Bullish or Bearish? Week of April 29, 2024
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Short-term trend (DAILY CHART) – RECOVERY: Last week, SPX rose from 4967 to 5099, a fantastic 132-point rally, repairing much of the damage done over the last three weeks. After reaching oversold levels (RSI @ 31.29), SPX bounced back strongly. Although the chart is not as dreadful as before, SPX is still not out of the woods yet. Note: Futures are SLIGHTLY HIGHER on Monday morning.
Long-term trend (WEEKLY CHART) – RECOVERY: On the weekly chart, SPX reversed direction and is headed higher. It's too early to say if this reversal has legs.
MACD (DAILY) = BEARISH: MACD is still below the zero line and below the 9-day signal line. It will take more time for MACD to give an all-clear signal.
RSI: (S&P 500) = 49.75 (DAILY) NEUTRAL: RSI went from deeply oversold to neutral as SPX rallied strongly last week. It could go either way from here.
Comment: SPX and the other indexes were headed towards the abyss when it reversed direction rather dramatically last week. The bulls are breathing a sigh of relief as the market corrected. The big question now is whether this correction is the real deal or if there will be (horror of horrors), a failed rally. Another word for that is "sucker's rally."
However, because the three-week selloff was so "orderly," a snapback rally was not surprising. It's been years since we've seen a panic-selloff, and although SPX and the other indexes plunged, few panicked, or so it seemed. It will obviously take a lot more selling before panic returns to Wall Street.
As for now, it's relatively easy to make a bull or bear case, so once again, stick to the strategies that are working for you, and abandon those that don't. Index funds are ideal for those who don't want to pick stocks. For those who pick stocks, choose the higher-quality issues if possible, and it's even better when they're on sale.
Bottom line: It's a wait and see week. Does this rally have legs or is it a "sucker's rally?" We should find out relatively soon.