WC-10/20: Expect a Not-So-Good Week
Indicators aren't looking great. Plus, a new(-ish) way to interpret the market.
Expect A Not-So-Good Week
The market didn’t really go anywhere last week, but the McClellan and RSI did, hovering around 0 and pushing up to about 67, respectively. The market seems to be holding its breath for the election, even though The Election Doesn't Matter To Stocks. TLDR, losses are probable this week, don’t expect the market to go anywhere crazy.
Indicators: Similarly split
S&P 500 RSI: 61.25 and rising (sort of)
The RSI was stagnant through last week, hovering around the 60s. Since an RSI of 70 suggests that the market is over-bought, it’s reasonable to interpret this as saying that the market is very slightly overbought.
Since the RSI oscillates between 70 and 30, expect the RSI—and potentially the market—to push up to 70 if it doesn’t stay right where it is, which I think is the more likely outcome.
McClellan Oscillator (S&P 500): 11.41 and going nowhere
The McClellan and RSI agreed on not going anywhere last week, and the McClellan has been hovering around 10 for a while. It’s anybody’s guess where this goes next, but if it sticks with the RSI it’ll push up a bit more into the green for the first half of the week before falling down into the red.
In that case, the market would grow in the first half of the week before contracting in the second. There’s some more evidence to support this: take a look at the McClellan Summation index (MSI). The MSI is calculated by summing all of the McClellan values for a certain number of days, and can help show longer-term behavior. This is the new market method I mentioned.
This week, the MSI is pushing up a little bit, which supports the half-good, half-bad week hypothesis. There’s some more math to do with this, but that’s probably best left to next week. Basically, we have a new way to interpret the McClellan, and it’s saying the same thing as the normal McClellan and the RSI.
This Week’s Market Catalysts: None
As far as I can tell. If you have a market catalyst, or something you think could be a market catalyst, I’m open to ideas/suggestions.
Ayyyyeeee