Key Takeaway
Growth followed by consolidation - the S&P 500 appears to be in a "Dead Zone". The market is consolidating its previous gains and is now in a tight side-ways or rangebound zone. (reference the two horizontal dotted blue lines)
This type of market environment requires time and patience, in that it could result in either a break up (good) or break down (bad) from this zone. RSI is a key indicator we follow and is reflecting the market's indecision by oscillating above and below the 50 line without clear direction - note: we want to this trend up above 50 to feel confident. The same goes for the MACD, which is hugging the zero line. The 20-Day Moving Average has rolled over a bit, which is an early negative indicator, but not something we would act on independently; while the 50-Day moving average (more important) has seen its trajectory flatten a bit. For the time being the 20-Day is still barely above the 50-Day Moving Average, which is good, but it's real close to breaking it - which would be an early red flag, and one we are watching closely. The 200-Day Moving average remains positively sloped at this point - but is too much of a lagging indicator act on.
This type of market environment requires time and patience, in that it could result in either a break up (good) or break down (bad) from this zone. RSI is a key indicator we follow and is reflecting the market's indecision by oscillating above and below the 50 line without clear direction - note: we want to this trend up above 50 to feel confident. The same goes for the MACD, which is hugging the zero line. The 20-Day Moving Average has rolled over a bit, which is an early negative indicator, but not something we would act on independently; while the 50-Day moving average (more important) has seen its trajectory flatten a bit. For the time being the 20-Day is still barely above the 50-Day Moving Average, which is good, but it's real close to breaking it - which would be an early red flag, and one we are watching closely. The 200-Day Moving average remains positively sloped at this point - but is too much of a lagging indicator act on.
In summary - it's a wait and watch market.
