Stocks Likely To Trend Higher Into Year End? | Michael Lebowitz

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**Michael Lebowitz** (0:59)
Look, assuming there's no news, which is a horrendous assumption, the trend should be for the market to drift higher. But as we know, as we saw the last time we talked, there is news and it does affect the markets. So pay attention. But all things considered, we expect an upward trend into year end.

**Adam Taggart** (1:28)
Welcome to Thoughtful Money, I'm Thoughtful Money Founder and your host, Adam Taggart, welcoming you back at the end of the week for another weekly market recap, this time featuring my good friend, Michael Lebowitz, Portfolio Manager at RIA. Michael, how are you doing?

**Michael Lebowitz** (1:41)
I'm doing great. It's Friday.

**Adam Taggart** (1:44)
It's Friday. Well, it's funny you mentioned that. So the last time you were on, Michael, which I think was two weeks ago, we had to record on a Thursday because of my schedule, I travel. And I made sort of an offhand comment of, hey, folks, we're recording this on Thursday, so we're going to be missing one day of the week. Hopefully, nothing happens in that last day. And then, of course, the markets had their worst day of the year. So glad we're doing it on Friday again.

**Michael Lebowitz** (2:10)
Well, so what's going to happen on Saturday now?

**Adam Taggart** (2:13)
Yeah, I know. Well, it's not temp fate there. But what was interesting is the markets did have a big drawdown for a brief moment there. There was a lot of panic and a lot of volatility over the next couple of trading days because it was an on-again, off-again trade war between President Trump and the Chinese.
We'll get more to that in a moment. But since that uncertainty in the markets, they've picked themselves back up as they've been doing pretty much all year, and pretty much trading back at record highs on the day we're talking here. So I think maybe, Michael, maybe we just go straight to the TA here. Market seems to be feeling pretty good right now, despite all the potential negativity we've seen in the headlines recently. What's your take here?

**Michael Lebowitz** (3:06)
Yeah. If you remind me, let's get back to that Friday from two Fridays ago, because there was a little liquidity issue, and liquidity issues are starting to pop up a little. So I would like to expand a little bit on that, but we can do that a little bit later. Let me share my screen, and we're going to start with a graph of the S&P 500 Not much has changed. We've talked about this divergence between the MACD, which is just slowly leaking lower in the market, which is, for lack of a better word, slowly leaking higher.
And same with the RSI, which is down here in the red. It's, you know, lower highs, lower lows. Kind of same with the MACD. The MACD is going on a little bit of a buy signal, but it's been doing that back and forth by sell signals as it declines. So it is working towards fair value, which is positive. The RSI is close to 50, which is fair value. And you can see the S&P has kind of gone nowhere for a month, a month and a half.
The moving averages have proven to be helpful. Right now, the last couple of days, we've been supported by the 20-day moving average in red. The blue is the 50-day, and that did provide initial support. But right now, that's kind of, if we break the 20, that's the next line in the sand. And then, I just drew this red line. It's been a line of support pretty close to the 50-day moving average. So, that's a level to watch. We don't want to break that, because then you set a precedent of a lower low. Doesn't mean it's the end of the world, but something to pay attention to. Conversely, if you get above the green line, you have record high, higher highs. So, let's see how it breaks out of this range. The market's trading decently this morning, bringing it to the very upper end of that range, but not quite at a record high. We'll see. And then at the very bottom, I added on balance volume. That may be a new one. And it's basically measuring on, if it's an up day or down day, and what the volume was like. And generally, in a bullish market, you want to see it trending upward. What we don't want to see is it start to flat line, or even decline while the market's going higher. That's telling you that the selling pressure is increasing, even if it doesn't show up in the S&P itself. So it's another technical indicator that we can pay attention to. In 1999, that was one of the hints, that there was something changing in the structure of the market. That had flattened out despite the market going on to record high after record high. So something to watch. There's zero warning. It's doing exactly what you want it to do. And as we kind of look ahead, we have a big week in earnings. A lot of the big tech companies are next week, along with a lot of other large companies. And we're slowly, once we get past that, we're getting on the other side of earnings season. Meaning that A, a lot of the earnings news is now in the market. But B, a lot of these companies in stock blackout, stock buyback blackout periods, can start buying back their stock. And that starts as early as this week. Some of the banks have reported already are probably out of the blackouts. Companies that reported this week could probably start buying back next week. So you have that support for the market that starts kind of coming back into the market that was left out for the last few weeks. And then we just run into the holiday cheer, the rebalancing, the typical year-end activities that can traditionally are helpful to the market. So the Santa Claus rally. Look, assuming there's no news, which is a horrendous assumption, the trend should be for the market to drift higher. But as we know, as we saw the last time we talked, there is news, and it does affect the markets. So pay attention.