The bulls are singing songs and dancing jigs of joy as the stock market floats higher. The SPX prints a new all-time closing high at 2933.68 on 4/23/19 (yesterday) overtaking the prior all-time closing high at 2930.75 on 9/20/18 seven months ago. The SPX all-time record high remains at 2940.91 from 9/21/18. The HOD yesterday was 2936.31 only five points away from the all-time high. S&P futures are flat about 90 minutes before the opening bell for the regular Wednesday trading session.
Traders want to buy even the smallest of pullbacks since the central banks have promised to print money forever. This price action is very similar to 2016 when the global central bankers colluded to save the markets. Short-sellers are running for their lives, throwing in the towel, creating upside short-covering rocket fuel. The banks have found love after earnings. Other company earnings hit a homerun which causes Joe Sixpack to run out and buy stocks.
Tech and chip stocks carry the broad market higher. NDX, COMPQ, SOX, XSD, SMH and XLK are all at record highs. Interestingly, however, none of the hot-shot high-flying techs such as FB, AAPL, AMZN, NFLX and GOOGL, the FAANG stocks, are at record highs. Alphabet (Google) is only a hair away so watch GOOGL to see if the broad stock market rally has more upside legs.
XLY, consumer discretionary, is at a record high. Of course it is. In this new Gilded Age, the wealthy continue buying the fancy and high-priced trinkets and bobbles. The huddled masses worry about making ends meet each month. The Trump administration would be expected to hype the US-China trade talks to keep the stock market rally alive and this morning there is news of more trade talks and everything is going swimmingly. Of course there is.
Keybot the Quant remains long the market and pegged at the maximum possible +100 level and is tracking copper intensely for the last couple weeks. The price action in the stock market is epic and historic but everyone is yawning.
On the daily chart, yesterday's joy gave a bump to the RSI for a higher high. The other indicators remain in negative divergence (red lines). Thus, price will need to jog, down one day up the next, to another matching or higher high, to get the RSI to roll back over into neggie d. After such a big pop in price, there is momentum, so price may remain buoyant today digesting the gain, if so, the jog move occurs in the subsequent day or two.
The RSI, stochastics and money flow are all at or coming off overbot levels agreeable to a pullback in the daily time frame. The rising wedge is ominous since the collapses can be dramatic. The upper band was violated so the middle band, also the 20-day MA, at 2879, is on the table and the lower band at 2810. The upper band at 2947 must be respected if the momo continues; this would be a new all-time record high above the current 2941 all-time high.
The volume candlesticks tell an interesting story. The two highest volume days over the last month are two sell days. None of the buying day's volumes are stronger than the two big sell days. That is the institutions passing off shares to Uncle Joe and Aunt Harriet that are caught up in the bullish television hype. The red circles show distribution days where the smart money is passing off shares to the dumb money.
The bulls are happy to see the pop in the RSI which provides a couple more days of life as discussed above. The golden cross occurred in late March and remains in play helping bulls. A pullback would have been expected when the golden cross occurred but again, all dips are bot strongly.
The ADX finally indicates a strong upside trend (blue box). Bears will need the ADX to roll back over to the downside. The Aroon is pegged at the epic +100 level indicating off-the-charts bullishness. This also occurred days ago at the same time the red line was at zero. It is impossible to get more bullish than that; the scale is pegged. And now, as price makes a new record high, the red ADX line is not at zero, and it would actually be expected to be negative although this is impossible, but rather sits at 20; a divergence.
There are enough gaps down below to look like Swiss Cheese so they are appropriately shown in yellow. Gaps are typically filled at some point in the future.
The SPX daily chart has wants to correct since late February early March but each pullback is met with strong buying on central bank promises, US-China trade talks, short-covering rallies and earnings joy. Keystone has highlighted the long and strong SPX weekly chart through this same time period and obviously it is dominating the price action. The low CPC and CPCE put/call ratios have also wanted a large pull back in the stock market for going on a couple months now.
Instead of the daily chart dropping from 40 to a 100 handles or more over the last couple weeks or so, and then returning higher to satisfy the weekly chart, price simply grinds higher. The top in the SPX weekly chart will likely dictate this near-term top. The bulls have pushed it this far so what is a couple more weeks?
The SPX weekly chart is in negative divergence across its indicators except for the MACD line in the very near-term (the MACD line on the weekly is neggie d as compared to the September record highs). Thus, the weekly chart likely needs another jog move, down one week up the next to a matching or higher price high, to negatively diverge the MACD line. So it continues to appear likely that the S&P 500 will top-out on the weekly basis say the first or second week of May (perhaps "Sell in May and Go Away") or perhaps sooner. This will lead to multiple weeks of downside and the low put/calls will surely kick in with negativity.
Since the upside joy continues day after day with traders dancing in the streets drinking Fed rum, ECB champagne and PBOC and BOJ rice wine, expect anything in the days and weeks ahead. It would not be surprising to see the S&P futures down 50 handles overnight at any day forward.
So summing up all the above mumbo-jumbo, watch copper closely. Bears need weaker copper or they got nothing. If copper weakens today or going forward it will tell you that the party is over. Watch GOOGL since it is teasing at new record highs. If GOOGL prints new record highs, it will take other FAANG and tech stocks higher and continue the broad market rally. If Google falters and rolls over, that will indicate the broad rally is out of gas. Watch the all-time record high for the SPX at 2941 from last September. The S&P 500 was only 5 points away yesterday. A new record high would be a big bull win and may push the momentum forward.
Watch the RSI on the daily chart above to see if it rolls over and identifies another top in this daily time frame. Watch the MACD line on the SPX weekly chart since it will likely identify the multi-week top in early May. Be prepared for negativity to arrive at any time, any day, any hour 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.
Note Added 9:38 AM EST: The Wednesday, 4/24/19, session is off and stumbling. Stocks are flat. Interestingly, the RSI is now dead flat as price prints a matching high. No need to wait for a couple-day jog. The RSI is quickly in negative divergence again. Copper futures are up +0.3% (lower than a couple hours ago). GOOGL is down -0.3%.