The Weekly Trader

May6

Bullish or Bearish? Week of May 6, 2024

Short-term trend (DAILY CHART) –  BULLISH: Last week, SPX rose from 5099 to 5127, a decent 28-point rally, with most of the gains coming on Friday (the Dow shot up higher by 450 points). SPX is is still recovering, and is almost back above its 50-day moving average. However, although SPX hasn't yet returned to its all-time highs, it's getting closer. This has made the nervous bulls happy. Note: Futures are SLIGHTLY HIGHER on Monday morning.

Long-term trend (WEEKLY CHART) – BULLISH: On the weekly chart, SPX is above all three moving averages and appears to be recovering nicely.

MACD (DAILY) = NEUTRAL: MACD is still below the zero line but above the 9-day signal line. It's giving mixed signals, but its better than last week.

RSI: (S&P 500) = 53.63 (DAILY) NEUTRAL: RSI is still in the neutral zone and could go in either direction.

Comment: Microsoft and Google had fantastic earnings on Friday, which resulted in a spectacular rally. And on Thursday, Apple announced a massive, $110-billion buyback program, which resulted in a Thursday rally. In addition, the jobs report was weaker than expected, which gave some investors hope the Fed will cut rates soon.

And just like that, the market is back in play.

A few weeks ago, we wondered if the recent rally was a "sucker's rally" or the real deal. Right now, it appears to be the real deal, although markets can reverse at anytime. However, based on the indicators and clues, this rally seems to have legs, at least for now.

Nevertheless, it would not be surprising if there was a huge summer pullback, but that is more of an educated guess based on market history, and not a fact.

For now, stick to the successful strategies that have worked so far, and that means being bullish until something changes. Although we had a short-lived hiccup, the market appears to be on track once again.

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