
The short-term Market Internals
indicator dropped to HOLD on 6 Nov. It had been BUY for the previous 3 days.
I remain bullish.
