Friday, July 21, 2017

$CPCE $CPC Put/Call Ratios and SPX S&P 500 Daily Charts; Near-Term Top At Hand



The CPCE and CPC put/call ratios remain complacent. The stock market (SPX) takes a little jog the last few days up down up and today down. Everyone is drunk as skunks off Fed wine, BOJ sake and ECB champagne expecting never-ending stock market highs. The low put/calls verify the rampant complacency consistent with market tops.

The bears have been screwed over the last few months with rarely a 0.80 or higher signal in the CPCE occurring or a 1.20 or higher signal in the CPC occurring which identifies a very attractive tradeable stock market bottom. With the rampant complacency and the SPX weekly chart showing neggie d, you do not want to be long right now. A near-term pull back is at hand it is simply a matter of how much the SPX will drop.


If you have been contemplating exiting longs concerned about a pull back today would be a good day to exit as well as early next week. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

Wednesday, July 19, 2017

TNX 10-Year Treasury Note Yield Daily and Weekly Charts; Death Cross; Downward-Sloping Channel


The moving averages are playing a key role with the direction in the 10-year Treasury yield. The TNX fell through the 100-day MA at 2.32% and then made a beeline for the confluence of the 20, 50 and 200-day MA's. A death cross occurs with the 50-day crossing down through the 200 (black circle). The blue lines show the downward-sloping channel in play.

The bracket formed by the 20-week MA at 2.31% and 50-week MA at 2.18% is key. These two moving averages are converging so yield is going to have to make a decision and that will likely set the path forward for the TNX. Yield gapped above the 100-week MA at 2.05% when President Trump was elected in early November. Yield never came back down to back kiss the 100-week as yet and it should show respect to the 100 at some point forward.


Use the MA's as a guide going forward;

100-day MA 2.32%; inflation is increasing and higher yields are coming
20-week MA 2.31%.
200-day MA 2.27%
20-day MA 2.27%
Yield is at 2.27% as this message is typed
50-day MA 2.26%
200-week MA 2.23%
50-week MA 2.18%
100-week MA 2.05%; deflation sends the US into a tailspin

Treasury note and bond bulls (higher note prices lower yields) will cheer if yield slips under the 50-day at 2.26% since a move to the 200-week at 2.23% will be on tap. If 2.23% fails, yield will next test 2.18%. If that fails, 2.05% is the next support. If the 2.05% level fails, serious trouble begins for the US economy and markets since the country will be falling into a deflationary spiral that the vast majority of Wall Street says will not occur.


Treasury note and bond bears (lower prices higher yields) will cheer if yield punches back up through that gauntlet at 2.27%. Yield will immediately run up to 2.31%. If yield moves above that 2.31%-2.32% resistance, yield will run far higher and the inflation proponents will throw a party. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.


Note Added 7:26 AM EST: The 10-year yield bumped higher to 2.28% but is spanked back down to 2.27%. Yield is chomping away at that formidable resistance at 2.27% trying to break out higher. Yield may dance in that 2.27%-2.31% range today.

Monday, July 17, 2017

NYMO McClellan Oscillator Daily Chart

The McClellan Oscillator remains elevated refusing to print under -30 for the last four months. The NYMO comes up to tag the upper standard deviation band. Price respects the bands moving from the lower band to the upper band and then back to the lower band and so on so a move to the lower band would be expected over the coming days say during the next week or two.

The elevated NYMO is indicating a stock market top is likely at hand. Stocks are not attractive on the long side until the NYMO prints in the green box. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

USD US Dollar Index Daily Chart; Oversold; Falling Wedge; Positive Divergence; Lower Band Violation; Price Extended to Downside

The number of shorts against the US dollar index is at a three-year high. The boat is fully loaded to the downside with the Wall Street pundits expecting a further drop in the dollar. You know what happens when the consensus moves in one direction, yes, the stock or index tends to do the opposite that is expected.

The USD is set up for a nice bounce in the daily time frame. RSI and stochastics are at oversold levels agreeable to a bounce. The falling wedge pattern is bullish. The indicators are universally positively diverged against the falling price (green lines) wanting to see a nice bounce in price occur. The USD has violated the lower standard deviation band so the middle band at 96.16 is on the table as an initial upside target. Price is extended below the moving averages and requires a mean reversion higher. All of these indications are bullish. Considering the strong number of shorts, once price begins to elevate it may shoot higher like a rocket as the shorts panic and cover. A higher dollar will likely boost emerging market stocks and small caps.


So the dollar bulls are likely winners in the short term in the daily time frame, however, the weekly chart remains weak. The stoch's are oversold on the weekly chart and agreeable to the bounce which will likely occur on the daily time frame as described. The RSI is not yet oversold on the weekly chart and the MACD line remains weak and bleak wanting to see lower lows in the dollar after the short term bounce occurs. 93 is a key support level. The USD monthly chart is favoring sideways movement with a slight downward bias.


Thus, the dollar is expected to bounce in the daily time frame, say it moves higher to the 96-97 level over the coming days or week or two but then price will likely roll back over again in the weekly time frame to come back down and test the lows in the 93-95 area say in early August. Keystone does not hold any positions in the dollar. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.


Note Added at 8:36 AM EST: The USD is printing at 95.14 receiving pressure from the dollar bears. What do you think will happen?


Note Added at 7:13 PM EST: The USD finishes the session at 94.90 with the dollar bears in control. Interestingly, the Russell 2000 small caps set a new all-time record so traders may be sniffing out a rise in the dollar.


Note Added on Tuesday Morning, 7/18/17, at 8:13 AM EST: Senate Leader McConnell cancels the proposed vote for the new Trumpcare healthcare bill called the Better Care Act. Two additional senators did not like the plan so it would not pass if put to vote. McConnell changes the strategy and will now seek a repeal vote for the Affordable Care Act (Obamacare). A repeal, if approved, will allow two years to come up with a replacement healthcare plan for the ACA. McConnell previously and unequivocally stated that he would not back a repeal bill. President Trump loses credibility since he bragged for the last year that the repeal and replacement of Obamacare would be easy and occur on day one of his presidency. Trump’s approval rating will slip lower in the polls. The republicans blew it by boasting for eight years that they had a great healthcare insurance bill ready to go that would replace Obamacare. That was a lie. They had no plan ready. Trump either blindly cheerleaded the new healthcare bill without ever understanding that there was no republican plan, or, he chose to lie about it to get elected. The president loses face. The demopublicans and republocrats are proficient at one task; lying. The US dollar index drops like a rock from 95.2 to 94.7 sending the euro currency basket higher. The euro moves above 1.15. The USD is down -8.2% from the top in early January. The Senate is not out of the woods since a repeal bill for the ACA may not have enough votes to pass. Obamacare may remain in place forever. The analysis above should hold but give the daily chart a day or two to price in this news.

Note Added on Wednesday Morning, 7/19/17, at 6:00 AM EST: The USD prints a low at 94.28 yesterday and is currently at 94.75. The ECB is on tap tomorrow morning. The euro moves inversely to the US dollar.

Sunday, July 16, 2017

CPCE Put/Call Ratio and SPX S&P 500 Daily Charts; Near-Term Top At Hand


The complacency is off the charts. Traders are drunk as skunks from Fed wine and ECB champagne buying stocks at the ask. Investors are smoking BOJ crack and buying stocks with total disregard for price. The VIX is at 9.51 basically the lowest number in its history which verifies rampant fearlessness. No one is concerned that the stock market will ever sell off again. Even if it does, the central bankers are the market and they will step in to save the day.

Aunt Agnes, usually a frugal soul, took her entire life savings to the broker in town and placed it all in the stock market. She says the stock market will go up forever. Moe, the local cab driver, says he also invested his entire life savings in stocks proclaiming that in a few years he will retire with all his profits. The low CPCE verifies the rampant complacency and lack of worry or fear.

The red circles show market tops when everyone is partying and complacent. The green circles show fear and panic, when there is blood in the streets. Note how the CPCE does a good job calling the near-term tops but the market bears continue to be screwed by the central bankers with stock market bottoms occurring at unimpressive levels in the 0.65-0.73 range. A notable stock market bottom typically occurs at 0.80 and above, that is when you can start buying stocks and going long.

So what are you going to do in the near-term? Ride the drop lower in equities or cash-out and move to the sidelines? The early June low pretty much nailed the market top to the day but the move lower did not amount to much. The low CPCE print in the middle of the month results in the trend of lower lows and lower highs for stocks into the bottom eight days ago.

The SPX prints an all-time record high at 2463.54 and all-time closing high at 2459.27 the highest numbers in the history of the stock market. Traders are singing "Happy Days Are Here Again" while dancing jigs of joy. What do you think will happen?This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

Saturday, July 15, 2017

The Keystone Speculator Inflation-Deflation Indicator Remains Mired in Deflation

The Keystone Speculator Inflation-Deflation Indicator remains mired in deflation. We live in special times. Typically, a deflationary quagmire would correspond to depressed and falling stock market prices but not in this age of obscene Keynesian money printing by the Federal Reserve and other major global central bankers. The power of the central bankers is astounding.

There is an ongoing battle between goods inflation/deflation and services inflation/deflation. Generally, the goods and services should track in relatively the same direction but something special has been occurring. The central bankers have destroyed price discovery over the years and global markets are twisted into knots; no one truly knows the correct price for anything anymore.

The chart above is weighted for the goods-oriented inflation/deflation since the CRB commodities index is used in the numerator of the ratio. The internet and computers are huge deflationary machines eliminating jobs and continuing to lower prices. Electronics and other products are cheaper each passing year. Corn and wheat crops are at bumper yields. The world is awash in oil maintaining a lid on fuel prices.

On the services side, however, prices are flat or in some cases rising. Those of you paying college tuition bills see prices rise each year. Heath insurance (ACA; Obamacare) and medical costs are out of control. Prescription drugs are expensive; many Americans over 50 years old take a palm-full of pills each day. Utility bills consistently sneak higher. Haircuts cost the same or more each year. Home prices continue rising which creates the vibe that inflation exists in the economy when in reality it does not. This gap between goods and services inflation/deflation is occurring around the world.

The expectation is that the US and the world will enter a recession at some point forward and the services inflation/deflation would be expected to roll over to the downside to join the goods deflation sitting in the basement. When the recession hits, people lose jobs, they do not spend money, prices drop. Customers begin delaying services that they routinely used before the recession. Once you lose your job, your whole life will change.

Inflation proponents need the chart above to start ramping higher to prove their thesis correct, however, that appears a tougher row to hoe. It is less likely that goods inflation will all of a sudden begin moving higher to join services rather than services dropping lower to join goods, especially with a recession on the come.

The US may remain mired in deflation for a couple more years but sure as night follows day and day night, inflation will arrive again. The last time that a notable whiff of inflation existed was back in early 2011 now six years in the rear view mirror. You will know inflation when it arrives since every day all day long, coworkers, family members and strangers will complain to each other about prices of everything including milk, gasoline, food, services, utility bills, etc....; this is not happening. After the chart moves higher in the months and years ahead, the velocity of money will kick in and the money sitting idle at banks will be put to work. A multiplier effect will accelerate business activity and inflation will leap higher and then the country will likely shoot up into hyperinflation say in the 2020-2025 time frame. That will be a different problem and a future bridge to cross. For now, deflation remains in charge.

Further discussion on inflation and deflation continues below.

Previous postings of the inflation-deflation indicator have extensive write-ups on inflation, deflation and the Fed’s shenanigans over the last nine years. Type ‘inflation’ or 'inflation-deflation' into the search box in the right hand margin to study prior articles.

Keystone’s Inflation-Deflation Indicator chart shows the markets and economy remaining mired in deflation. What is that you say!? Balderdash! Blasphemy! Wall Street proclaims, “Inflation is here! Inflation has arrived!” What is this nonsense talk about deflation?

The majority consensus on Wall Street continue to tout inflationary forces ahead. After all, the Fed is hiking rates. They have to cheer lead this line since they all are heavily invested in the banks hoping for a steeper yield curve. The Federal Reserve has called the current lack of inflation "transitory" although humorously, the so-called transitory disinflation/deflation is now running strong for four months into the fifth (from CPI data). Comically, in Chair Yellen's mind, when does transitory become a trend?

Inflation is Godot. Inflation has been pictured on a milk carton for the last few years (missing). Deflation rules the roost. The chart shows that more up in yields, and higher commodity prices, are needed for the indicator to move higher towards inflation.

Keystone's Inflation-Deflation Indicator remains in DEFLATION at 1.76The low point on the chart above was in December 2015 at 1.70 so we are teasing those lows. The 10-year yield back then was at 2.19% and currently at 2.33%. The CRB back then was at 170.70 and now at 176.28. The Keystone Speculator Inflation-Deflation Indicator remains mired in the deflation region.

The 10-year Treasury note price is used for the denominator of The Keystone Speculator Inflation-Deflation Indicator. The 10-year Treasury price is 100.34 (100 11/32) with a yield at 2.33%. Commodities are in the numerator. The CRB Commodity Index is 176.28. Taking a look at the numbers;

CRB/10-Year Price = 176.28/100.34 = 1.76

Over 4.40 = Hyperinflation
Between 3.60 and 4.40 = Inflation
Between 3.00 and 3.60 = Neutral; Inflationists and Deflationists Battle
Between 2.9 and 3.00 = Disinflation
Under 2.90 = Deflation

Despite all the hoopla and trumpets blaring that inflation has arrived, the economy and markets instead remain mired in deflation. The main reason is the lack of wage growth. Inflation cannot exist without wage inflation (watch the Friday Monthly Jobs Report to see if any wage inflation occurs) and wage inflation is not occurring. Wage inflation is growing annually at about +2.5% a paltry amount. When is the last time you had a substantive raise?

The Federal Reserve needs to see the annual wage growth at +4.0% to +4.5% to be comfortable knowing that inflation has taken hold and will be sustainable going forward but this is a dirty little secret they will not discuss in public. Yellen would likely perform cartwheels in the hallway of the Eccles Building if wage growth at least breached the +3% level.

The United States remains in a deflationary funk since August 2014 about three solid years. Think back to the summer of 2008 if you want to relive the feeling of rising inflation. Rising prices were a common daily complaint at office water coolers, supermarkets and dentist offices back in 2008; not now. When inflation occurs, you will feel it and you will hear about it and you will be complaining about the huge costs for everything.

There is a whiff of services inflation occurring as mentioned at the top of this article. The bulk of this is due to rising medical insurance (Affordable Care Act; ACA; Obamacare) and prescription costs, increasing college tuition and rising accounting, attorney and professional service fees. Home prices have also been inflationary but have been peaking and topping off lately perhaps ready to subside. Lower house prices would dampen inflation expectations.

The world is awash in oil and the OPEC and non-OPEC nations are colluding to limit production to artificially drive prices higher. All that oil sloshing around is oversupply and deflationary. People are not complaining about food prices like 2-1/2 years ago during the bad crop year. Commodities remain subdued in price. A large increase in commodity buying and shipping is needed to prove that inflation is on the rise and that is not occurring. The BDI (Baltic Dry Index) remains subdued.

The retail bankruptcies and store closures increase. The US is grossly overstored by a factor of 3 to 1 compared to other Western nations. The retail carnage is disinflationary since racks of clothes and other products will be sold pennies on the dollar to liquidate inventories. A recession would exacerbate this activity.

There is no demand in this sick stagnant economy that is only pumped-up by fits and starts of central banker and/or government stimulus. Deflation is defined as consumers deciding to wait for the future to buy something since they believe it will be cheaper. This mindset continues.

Another subject no one is talking about is a recession that is long overdue. Economists and analysts were polled last December on the likelihood of a recession and the consensus was only for a 30% chance or less of a recession over the next year.  Canaccord strategist Tony Dwyer proclaims that a recession is two or three years away at the earliest. That is an optimistic bunch on Wall Street. What are they smoking? They should pass it around to everyone else.

A recession will usher in deflationary behavior and is likely coming far faster than anyone realizes. Treasury yields will fall as investors seek safety in notes and bonds (price up yields down). Keystone’s indicator then drops as the price in the denominator moves higher although the indicator probably does not have much further to drop. Likewise, demand for commodities decreases in a recession so the CRB index drops and a lower numerator in the indicator will send the number lower again, a 170-handle on the CRB is an extremely low and deflationary number already.

The structural unemployment problem remains in the U.S. and the current stagnant wage growth (wage deflation) reinforces an ongoing deflationary and disinflationary theme. Technology, computers and the Internet are huge deflationary machines. Robots continue to replace human's on the job.

The GOOGL driverless vehicle technology already has trucks operating on the road in California and other states and auto manufacturers are pouring billions into this technology that will eliminate more jobs. Driverless vehicles will greatly impact to the trucking industry. Trucks could transport goods driverless allowing companies to drop-kick more workers across the parking lot. The pattern of 'more tech--less human's' will continue. Fast-food restaurants are introducing kiosks that eliminate more jobs. Automation is deflation.

The structural unemployment problem will continue in the US for years and perhaps decades forward. The unemployed and underemployed create a burden on the economy over time. The wealthy on Wall Street, in bed with the Fed, made themselves filthy rich by taking advantage of the 2008-2009 crash (easy money pumps the stock market higher) while the middle class and poor (that do not own stocks) were thrown under the bus over the last nine years.

Companies are meeting EPS (earnings-per-share) by laying off workers and squeezing more production out of existing workers (as evidenced by flat to lower top line revenues for companies across all sectors for the last couple years). Instead of creating jobs and buying equipment with the central banker easy money, companies use the dough for stock repurchase programs (buybacks) that artificially pump stock prices higher. Yes, they are greedy b*stards.

Watch Keystone's formula above; you can crunch the numbers to check the indicator every few weeks. It is shocking to see equity markets print new record highs against a disinflationary and deflationary back drop. It is unprecedented perhaps a 1930's redux. This behavior can only be chalked up to the amazing power of the central banker money-printing. The central bankers are the market. They are modern day money Gods in charge of the Temple. Kneel before their Power and Majesty.

The Brexit stock market crash in late June 2016 was stopped by the BOE promising easy money. The PBOC keeps pumping China’s economy and markets. The Fed had remained accommodative all year long keeping stocks elevated and will likely retreat from its gradual hiking path. The BOJ keeps implementing stimulus programs and defended the 0.10% level on the 10-year JGB last week by printing more money.

The ECB continues its QE program pumping more money into markets so the wealthy can become richer before the whole outhouse goes up in smoke. All-time highs are printing in global stock markets. The wealthy light expensive cigars and dab the ashes on the faces of the lower middle class.

Inflation is not in sight currently. The inflation-deflation indicator moving a touch above 3.00 in early 2014 was due to rising food and beef costs. Corn and wheat prices have plummeted back to earth. Crops are producing yields at record highs this year so the food inflation will continue subsiding. The cheaper grain prices will bring down the cost of beef especially as herds increase after the culling due to drought two and three years ago.

Stagnant wages in America will prevent inflation from occurring. When wages rise, that will tell you inflation is coming fast and Treasury yields will then rise strongly. As long as wages remain flat or lower, inflation will not exist. Focus on the wage data in the monthly jobs reports.

Think back to the last period of rampant sustainable inflation in 2006-2008; you were likely enjoying happy raises at work, right? And probably not so much from 2009 to present? 

What does all the wind-bag mumbo-jumbo above say in a nutshell? The current answer to the ongoing inflation-deflation debate is DEFLATION as much as everyone tries to ignore it and say that inflation is here to stay. After 8-1/2 years of obscene Fed and other central banker money-printing, the United States economy remains mired in deflation proving that Bernanke's grand Keynesian experiment, blessed and implemented by Fed Chair Greenspan, and now controlled by Fed Chair Yellen, as well as dovish Fed members such as Evans, may be tragically failing.

It is prudent to prepare yourself and your family by raising as much personal cash as possible and paying off debt. Avoid taking on new debt. Cash is king in deflation. Show respect to holding cash.

Many analysts argue against the overall ongoing global deflation hypothesis saying the view on services inflation versus goods inflation must be explored in more detail. Services are experiencing some inflationary effects while goods are in a deflationary trend. The Trump enthusiasm is creating the bump in inflation over the last few months. The chart above hints that the deflationary funk will likely continue.


All of you inflation enthusiasts do not fear, however, inflation will arrive soon perhaps in the 2018-2020 time frame and then hyperinflation in 2020 and beyond. That will be a whole new set of problems, that is if we survive the last of the disinflation and deflationary environment over the next couple years.

Thursday, July 13, 2017

SPX:VIX Ratio and SPX S&P 500 Daily Charts


The SPX:VIX ratio is useful in identifying key stock market bottoms. This is because the ratio emphasizes large spikes in volatility which reflects panic and fear the best time to go long. The VIX is a useful signal when it spikes higher since it can identify a bottom in the stock market but is not as much use when it is low, like now at sub 10, since the VIX can remain low a long time and calling a market top can be more elusive. Use the low CPCE and CPC put/call ratios to help identify market tops.

Think back to your high school days and fractions. A ratio is a fraction. For the SPX:VIX ratio, it is a fraction of the S&P 500 price in the numerator (top number) divided by the VIX volatility number in the denominator (bottom number). When the S&P 500 rallies and price is moving higher and higher, like the last nine years, the SPX:VIX ratio will move higher. If the SPX moves lower, the ratio will move lower. If the VIX (volatility) moves higher (bearish for stocks), the SPX:VIX ratio will move lower and if the VIX moves lower (bullish for the stock market), the SPX:VIX ratio will move higher.

The SPX is at record highs and the VIX is at multi-decade uber lows. Therefore, the ratio should be at nosebleed stratospheric levels, which it is at 247. The green circles show the key bottoms in the stock market over the last year (timie to go long). Once the market starts to sell off and accelerate lower, the VIX is spiking vertically higher, traders are panicking throwing stocks overboard with reckless abandon, some investors screaming that the end is near, this sends the SPX:VIX ratio lower and that spike lower in the ratio identifies the stock market bottom. You always buy when there is blood in the streets. Therefore, you do not want to be long stocks right now. Keep your powder dry and be patient and do not start nibbling on the long side until the SPX:VIX ratio begins printing inside the  green box in the right margin. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

GOOGL Alphabet (Google) Monthly Chart; Overbot; Rising Wedge; Negative Divergence Developing; Upper Band Violation; Multi-Year Top in Play Going Forward

Negative divergence is setting up for Google as shown by the red lines. The MACD line, however remains long and strong wanting to see another higher high in price after a pull back occurs on this monthly basis. When price comes back up, the MACD line should go neggie d joining the other indicators and a  multi-year top in Alphabet will likely print. Thus, price may move down, up, then down or down, up, down, up, then down and roll over, on a monthly basis. Thus, a multi-year top would be expected to print for GOOGL say in the August to November time frame.

If you have enjoyed big profits on Google, it is likely prudent to start implementing an exit strategy. The red lines show the rising wedge in play over the last 4 years which is a very bearish pattern. The collapses from rising wedges can be quite dramatic. The red lines for the indicators show universal negative divergence occurring wanting to see a spank down sans the MACD as mentioned. GOOGL will likely pull back lower for a month or so, then move higher for another higher high in price and then, if the MACD line is negatively diverging, the multi-year top is in.

GOOGL has violated the upper standard deviation band (pink) so the middle band at 813 is on the table for starters and even the lower band at 664 as the long-term plays out. Price is above its moving average ribbon requiring a mean reversion lower. The RSI and stoch's are overbot agreeable to a pull back in price.

The ADX line exhibits a strong trend for the rise in price over the last five years. The GOOGL bears will not be happy until the ADX slips under that 30-31 level. When the top is placed and price begins rolling over to the downside the ADX will drop and indicate the strong uptrend is over. For now, the uptrend remains strong, and along with the long and strong MACD will help print another higher high in price say a month or two out.


Keystone was amazed that a lot of you millennials hold Google stock. All you under 30-year old's own a disproportionally large amount of shares in the top tech companies such as AAPL, NFLX, AMZN, FB, GOOGL and even TSLA. Setting Tesla aside, the charts of the other bigwig tech stocks, that have driven the broad stock indexes higher the last few years, are similar to GOOGL.

NFLX, AAPL and GOOGL will likely top out with a multi-year top and begin rolling over say, anytime now through October. AAPL has likely printed its multi-year top and is expected to roll over to the downside first going forward. NFLX should then follow Apple lower. Google should then follow Netflix lower. These three will likely roll over first and then followed by FB and AMZN a month or two later (say August-November multi-year tops). If you are young and your chest is puffed out since you have made a lot of money on Apple, Netflix and Google, it is likely wise to cash-out. That goes for any of these hotshot stocks. It is important to likely exit Apple and Netflix without hesitation now. You have a little more time with Alphabet since it may not place its multi-year top until the August-October time frame. Then Facebook and Amazon will roll over following AAPL, NFLX and GOOGL. It will be a wild second half of the year ahead.

You can always scale out of positions by selling, in the case of AAPL and NFLX, one-third of the position today, one-third in two or three weeks, and then the final third in about six weeks. You can scale out of GOOGL by selling say one-third today, one-third in August and one-third in September. Let that money sit in cash for a while since it is likely more important to be out of the market rather than invested on the long side.


Keystone does not own any position in AAPL, NFLX or GOOGL currently but both Apple and NFLX are setting up as potential attractive shorts. The shorter term charts can be used to gauge a good entry on the short side. Obviously, if the above stocks place multi-year tops and roll over in the weeks and months ahead as explained, the broad stock market will as well. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

AAPL Apple Monthly Chart; Overbot; Rising Wedge; Negative Divergence; Upper Band Violation; Multi-Year Top in Play

Apple is singing its swan song right now. The monthly chart says AAPL is placing a multi-year, yes, multi-year top currently. If you have enjoyed big profits on Apple, it is likely prudent to say your good-byes and exit stage right.

The red lines show the rising wedge in play over the last couple years which is a very bearish pattern. The collapses from rising wedges can be quite dramatic. The red lines for the indicators show universal negative divergence occurring wanting to see a spank down in price. The MACD line is trying to eke out a tiny bit more of upside strength in this monthly time frame (tiny green line) but the indicators are forecasting that the multi-year top for Apple is likely in.


Price will want to begin retreating on this monthly basis going forward. There may be some sideways jogging action such as down, up, down, but the multi-year top for AAPL is likely in now or anytime say between now and September.

AAPL has violated the upper standard deviation band (pink) so the middle band at 116 is on the table for starters and even the lower band at 76 as the long-term plays out. Price is above its moving average ribbon requiring a mean reversion lower. The RSI is overbot agreeable to a pull back in price.

Note the ADX line that trends lower and trying to get back into the mid to upper 20's to prove that the uptrend remains in a strong trend. You can see it is struggling. If the ADX prints in that pink box in the right margin, Apple has a little more upside in store and that sliver of strength with the MACD will help elevate price, however, and as would be expected, the ADX will likely stall and roll over proving the strong uptrend in Apple price is over. You can see the trend higher in price during 2011 and 2012 was a very strong uptrend, then the uptrend became very weak in 2013. The ADX began moving higher again in 2014 and it was party time in 2015 with a strong upside trend in play again. Last year the strong uptrend in Apple ended and now the ADX is struggling to regain its prior glory.

Keystone was amazed that a lot of you millennials hold Apple stock. All you under 30-year old's own a disproportionally large amount of shares in the top tech companies such as AAPL, NFLX, AMZN, FB, GOOGL and even TSLA. Setting Tesla aside, the charts of the other bigwig tech stocks, that have driven the broad stock indexes higher the last few years, are similar to the Apple chart.


NFLX, AAPL and GOOGL will likely top out with a multi-year top and begin rolling over say, anytime now through October. AAPL has likely printed its multi-year top and is expected to roll over to the downside going forward. Ditto NFLX. These three will likely roll over first and then followed by FB and AMZN a month or two later (say August-November multi-year tops). If you are young and your chest is puffed out since you have made a lot of money on Apple, it is likely wise to cash-out. That goes for any of these hotshot stocks.


You can always scale out by selling one-third of the position today, one-third in two or three weeks, and then the final third in about six weeks. Let that money sit in cash for a while since it is likely more important to be out of the market rather than invested on the long side.


Keystone does not own any position in AAPL currently but both Apple and NFLX are setting up as potential shorts. The shorter term charts can be used to gauge a good entry on the short side. Obviously, if the above stocks place multi-year tops and roll over in the weeks and months ahead as explained, the broad stock market will as well. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.


Note Added at 7:20 PM EST on Monday Evening, 7/17/17: Much-followed Apple analyst Katy Huberty at MS continues raising price targets for AAPL stock. Huberty stands on a soap box and proclaims that AAPL will hit 182 (Apple sits at 149.56 at the 50-day MA at 149.37 so AAPL will make a bounce or die decision tomorrow).

Wednesday, July 12, 2017

NFLX Netflix Monthly Chart; Overbot; Rising Wedge; Negative Divergence; Upper Band Violation; Multi-Year Top in Play

Netflix is singing its swan song right now. The monthly chart says NFLX is placing a multi-year, yes, multi-year top currently. If you have enjoyed big profits on Netflix, it is likely prudent to say your good-byes and exit stage right.

The red lines show the rising wedge in play which is a very bearish pattern. The collapses from rising wedges can be quite dramatic. The red lines for the indicators show universal negative divergence sans that MACD line. The MACD line is trying to eke out a tiny bit more of upside strength in this monthly time frame. The RSI and stoch's are overbot agreeable to a pull back.


Price likely wants to retreat now, then come back up to satisfy that tiny MACD green line, which should then negatively diverge, where the top in price would be in. So perhaps a pull back in NFLX this month, a recovery in August, then roll over for the months and likely years ahead. The other outcome is that price would simply begin to roll over now and the multi-year top is printing now. The MACD line is at a comparable level as late 2015 and only misses being negative divergence by a hair.


NFLX has violated the upper standard deviation band (pink) so the middle band at 120 is on the table for starters and even the lower band at 69 as the long-term plays out. Netflix is above its moving average ribbon requiring a mean reversion lower.


Keystone was amazed that a lot of you millennials hold Netflix stock. All you under 30-year old's own a disproportionally large amount of shares in the top tech companies such as NFLX, AAPL, AMZN, FB, GOOGL and even TSLA. Setting Tesla aside, the charts of the other bigwig tech stocks, that have driven the broad stock indexes higher the last few years, are similar to the Netflix chart. AAPL and NFLX are set up to retreat first.


NFLX, AAPL and GOOGL will likely top out with a multi-year top and begin rolling over say, anytime now through October. AAPL will likely roll over first and lead lower with NFLX right with it. These three will likely roll over first and then followed by FB and AMZN a month or two later (say August-November multi-year tops). If you are young and your chest is puffed out since you have made a lot of money on Netflix, it is likely wise to cash-out. That goes for any of these hotshot stocks.


You can always scale out by selling one-third of the position tomorrow, one-third in two or three weeks, and then the final third in about six weeks. Let that money sit in cash for a while since it is likely more important to be out of the market rather than invested on the long side.


Keystone does not own any position in NFLX currently but will watch that MACD line to see how it develops and perhaps short Netflix in the near future. AAPL and NFLX are the two on the radar screen for potential shorts. Obviously, if the above stocks place multi-year tops and roll over in the weeks and months ahead as explained, the broad stock market will as well. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.


Note Added at 7:20 PM EST on Monday Evening, 7/17/17: After the closing bell, Netflix earnings are released. Netflix reports a 1 cent miss on EPS and the top line is only in line. NFLX launches +9% to a new all-time high at 176.55 as traders choose to latch on to the higher guidance and the robust subscription increases. Netflix adds 5.2 million users versus 3.2 million expected. 4.1 million new subscribers are added internationally versus the 2.6 million expected. Domestically, 1.1 million subscribers are added compared to the 631K expected. Netflix should create joy in the tech and FAANG stock tomorrow. The NFLX monthly chart above is setting up for a potential long-term multi-year top (negative divergence across all indicators) as discussed so tonight’s joy may extend the topping process a few extra weeks. Loyal subscribers like the new content. At 4:53 PM EST, traders are throwing money at Netflix in the afterhours. NFLX jumps over +10.6% higher to 178.78. The stock is on fire with investors buying with total disregard for price. The Netflix subscription numbers have sent investors into a tizzy willing to buy at any price. A conference call begins in about one hour. The main question is will the subscriber growth continue? NFLX is up +11% to 179.37. The Netflix EPS miss and inline top line is completely ignored during the evening as analysts and television pundits tout the subscriber growth. The bulls are guaranteeing higher NFLX stock prices ahead. NFLX is up +10.6% to 178.80 as the Netflix conference call begins. Charts can only price in everything known up to the minute so after tonight's news, Keystone can update the chart above say in 2 or 3 weeks. Generally, the same analysis will likely hold with NFLX placing a multi-year top this year. That little long and strong MACD line forecasted  that a higher high would occur in price in the near-term on the monthly basis. The longer-term neggie d should remain in play.