Waiting Game

Following the December plunge in the stock market, we are experiencing a sharp oversold rally, which is now running into resistance overhead. The longer-term 50 week moving average is turning down and should cap the advance from here. What happens next is all important. Is this a bear-market rally that has run its course, or the start of the next leg higher in an ongoing 10-year bull market? We will find out shortly.


My Technical trend indicator has flipped back to bullish mode. However, the majority of the technical indicators I follow remain bearish. I expect these conflicting signals to resolve in a singular direction shortly. Relative strength indicators (RSI) for US markets are tipping into positive territory above 50%, though RSI readings are still negative for Europe. MACD momentum readings are still negative for all markets. All markets continue to trade below their long-term MA’s (50WMA). Only in the tech sector in the US are the majority of stocks now trading above their 200DMA. Meanwhile, NYSE and Nasdaq indices continue to report bullish percentage readings below 50%, while the S&P 500 and S&P 100 indices are now reporting bullish percentage readings above 50%.

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