Thursday, June 4, 2020

NYMO McClellan Oscillator and NYA NYSE Composite Daily Charts; Near-Term Top At Hand



The NYMO, McClellan Oscillator, is back up in the red zone above 92. The red circles show stock market tops and the green circle shows the March bottom. What do you think will happen going forward? The collapses from rising wedges, as shown on the NYA, the NYSE Composite Index, chart, can be quite dramatic.

Remember to keep watching the NYA 40-week MA cross one of Keystone's key intermediate and long-term market signals. The 40-week is at 12624 with price at 12302 using the 200-wk MA at 12242 as support. This is high drama. If the NYA pokes above 12624, the bulls will have a big party with stocks headed to record highs. If NYA stalls here, and is unable to attain 12624, look out below. Equities will likely collapse down the rabbit hole going forward for the remainder of the year. 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, June 3, 2020

CPC and CPCE Put/Call Ratios Daily Charts; Rampant Complacency, Lack of Fear and Euphoric Bullishness Sets Up Epic Stock Market Top



The stock market is in a melt-up celebrating ECB President Lagarde's promise for more easy money tomorrow morning and Federal Reserve President Powell's pledge for more juicy goodies next Wednesday, 6/10/20. In fact, Powell proclaims across the land that he has "limitless" tools available to keep the stock market elevated. Madame Lagarde will swim out to the stage tomorrow, in Olympic form, and synchronize the new bond-buying program with the global central banker cabal. Lagarde already promised a big bazooka but the natives have become reckless so she had better show up displaying two big bazooka's in the morning (lunchtime European time).

Comically, the SPX will be up 200 points before it falls 200 points. Keystone wanted to show the two charts above because you must realize that over the coming few days, you will witness the start of something so wild that it will be talked about for decades to come. The stock market is printing an epic top right now and the only question is how far she will fall.

No one sees it coming at all. The SPX PE is at 22 and traders are sloughing that off like warmed-over meatloaf. There is only one belief and that became apparent on the floor of the Big Board today. A shrine was erected in Honor of the Federal Reserve. Traders kneel in front of a cardboard cutout of Chairman Powell. They Praise the Glory of the Fed and its ability to make stock market prices rise forever. The Fed is the new modern-day money and market God. Praise Be to Lord Powell.

Since the stock market will never go down again, as every man, woman and child believes, investors are getting out of hand in their portfolio positions. Fred Fafooshnik, who fancies himself as Jesse Livermore incarnate, decided to place his entire life savings in the quintuple 5x ETF that is long the S&P 500. Fast Freddy, that's what the gal's call him around town, then bot AMZN stock with his paycheck. Even Pastor Brown, that lives in the run-down rectory across from the church at the end of town, took last Sunday's collection plate and bot AAPL stock. He told the altar boys that the Lord would think it is alright because it is guaranteed to triple in only a year or two.

Late Monday, the stock market received a strong short-covering rally and that feel continued today. One by one, those short the market could no long endure the pain. Were you one of them? Traders will hold on until they cannot take it anymore. A lot of folks covered shorts today and officially gave up on stocks ever going down again. This is evidenced by the low put/call ratios now at record lows. Complacency and fearlessness is rampant in the markets. Investors are euphorically bullish expecting the rally party to never end. They are about to get hit in the face with a 2x4 (two-by-four; a stick of lumber). 

The near-term top has been very elusive in recent days as the SPX price has rocketed higher. The bulls have the central bankers in their camp. The full moon peaks for the month on Friday at 3:12 PM EST. Stocks are usually bullish through the full moon. Stocks are usually bullish to begin a month, like now. Stocks are bullish 80% of the time the couple days going into the Fed meetings which is next Wednesday. The bulls are laughing since everything is going their way and they tell the bears to lick their shoes. Sally, the platinum blonde receptionist in the lobby, yells out that she bot NFLX stock with her entire paycheck last week.The cab driver, shoeshine boy and doorman all say that "Stocks will never go down again." 

Of course that is when they do. The CPC is down to 0.40 not seen since 2014. That means traders are the most bullish and confident in six years. The CPC is down to 0.69 not seen since the Jan-Feb stock market top this year. People are throwing money at the stock market right now. A chimp is picking stocks for one trader. Another is throwing darts at the stock pages. It's all fun and games since everything goes up on central banker liquidity forever (moral hazard).

The bulls are trying to keep stocks elevated into the Fed meeting next Wednesday but one step at a time. Lagarde is in the limelight tomorrow displaying her bazooka's. This puppy can collapse at anytime. Same dealio as the last hundo and a half points; the top is set to occur at any hour any time any day forward. It is likely going to be historic. Ditch your longs and bet heavy on the short side; big blocks of shorts. Go for it. The NYMO is above 92 signaling a near-term top in stocks. You do not get these opportunities often. A top is in here somewhere and when it drops it may be nasty and fast.

The SPX 2-hour chart is in negative divergence so it has topped out. The bulls have managed to goose the RSI and MACD higher on the SPX daily chart which wants to now add 1 to 3 days of buoyancy. The bulls are trying to keep the turd afloat into the Fed decision next Wednesday and hope that more easy money will take stocks even higher. However, considering the drama the last couple weeks, when she starts down, it may be super fast, even a flash crash. Plan accordingly.

The SPX weekly chart continues showing long and strong indicators so this will have to be monitored going forward. Bulls may try to keep stocks elevated which may provide time for the weekly chart to set up negatively and take it all lower for an extended time, or, stocks tumble hard and fast say for a week or two, but then recover again to the current highs, when the weekly will be neggie d, then stocks roll over again for multiple weeks.

Keybot the Quant, Keystone's proprietary trading algorithm, remains long. Keybot takes the smoothest path possible through the trading year and is not programmed to catch tops and bottoms. Stocks should roll over at anytime forward due to the technicals explained in recent days and then Keybot flipping short would act as a confirmation of the downside.

Get ready. Stocks will top out at anytime ahead and the fall is going to be large. Take your pick; 100 S&P points,? 200? 300? Maybe more to the downside? 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.

The Keystone Speculator Coronavirus (COVID-19) Infection Rate Model Update 6/3/20; Indonesia, Philippines, Egypt, Kenya, South Africa, Mexico, Honduras, Columbia, Brazil, Peru, Bolivia, Chile, Argentina, Bangladesh, Pakistan and India are in COVID-19 Hell; America Continues Reopening the Economy; US Active Cases Curve Finally Flattens (Tentatively); Texas, Arkansas, North Carolina and California are Troubled States; Second Wave Worries Continue; US-China Relations Deteriorating; Population Becoming Complacent About COVID-19; Coronavirus Article 9





By K E Stone

Communist China’s Wuhan coronavirus (COVID-19) bioweapon has infected 6.5 million people around the world murdering over 383,000 souls. 3 million people have recovered. The Wuhan killer disease has attacked and sickened 1.9 million Americans (0.6% of the 330 million US population) murdering over 108K United States citizens. 646K have recovered.

Virus, schmirus. This is the way the public is beginning to think. The coronavirus news has settled down significantly. It is overtaken by the killing of George Floyd a black man in police custody. The cop allegedly kept his knee on Mr Floyd’s neck until he passed out and died (the video appears to be conclusive). Protests and riots break out in the major cities. Looting is rampant for the last week. Ironically, the government requires the looters to wear a mask due to the virus which also hides their identity; a criminal's dream. The protesters are not following social distancing rules. The COVID-19 pandemic fades into the background as the police brutality against folks of color takes the spotlight.

USA has the most number of total coronavirus cases in the world followed by Brazil, Russia, Spain, UK, Italy and India, respectively. With deaths, the US leads followed by the UK, Italy, Brazil, France and Spain, respectively.

An update for The Keystone Speculator Coronavirus Infection Rate Model (TKSCIRM) is provided and tweaked since another 10-day period passes and more data and information are available. This is Article 9 in the coronavirus series that provides real-time information for historians, teachers, students, journalists, economists, market participants, corporate executives, financial managers, doctors, nurses, medical personnel, researchers, public officials and politicians studying the COVID-19 pandemic. This ninth article is published on Wednesday, 6/3/20, as the S&P 500 catapults to new highs for the rally off the March bottom low the SPX now up to 3123.

As mentioned in the prior articles, the Worldometer web site is very useful in tracking the coronavirus (COVID-19) around the world and its link is provided. Charts above are provided courtesy of Worldometer and annotated by Keystone.

The Keystone Speculator Coronavirus Infection Rate Model (TKSCIRM) forecasts the peak date in active coronavirus cases for any country or region. TKSCIRM monitors the Worldometer new case data for a country or region and identifies the date of the peak in new cases (New Case Peak Date). Once this occurs, the active case bell curve will peak in 1 to 4 weeks depending on how the virus situation is handled. If the country, region or state is well-prepared, the active cases will peak 11 days after the new cases peak. If the country is not well-prepared, like the US, the active cases will peak in 28 days. If a US state, add 28 days to the New Cases Peak Date to arrive at the Projected Active Cases Peak Date.

The US active cases chart, shown above, the bell curve which represents the maximum strain on medical facilities, has topped out and is rolling over. Finally, some good news. American healthcare workers are going to catch a break and should notice a dramatic drop-off in active virus cases in a week or two when the right side of the bell curve will form. The ‘flattening of the curve’ term references the active cases chart where the top of the bell curve shape forms.

The US death curve is also shown above where a 120K deaths are expected in the US mid-month and then perhaps 130K by the Fourth of July Independence Day. The death curves are unforgiving for most countries, even those that succeeded in fighting the virus quickly. The curves keep sloping higher. The total estimation of US deaths will probably be in that 130K to 140K range.

The positive near-term direction will continue unless the increased human interactions recently bring on a second wave. For now, things are working out okay for many American states, and other nations, that are restarting their economies. However, plenty of countries, and US states, remain in trouble as highlighted below.

The active case bell curves have peaked, flattened and rolled over or are rolling over for the following nations that are on their way to better days ahead (barring a second wave).

China (Active Case Peak Date 2/17/20) (13 days after New Case Peak Date) (data is suspect)
South Korea (Active Case Peak Date 3/11/20) (8 days)
Switzerland (Active Case Peak Date 3/21/20) (11 days)
Austria (Active Case Peak Date 4/3/20) (8 days)
Australia (Active Case Peak Date 4/4/20) (13 days)
Iran (Active Case Peak Date 4/5/20) (6 days) (data is suspect) (now facing second wave but new cases have not yet exceeded the 3/30/20 New Case Peak Date but are extremely close)
Germany (Active Case Peak Date 4/6/20) (10 days)
Taiwan (Active Case Peak Date 4/6/20) (17 days)
Hong Kong (Active Case Peak Date 4/7/20) (9 days)
Hungary (Active Case Peak Date 5/4/20) (24 days)
Israel (Active Case Peak Date 4/16/20) (14 days)
Italy (Active Case Peak Date 4/19/20) (30 days)
Ireland (Active Case Peak Date 4/20/20) (10 days)
Turkey (Active Case Peak Date 4/23/20) (13 days)
Spain (Active Case Peak Date 4/23/20) (29 days)
France (Active Case Peak Date 4/28/20) (26 days)
Japan (Active Case Peak Date 4/28/20) (18 days)
Portugal (Active Case Peak Date 5/11/20) (31 days)
Singapore (Active Case Peak Date 5/12/20) (23 days)
United States (Active Case Peak Date 5/30/20) (37 days)

Ecuador
4/24/20 New Case Peak Date (blew away the prior 4/10/20 date)
5/21/20 Projected Active Case Peak Date
5/24/20 Active Case Peak Date (the Keystone Model almost hit it on the dot) (30 days)

Canada (North America)
5/3/20 New Case Peak Date
5/31/20 Projected Active Case Peak Date
5/30/20 Active Case Peak Date (the Keystone Model almost hit it exactly)

The active case bell curves have not peaked for the following nations or it is not possible to verify that they have topped-out. These nations remain mired in the coronavirus quagmire.

UK (Europe) (data is suspect)
4/10/20 New Case Peak Date
5/7/20 Projected Active Case Peak Date (cannot confirm that the peak is in)


Netherlands (data is suspect)
4/10/20 New Case Peak Date
5/7/20 Projected Active Case Peak Date (cannot confirm that the peak is in)

Belgium (data is suspect)
4/15/20 New Case Peak Date
5/13/20 Projected Active Case Peak Date but the chart keeps running higher

Sweden (data is suspect)
4/24/20 New Case Peak Date (4/8/20, 4/30/20, 4/24/20, 4/30/20, 5/29/20, 6/2/20 are highs)
5/21/20 Projected Active Case Peak Date (cannot confirm that the peak is in)


Russia (data is suspect)
5/11/20 New Case Peak Date
6/8/20 Projected Active Case Peak Date (curve may have peaked 6/1/20)

Poland
5/12/20 New Case Peak Date
6/9/20 Projected Active Case Peak Date (curve may have peaked 6/1/20)

The countries below are in COVID-19 Hell. Patients are dropping like flies. These nations will need help from the other countries that have recovered. May the Lord Have Mercy on Their Souls.

Indonesia
5/21/20 New Case Peak Date (4/12/20, 4/14/20, 4/17/20, 4/28/20, 5/1/20, 5/13/20 huge days)
6/18/20 Projected Active Case Peak Date

Honduras
5/23/20 New Case Peak Date
6/20/20 Projected Active Case Peak Date

Kenya
5/28/20 New Case Peak Date (blew past the 5/21/20 date)
6/25/20 Projected Active Case Peak Date

Mexico
5/28/20 New Case Peak Date (5/8/20, 5/13/20, 5/22/20 big days)
6/25/20 Projected Active Case Peak Date

Philippines (data is suspect)
5/29/20 New Case Peak Date (blew past the 3/31/20 date)
6/26/20 Projected Active Case Peak Date

South Africa
5/29/20 New Case Peak Date (5/13/20, 5/17/20, 5/21/20, 5/23/20 big days)
6/26/20 Projected Active Case Peak Date

Brazil (data is suspect)
5/30/20 New Case Peak Date (blew away the prior 4/6/20 and 5/20/20 dates)
6/27/20 Projected Active Case Peak Date (may have peaked 6/1/20)

Columbia
5/30/20 New Case Peak Date (blew pat 5/23/20)
6/27/20 Projected Active Case Peak Date

Egypt
5/31/20 New Case Peak Date (blew past the 5/22/20 date)
6/28/20 Projected Active Case Peak Date

Peru
5/31/20 New Case Peak Date (4/13/20, 4/25/20, 5/13/20, 5/21/20 big days)
6/28/20 Projected Active Case Peak Date

Bolivia
5/31/20 New Case Peak Date (blew past 5/21/20 date)
6/28/20 Projected Active Case Peak Date

Chile
6/1/20 New Case Peak Date (blew away the prior 5/13/20, 5/22/20, 5/25/20 dates)
6/29/20 Projected Active Case Peak Date

Argentina
6/2/20 New Case Peak Date (blew past 5/22/20 date)
6/30/20 Projected Active Case Peak Date

Bangladesh
6/2/20 New Case Peak Date (blew past the 5/23/20 date)
6/30/20 Projected Active Case Peak Date

Pakistan
6/2/20 New Case Peak Date (blew past the 5/13/20 date)
6/30/20 Projected Active Case Peak Date

India
6/2/20 New Case Peak Date (blew away the prior 5/10/20 and 5/23/20 dates)
6/30/20 Projected Active Case Peak Date

The remaining hot zones are South Asia, Central America, Africa, and South (Latin) America. The southern hemisphere of Mother Earth is going into wintertime as the northern hemisphere proceeds into summertime. The Wuhan virus would be expected to spread quicker in the southern hemisphere during the cooler conditions, however, the virus is not subsiding significantly in the hotter weather.

Surprisingly, our neighbors to the south, Mexico, are having a tough time getting the virus under control. The worst three nations, in respect to taking the longest time to recover from covid, which will probably not be until the end of this month at the earliest and maybe early July, are the Bangladesh, Pakistan and India cluster. Maybe Pakistan and India will build better relations if they can communicate to each other positive comments and ideas about combating the coronavirus. Realistically, probably not. It may be a good idea to put a hold on that curry order.

For the US states that have flattened their active case bell curve chart recently, the top in the active case chart occurs an average of 28 days beyond the peak date in new cases, as per the Keystone Model.

Louisiana
New Case Peak Date 4/2/20
Active Case (which indicates the maximum strain on the healthcare system) Peak Date 4/23/20 (21 days)

New Jersey
New Case Peak Date 4/3/20 (4/16/20 also a peak date)
Active Case Peak Date 5/20/20 (47 and 34 days)

Massachusetts
New Case Peak Date 4/24/20 (a huge spike in new cases occurs on 6/1/20 for a potential second wave coming?)
Active Case Peak Date 5/20/20 (26 days)

Pennsylvania
New Case Peak Date 4/24/20
Active Case Peak Date 5/21/20 (27 days)

Illinois
New Case Peak Date 5/12/20
Active Case Peak Date 5/30/20 (18 days)

Washington (state)
New Case Peak Date 5/1/20
Projected Active Case Peak Date 5/29/20 (may have peaked 6/1/20)

These US states below show active cases rising so the strain on medical facilities will continue. Massachusetts may be slip-sliding away into this troubled group below.

New York (data is suspect)
New Case Peak Date 4/15/20
Projected Active Case Peak Date 5/13/20 but chart continues higher


Florida (data is suspect)
New Case Peak Date 4/17/20 (5/21/20 and 5/29/20 are big days)
Projected Active Case Peak Date 5/15/20 but chart continues higher

Ohio (data is suspect)
New Case Peak Date 4/19/20
Projected Active Case Peak Date 5/17/20 but chart continues higher

Texas
New Case Peak Date 5/15/20 (6/2/20 is another big day)
Projected Active Case Peak Date 6/12/20 (the active case curve is about to print a higher high)

Arkansas
New Case Peak Date 5/20/20 (6/1/20 is another big day)
Projected Active Case Peak Date 6/17/20

North Carolina
New Case Peak Date 5/30/20 (5/23/20 is another big day)
Projected Active Case Peak Date 6/27/20

California
New Case Peak Date 5/30/20
Projected Active Case Peak Date 6/27/20

Michigan, Maryland, Georgia, Connecticut, Virginia, Indiana, Colorado, Minnesota and Tennessee are states with higher numbers of infections than other states but the data and charts available do not allow for proper analysis. Texas, Arkansas, North Carolina and California are the worst states each not expected to peak with their active cases (max strain on medical facilities) until mid to late June.

California’s active cases chart is shown above and the top of the bell curve may not form until that late June early July time frame. That is an ugly chart perhaps the worst of the states where data is available.

For any state that has not yet reached its peak in the active case curve, simply identify what day the new cases peak and add 28 days to that date to project when the top of the bell curve will occur.

As mentioned above, the news around the coronavirus pandemic has drastically subsided. It was doom and gloom up through a couple weeks ago but many Americans are now acting like covid is yesterday’s news. Everyone is anxious to get back to work except the minimum wage folks collecting both unemployment and a $600 government check for not working. But this is little solace for the disadvantaged population. As the Federal Reserve stated, 40% of the unemployed are making less than $40K per year. The class war will be exacerbated by another further division of rich and poor in America.

The virus also exposed how many Americans are living paycheck to paycheck and there are millions, in all social classes. Even business owners, that are supposed to be smart, have no savings or money set aside, or access to money, if times go bad. Times went bad so it should be too bad for them if capitalism existed. But it does not and crony capitalism will try and save the day.

The COVID-19 news has fizzled. The daily press conferences are gone. Dr Fauci rarely talks to the president anymore. The doctors are going to have some egg on their faces for all the doom and gloom projections. Nearly 110,000 US citizens have died from covid which is an epic tragedy but at least it is far better than the original projections of millions.

The US is in fair shape but there is concern that the recent reopening of the economy, and protests that are placing people close together, will bring a second wave. Several states above appear very worrisome so the US is likely not out of the woods as yet. The economies have reopened in all 50 states although to a varying degree.

The coronavirus pandemic came in with a roar but may be going out with a whimper. The next few days are important to see if those bad states worsen, or not.

In Pennsylvania, 3% of the government is laid off; a paltry amount compared to common citizens and these folks are each day deciding who will be allowed to return to work. It’s another day of crony capitalism in America.

The CDC, NIH and WHO, the Three Stooges, are the gang that could not shoot straight. The CDC has ongoing problems with testing programs. Trust has been lost in these organizations and interestingly it may lead to the public not believing the next warning that comes along.

The S&P 500 catapults higher in the 6/3/20 session powered by central banker largess. The ECB is set to pump the stock market higher in the morning with more promises of easy money and the Federal Reserve is on tap next Wednesday, 6/10/20, providing more goodies. The SPX jumps 42 big points today, +1.4%, to 3123 the highest level since early March.

The New England Journal of Medicine says hydroxychloroquine is no better at treating coronavirus than a placebo. President Trump continues to attack the governors saying they are weak at handling both the virus and the ongoing riots. Of course he does since he will have someone to blame in the future. US and China relations deteriorate daily. A tit for tat of actions is beginning. China achieved their goal all along concerning the trade negotiations which was to run the clock out into the November election to see what happens.

The COVID-19 pandemic is going into a lull period unless the recent protests, riots, and reopening of the economy pushes the new cases and active cases higher. COVID-19 consumed everyone’s lives but it is now fading from view like a teenage love; the only remaining visual remnant of the virus is the face masks required to enter most buildings and stores. King Trump refuses to wear his mouth diaper even though it would be very useful in catching the daily verbal diarrhea.

USD US Dollar, GTX Commodity Index and SPX S&P 500 Daily Charts




The weakness in the US dollar is pumping commodities and the broad stock market higher. USD tops out on 5/14/20. This is where commodities, GTX, takes off higher. You can look at CRB, and other commodity charts, and see the same or similar behavior. Oil had a record-setting rally in May. The SPX also pops higher when the dollar rolled over.

For USD (do not confuse $USD which is the dollar index, like DXY, the dixie, with USD which is the 2x semiconductor ETF), the 20-day MA stabs down through the 50-day which is a negative sign for price and the dollar moves lower. USD came up for the back test of the 20, and fails, so the bears win and price falls apart. USD next tests the 200-day MA support and fails so the dollar needs to back kiss the 200. That falling wedge pattern is bullish so the buck will likely bottom on the daily basis over the next one to three days.

For GTX, the green upward-sloping channel points to more upside after a pullback to the bottom rail. A pullback in GTX would correspond to the dollar popping-up to back test the 200-day MA at 98.39. The 20-day MA pierces up through the 50-day MA which points to higher prices ahead for GTX on the daily basis.

For SPX, price gaps higher once the dollar weakness began. The S&P 500 travels up into the apex of that rising wedge which is a bearish pattern. The collapses from rising wedges can be quite dramatic (a fast and sharp flush lower creating carnage across the land).

It has been a little mini-saga looking for the near-term top due to the complacency and fearlessness in the stock market. It was a mystery if the SPX was going to test the 200-day MA at 3004; it did. After that, the hanging man candlestick prints, followed by another two days later, forecasting a direction change. Alas, price moves higher as the Fed and other central banks keep promising to print money forever. The goal is to always protect the wealthy elite class that own large equity portfolios.

Keep an eye on the US dollar since stocks and commodities will likely move inversely. The dixie is currently trading at 97.38 sneaking through that LOD from yesterday. The dollar bears are in control. S&P futures are up +13. Traders Kneel and Praise the Endless Power of the Federal Reserve. King Powell calls the Fed's power, "Limitless." Jay wants to make sure the wealthy class sleeps well at night. 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.

TNX US 10-Year Treasury Note Yield Daily Chart; Sideways Symmetrical Triangle; Tight Bands


The Treasury market is about to make a big move. The pink standard deviation bands are squeezing in tight and will shoot the 10-year yield strongly up or down. Tight bands only forecast that a big move is about to happen but does not predict direction. The 10-year yield, 20 and 50-day MA's are all at the same level at 0.68% (move the decimal one place over). The 10-year is currently printing at 0.70%.

The 20-day MA is crossing up through the 50-day MA which is an upward sign for yields ahead. The 200-day MA is up at 1.39% and it needs a back kiss at some point in time.

The sideways symmetrical triangle is in play. Yield has oscillated into a tighter and tighter range and now sits at the apex of the triangle having to make a decision up or down. The vertical side of the triangle runs from 0.50% to 1.00% or 50 basis points (bips). Thus, the triangle, and the tight bands, are about to squeeze out a big move of perhaps 50 bips which places the 10-year yield either at 1.20%-ish, or 0.20%, over the coming days. Perhaps we can entertain three outcomes.

First, since the broad stock market is set to roll over due to the extreme complacency and fearlessness, this risk-off environment would be expected to send yields lower. Stocks are sold off and some of that dough goes into Treasuries which drives the note and bond prices higher and yields lower.

Second, the broad stock market rally continues higher for a few more days into next week since the ECB plans on pumping stocks tomorrow and the Federal Reserve is on tap to pump next Wednesday. Isn't it a joke of a financial system? Don't worry; it's on its last legs anyway. So stocks would rally higher and money will be pulled from Treasuries to place into stocks sending note and bond prices lower and yields higher. This scenario would be associated with a good economic rebound and analysts will say that yields are going up for a good reason.

Third, is an interesting outcome. This is when stocks drop, as the complacency says is coming any hour any time, and yields rise. How could that be? If stocks are sold off, wouldn't that money go into notes and bonds driving yields lower not higher? Wouldn't investors be seeking (perceived) safety and buying Treasuries sending yields lower not higher? Well, yes, that is the first scenario. However, you are forgetting the end game. Perhaps we are at the end game? This is when confidence is lost in the Federal Reserve and other global central bankers and their Keynesian money-printing schemes. Once confidence and trust is lost in the central banks, it's over. The fiat money system implodes. Thus, for the third scenario, the end game, stocks sell off into oblivion but to everyone's surprise, yields rise. Global traders and investors will immediately realize that 'we aren't in Kansas anymore'. There you go. Three choices. Choose your poison. If this third outcome occurs, that tells you that the end game has begun and Uncle Sam begins walking towards the gallows, walking the green mile.

The fourth scenario of higher stocks and lower yields is ignored since that is the market for the last decade due to the central banker's largess. The Fed, BOJ, ECB, PBOC and over 20 other major central banks are printing money like madmen driving yields lower and stocks higher. The central banker easy money has pumped all asset classes higher to the point that no one truly knows what anything is worth anymore. The Fed and their sick friends have destroyed all price discovery in markets. The easy money has driven up stocks, bonds (higher prices lower yields), real estate, art, classic and antique cars, vineyards, collectibles, any asset class that you want to mention. It is sick and has an expiration date at some point forward.

The four horseman of the global financial Apocalypse, the Fed on the white horse, the PBOC on the red (commie) horse, the ECB on the black horse and the BOJ on the pale horse, are, as Ezekiel says, here to release sword, famine, wild beasts and plague on the world. 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 9:50 AM EST: The SPX pops 26 points to 3107 with the 10-year yield up to 0.74% so scenario two is occurring. Any minute, someone will say that yields moving higher are a good thing. Will scenario two slip into scenario three? Only time will tell.

Note Added 4:43 AM EST on Thursday Morning, 6/4/20: The SPX finishes the Wednesday session up a big 42 points, +1.4%, to 3123. The S&P 500 is up +2.6% this week. The 10-year yield rises to 0.76%. S&P futures are down -10 this morning with yields hanging steady at 0.75%-0.76%.

Tuesday, June 2, 2020

MSFT Microsoft Weekly Chart; Double-Top (M-Top); Overbot; Negative Divergence; Loss of Trend; Aroon Negative Cross


Mr Softy is about to go limp. MSFT is a stalwart outperformer the last few years pumping the stock market higher, especially the Nazzy indexes. A lot is said about the FAANG stocks (FB, AAPL, AMZN, NFLX, GOOGL) but you must add Microsoft to that list. However, price comes up for the double-top, or M-Top, with the chart indicators in universal negative divergence. It's over in the weekly time frame.

The stochastics are overbot agreeable to a selloff ahead. Price is extended above it moving averages requiring a mean reversion like earlier this year. Interestingly, price is not at the upper standard deviation so if you are a MSFT bull, there is a tiny sliver of hope for you to hold on to (price may float a bit higher if there is happy talk about Microsoft or the economy or more central banker money-printing).

A back kiss of the 20-day MA at 170 and 50-day MA at 154 are on the table. The 150-day MA sloping higher proving that the ticker is in a cyclical bull pattern. The ADX is down at 25. Note that for the rally earlier this year, the ADX was ramping higher and above 40. For this rally it should be the same, but it is not. The ADX is actually moving lower proving that the rally is NOT a strong uptrend. The Aroon negative cross occurs making for happy bears but the bulls are hoping for a repeat of 2019 when a positive reversal occurred and it was off the races. You can see that the chart is in far different shape now. 

Simply short MSFT from here forward for next few weeks with confidence. The hourly charts hint at a rolling top rolling over. The MSFT monthly chart is also in neggie d except for the MACD which you need to watch closely. The MACD remains long and strong hinting that after a multi-week selloff, Microsoft will want to come back up again to the current highs, on the monthly basis. However, this is not cast in stone. Once the selling begins in earnest, the MACD on the monthly chart will likely bend lower and by the time June ends, it may display neggie d. What does all this mumbo-jumbo mean? It means that there is a very high probability that these current highs in Mr Softy, that match the highs from February, may be the long-term highs for the ticker and not seen again for months and years. Plan accordingly if you are long MSFT and enjoyed the big ride up, and then endured the last few months of turmoil and pain. If so, "Sell Mortimer, sell." Keystone does not have a position in MSFT right now but will short it going forward. 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.

Monday, June 1, 2020

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



The euphoric fun party in the stock market continues.It is fun to watch. Everyone milling around, happy as pigs in mud, sucking down Fed wine and ECB champagne with another case of the former coming next Wednesday, 6/10/20, and a few special bottles of the latter coming this Thursday morning, 6/4/20. Folks long the stock market are so happy now. They feel invincible. They do not realize that they are going to be cut off at the knees first, then lanced and then their heads lopped off, landing on a platter. It is likely not going to be pretty and display lots of carnage. Oh well, that's the way it goes.

The CPCE put/call ratio is back down to the lows from a few days ago. The complacency is off the charts signaling a significant top at hand. A -5% to -10% drop would not be surprising. The euphoric bullishness is evidenced by business media commentary each day. GS has reversed its somber call on stocks going forward now calling the all-clear for equities. All the bears have left town. The local costume rental store just put a sign in the window for a special on bear suits; no one wants them anymore. Yogi and Booboo flew off to Bermuda. Smokey the Bear is carried out head-first (on a stretcher) from the Big Board floor. 

The seniors at the bingo parlor are bragging to one another that they now own the FAANG (FB, AAPL, AMZN, NFLX, GOOGL) stocks. Matilda, the bossy lady that refuses to be outdone by any of the other blue-haired gals, steps up onto a metal chair in her orthopedic tennis shoes and exclaims that she took her whole life savings and bot Apple stock. The hall went dead quiet then erupted into great applause. Everyone said that Matilda was always the smart one and all planned to buy more stock tomorrow.

It is a hoot for a technician to watch the price behavior now because markets are about to pull back, probably big-time, and few know it. The SPX turd is kept afloat by ongoing central banker money-printing promises, happy vaccine talk and happy Trump speak promising more goodies. Investors are ignoring the coronavirus (COVID-19), the little thing that has killed well over 100K Americans and counting.

Mr Floyd, a black man, is allegedly murdered by a white cop while in custody, and the video displays the dirty deed plain as day. Protests erupt into riots in many cities and around the world. Looters, which is anyone disadvantaged in the US, take advantage of the situation, to grab new electronics, flashy clothes, Nike sneakers, and everyday needs from dollar stores. They figure the elite privileged class has raped the country for all its worth so they better grab some while they can. The class war has begun. You ain't seen nuttin' yet. Ahh yes, the days of youth as a Teenage Anarchist. Life is interesting.

That initial pullback in May on a low put/call ratio gave up about 110 points so this coming selloff should be more than that. On the SPX daily, price should pull back to the 20-day MA at 2931 or 21-day MA down at 2926 (2920-2940) which is also price support. That would be a 130 points. Since the complacency is off the charts, traders need to be taught a lesson so a quick trip to test that prior low at 2820 is definitely on the table. That would be a 230-point flush lower. Now we are talking. Do not forget. We are in flash crash territory considering the fearlessness in stocks and elevated prices.

As the selling starts, it will be fun to watch the rats leaving the sinking ship. The SPX daily and 2-hour charts are good to go for the downside. The SPX 2-hour price comes back up for a double-top, or M-Top, almost, so it will be in neggie d in an hour or two after the Tuesday morning opening bell. It's ready. Simply push it off the cliff and it will fall far. As a professional technician, this is fun to watch. At anytime, all Hades should break loose in the stock market and thus, probably in the main stream news events 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.