Tuesday, December 30, 2014

SPX 30-Minute Chart 8/34 MA Cross

The bears take a firm shot across the bow at bulls pushing the 8 MA under the 34 MA (by 8 pennies) to signal bearish markets for the hours ahead. If the bulls want to stop the negativity they have to do it pronto, immediately, and spike the SPX higher, otherwise, markets will continue to leak lower. The indicators are weak and bleak and stochastics not yet in oversold territory so the door is open to lower prices. The rising wedge, overbot conditions and neggie d (red lines) shown above and discussed in the previous chart create the spank down. Is the Santa Claus rally in jeopardy? Will Santa fail to call on Broad and Wall? For now, Santa's sleigh is stuck in a roof gutter and may not become airborne again.

December started at 2067.56 and there are less than two days remaining in the month. Key S/R is 2093, 2089, 2075-2076, 2067, 2061, 2057, 2054 and 2040. The 20-day MA is 2054.22. Watch the 8/34 cross on the 30-minute to see if the bears continue to growl, or, if they choke and the bulls take over with the positive 8/34 cross again. 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 11:59 AM: The SPX is 2084.51. The 8 MA on the 30-minute is 2087.30. The 34 MA on the 30-minute is 2089.79. The bears are receiving a touch of downside separation as the 8 MA leaks lower. As long as SPX price stays under the 8 MA now at 2087-ish, market bears are fine and will drag prices lower. If the SPX moves above 2087-ish, then the bulls will be preparing to punch the bears in the face. The 8 MA is under the 34 MA so the bears are in charge for the hours ahead.

Note Added 12:04 PM: SPX 2085.01.

Note Added 1:34 PM: The SPX is 2082.84. The 8 MA on the 30-minute is 2083.82. The 34 MA on the 30-minute is 2089.32. So the separation remains between the 8 and 34 MA's making the bears happy but the SPX price is trailing sideways and not making any headway lower. Thus, the 8 MA drops down under 2084 and price is only one point away. Market bears must keep the SPX under 2083-2084 and heading lower to stay in control. Market bulls need to push the SPX above 2083-2084 and you will notice stocks recovering. This is a pivot point with the SPX at 2082-ish; it must decide to either bounce or die from here.

Note Added Thursday, New Years Day: It died; the SPX gave up the ghost through Wednesday finishing with a negative month (under SPX 2067.56). NYA 10780 is critical and will determine if the bears actually got game, or not.  Happy New Year to all!

America Mired in Deflation; A Graphical Representation of Keystone's Inflation-Deflation Indicator

At year end, a look at Keystone's Inflation-Deflation Indicator is informative. Despite the universal consensus touting inflation, the deflation cloud lingers. Europe remains mired in deflation and the question is whether that deflation will be exported to the US this year. According to Keystone's indicator, the US has been in deflation since August. The lower commodity prices create the deflationary affects with the CRB plummeting to five-year lows not seen since 2009. The 10-year yield is down to 2.19%. In early 2009, the Fed saved the stock market with QE1 the beginning of the Keynesian money-printing scheme. This central banker intervention continues globally along with low rate polices and the ongoing Fed ZIRP (zero interest rates) Forever policy.

The inflation versus deflation debate rages on between traders, investors, economists, analysts and all market enthusiasts. Each side highlights anecdotal evidence to prove their case. Inflationists tout high food, energy, oil (energy and oil now lower), insurance and college tuition costs, as well as increasing home prices, while deflationists highlight long-term weakness in commodities (oil and commodities are weaker in recent weeks), lack of wage growth, falling Treasury yields and stagnant house prices to bolster their case. The flat to lower wages is very important. Inflation will not exist without rising wages; this is why you want to watch the wage component in the monthly jobs report the first Friday of each month. Last month the inflation side receives a slight bump in wages that has increased excitement that the US economy is finally clicking into gear. The wage data for the Monthly Jobs Report on 1/9/15 is arguably more important than the actual job number and unemployment rate. Wages are generally remaining flat so inflation remains on a milk carton (missing). The UK economy appeared to be in solid recovery mode but is now waning as realization sets in that wages are not increasing and noninflationary, or more correctly, disinflationary pressures are developing or in place globally.

In the States, the US economy slipped back into Deflation in August according to The Keystone Speculator Inflation-Deflation Indicator. During the spring time this year into summer, the inflationists were on a roll. Oil prices were rocketing higher as well as energy costs and everyone took notice of the rising food prices at the super market choosing to eat spam instead of steak. The indicator was above 3.00 in the middle neutral zone where inflationists and deflationists fight it out but the indicator never moved anywhere near inflation at 3.60 and higher.

This summer during July and August, the indicator drops into disinflation playing around between 2.90 and 3.00 due to the falling 10-year Treasury yields down towards 2.30% and lower and the dropping CRB Commodity Index under 290 and lower. Keystone's indicator falls into deflation in August which always creates a huge gasp of shock and surprise from the 95% or more of investors and traders that universally agree that deflation will never exist and inflation should be arriving any minute (due to the obscene Fed money printing).

Money managers parade across television and computer screens daily 100% guaranteeing that note and bond yields will move higher--and some have been promising that since late 2009. The consensus continues to have the Treasury yield direction wrong and stubbornly remains on the soap box for higher rates since, well, more time has passed and rates have to go up, don't they? That at least is the thinking but remember, there is no one alive now that traded through the Great Depression that can provide insight into this current epic and historic market period that perhaps only occurs at an 80-year-ish cycle period or multi-decades stock cycle period a la a Kondratiev Winter.

The Treasury yields typically move in the same direction as the equity markets since money usually moves from stocks into bonds and from bonds to stocks depending on risk-off, or risk-on, respectively. Higher yields (lower Treasury prices due to low demand) = higher stocks = a move towards inflationLower yields (higher Treasury prices due to high demand) = lower stocks = a move towards deflation.

In normal markets, copper and commodities will push and pull markets in the same direction but the central banker money overrules all market fundamentals. Price discovery is lost across all asset classes due to the near six years of central banker intervention. No one truly knows what any asset is actually worth anymore. As long as global QE and the Fed's ZIRP Forever policy continues flooding the markets with cash, the stock market floats higherThe big upward move in commodities earlier this year (spring 2014) is what created the inflation buzz. The CRB went from 275 at the start of the year to nearly 315 at the June peak so this move pushed Keystone's indicator above 3.00. Now the CRB collapses from near 315 down to 233 over the last six months; an epic -26% bear market failure that quiets the inflationists.

The economy was in disinflation and deflation for much of 2013 but this did not have a negative effect on the stock market. The Fed's easy money funds dividend and buyback programs to pump stock prices higher nullifying regular expected negative market affects. In addition, the easy money is used to help fund M&A and tax inversion strategies. The free money is making the wealthy super wealthy since they own stocks at the expense of the middle class and poor that are knocking on doors unable to find a job. The Fed has created an elite society in America; the rich are richer and the poor poorer. President Obama is in full agreement with this direction since he appointed Fed Chair Yellen, Queen of the Doves, to the FOMC because she is a Keynesian that prints money to send the stock market higher. The president and republicans and democrats in Congress are all part of the elite class.

The 10-year Treasury note price is used for the denominator of The Keystone Speculator Inflation-Deflation Indicator. The 10-year Treasury price is 100.53 with a yield at 2.19%. The 10-year yield was over 3.00% to begin 2014, over 80 basis points higher. The CRB Commodity Index is 233.24. Taking a look at the numbers;

CRB/10-Year Price = 233.24/100.53 = 2.32

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

The last time that rampant inflation existed in the US was from 2006 into 2008 as the stock market peaked out. During the Fall 2008 market crash into early 2009, commodities collapsed and investors ran to the perceived safety of US Treasuries driving yields lower. The pundits pound the table currently that low oil and commodity prices lead to great things ahead but it did not work out that way in 2008-2009. Instead, lower commodity prices was a harbinger of deflation and a stock market crash.

The indicator collapsed into deflation in early 2009. Former Fed Chairman Ben Bernanke is labeled as a 'student of the Great Depression' and his main takeaway is that the Fed did not provide enough stimulus quickly enough to prevent the depressionary malaise that developed through the 1930's. Therefore, Bernanke fired the huge QE1 money bazooka in March 2009 to save the country from a deflationary spiral. As the chart shows, the quantitative easing programs did work sending the indicator up into the neutral zone headed towards inflation. Bernanke must have been proud with his chest puffed as he signed autographs. However, the US budget crisis and other economic softness created more concern in 2011 which led to the August 2011 stock market waterfall crash. 

In May 2011, the indicator was above 3.60-3.70 signaling the existence of inflation but it was very brief. If you blinked you missed it. The indicator peaked out in 2011 and quickly retreated (inflation was very noticeable but it did not have staying power) as the stock market collapsed. The Fed has received a lot of heat over the last few years for remaining worried about disinflation and deflation but the chart clearly shows the Fed is correct to worry. The only thing the Fed has been correct about is its concern over disinflation and deflation. The FOMC is likely monitoring a similar technical presentation as explained in this article which definitely shows a country mired in deflation with inflation nowhere in play despite the obscene Keynesian spending.

Since the 2011 peak, the indicator has moved steadily lower from above 3.60 down to 2.33 (from neutral down through disinflation into deflation). The indicator signals deflation from August 2013 until January 2014.

Chairman Bernanke announced QE1, QE2 and Operation Twist to stop the free-fall into a deflationary spiral from 2009-2012. In late 2012, the Fed threw the kitchen sink at the markets with the promise of QE3 Infinity, timed with the ECB's OMT Bond-Buying program, and also QE4 Infinity and Beyond (which replaced Operation Twist with outright purchases), when the stock markets were already somewhat elevated (the QE3 and QE4 pumps are now simply referred to as the QE3 Infinity program). This orgy of Fed quantitative easing, along with the BOJ bludgeoning the yen (sending dollar/yen currency pair and Japanese and US stocks higher), creates the bullish equity markets all through 2013 and into the September 2014 stock market top.  In addition, China, the BOE and ECB are all pumping the markets with easy money as well.

The current 2.32 reading is the lowest since 2009 sending a shiver down the spine that a Great Depression redux definitely remains on the table. Folks continue to tighten their spending to stretch family budgets. Purchases are delayed since store discounts are increasing and the item will be cheaper in a couple weeks (a hallmark sign of deflation). A cash society is growing in the US since common folks can avoid losing money to government taxes. The wealthy, made wealthier by the Fed with obscene stock market gains are spending their winnings on luxury goods, high-priced real estate (creating a house price bubble), art, vintage cars and collectibles (all are asset bubbles). The central bankers threw the kitchen sink at markets over the last two years but the US continues to slip-slide into deflation anyway. Deflation is a powerful force and perhaps it needs to extract its pound of flesh. Deflation was cheated and not permitted to play out in March 2009 when Bernanke stepped in with QE1.

An over leveraged economy like 2006-2008 needs to result in failures so the slate can be cleared as capitalism dictates. Free markets and capitalism are dead in America since the government now saves companies from failure; especially the corrupt banksters that are in bed with the politicians. Society, especially the elite class, does not want to experience the negativity and pain associated with the cleansing side of capitalism. People only want to experience the happy side of capitalism. So the Fed tries to paper over the problems using time to an advantage but as time goes on, the chart above says the Fed's grand experiment is failing.

The lackluster action in the Baltic Dry Index (BDI) and shippers indicate a global slowdown is ongoing. Ditto the drop in commodities and weak copper. It is interesting to watch the power of the central bankers as they pump equity markets higher but without the global economy kicking into gear it will be all for naught. The debt created will only end with a more drastic fall from grace than late 2008 early 2009 since a healthy market bottom was never allowed to occur (free markets were destroyed as the bad side of capitalism was not allowed to take place to clear the market in early 2009).

The pundits and analysts that say Inflation and even hyperinflation are at the doorstep are likely premature. Inflation and even hyperinfation is definitely expected in the years ahead but it may be years away still yet. Keystone is thinking that inflation will occur in sync with the 18-year stock cycle of 1964 (bear)1982 (bull)2000 (bear), and 2018 (bull). So the thought is that inflation and hyperinflation are perhaps two to four years away. Even if the 18-year stock cycle left translates a couple years, that would be 2016 still many months and a year or two away before rates would rise substantially.

The expectation remains that Treasury yields should move sideways and even leak lower for the next year or three. The 18-year bear stock market cycle should raise its head moving forward for the last four years of its cycle (now through 2018). Judging from history, it would not be surprising to see the stock market down 3 of the next 4 years to finish the 18-year secular stock market cycle.

Deflation is nasty and will surely affect everyone's lives. Since prices drop precipitously in deflation, consumers do not spend money since next week the price will be even cheaper. This economic behavior leads to a stagnant and very sick economy with businesses closing doors due to the lack of demand. Companies are hanging on currently with skeleton work forces hoping for business to pick up. A downward deflationary spiral occurs since companies fire workers that are no longer needed due to falling product demand. Europe is on the verge of falling into a deflationary funk a la Japan's lost two decades. Long-time readers of Keystone's missives fully anticipated and expected the current European deflation despite the consensus saying that deflation would not occur.

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 for several months and only one accident has occurred--and that was comically a human driver that hit the driverless vehicle. Just think of the 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. 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 wealthier taking advantage of the 2008-2009 crash while the middle class and poor (that do not own stocks) were thrown under the bus.

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!). These deflationary signals are ignored in the media. At some point, everyone will have to utter the 'D' word, deflation, and show respect to the 900-pound gorilla sitting on the living room sofa.

Watch Keystone's formula above, you can crunch the numbers to check on the indicator every few days. It is shocking to see equity markets print new record highs in recent months against a disinflationary and deflationary back drop. This behavior can only be chalked up to the amazing power of the central banker money-printing.

Inflation is not in sight despite the inflation-deflation indicator moving a touch above 3.00 in early 2014 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 one year 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 existThink back to the last period of rampant inflation in 2006-2008; you were likely enjoying happy raises at work, right? And probably not so much from 2009 to present? Correct? Food price increases tend to be seasonal and weather-related and work through the system over time as is occurring now with corn and wheat prices falling. Fewer folks are complaining about high food prices anymore.

What does all the above wind-bag mumbo-jumbo say in a nutshell? The current answer to the ongoing inflation-deflation debate, is, Deflationas much as everyone tries to fight it. After nearly six years of obscene Fed and other central banker money-printing, the economy is mired in deflation proving that Bernanke's grand Keynesian experiment, blessed and implemented by Fed Chair's Greenspan and Yellen, as well as dovish Fed members such as Evans, may be tragically failingPrepare 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. History may repeat. The bums standing on a street corner holding a tin cup in the 1930's would ask a passerby, "hey buddy, can you spare a dime?"

Sunday, December 28, 2014

Template for 2015 Predictions

Here is a template for anyone interested in recording your own predictions for 2015. The task is useful from an intermediate and longer term perspective and also provides comic relief come December 2015. Closing Prices are end of year next year 12/31/15. The Price Range is the high and low during 2015.

Keystone will post his 2015 Predictions in the days ahead.

2015 Predictions

SPX High for 2015:
SPX Closing Price for 2015:
SPX Low for 2015:
Dollar Range ($USD):  
Dollar Closing Price ($USD):
Dollar/Yen Range (USD/JPY):
Dollar/Yen Closing Price (USD/JPY):
Euro Range ($XEU):
Euro Closing Price ($XEU):      
2-Year Note Yield Range ($UST2Y):
2-Year Note Closing Yield ($UST2Y):  
10-Year Note Yield Range ($TNX):
10-Year Note Closing Yield ($TNX):  
2-10 Spread at End of Year (Starts at 152):
30-Year Note Yield Range ($TYX):
30-Year Note Closing Yield ($TYX):  
Will Yield Curve Flatten or Steepen?
Unemployment Rate % Range: 
Unemployment Rate % December 2015:
Will Any Monthly Jobs Report Be Under 200K Jobs?
Will Wage Inflation Appear in 2015?
GDP Average for 2015: 
WTIC Oil Range ($WTIC):
WTIC Oil Closing Price ($WTIC):
Brent Oil Range:
Brent Oil Closing Price:
Natty Gas Range ($NATGAS):
Natty Gas Closing Price ($NATGAS):
Gold Range ($GOLD): 
Gold Closing Price ($GOLD): 
Copper Range ($COPPER):
Copper Closing Price ($COPPER): 
Commodities Range ($CRB): 
Commodities Closing Price ($CRB):  
China Growth Rate % Average for 2015:
Technology Sector (XLK) Higher or Lower in 2015?
Financials Sector (XLF) Higher or Lower in 2015?
Health Care Sector (XLV) Higher or Lower in 2015?
Consumer Discretionary Sector (XLY) Higher or Lower in 2015?
Consumer Staples Sector (XLP) Higher or Lower in 2015?
Energy Sector (XLE) Higher or Lower in 2015?
Industrials Sector (XLI) Higher or Lower in 2015?
Materials Sector (XLB) Higher or Lower in 2015?
Utilities Sector (UTIL or XLU) Higher or Lower in 2015?
Telecom Sector (IYZ) Higher or Lower in 2015?
Retail Sector (RTH or XRT) Higher or Lower in 2015?
Transportation Sector (IYT or TRAN) Higher or Lower in 2015?
Homebuilders (XHB) Higher or Lower in 2015?

List Further Prognostications Below:

Assessment of Keystone's 2014 Predictions

It’s that time of year to assess Keystone's predictions from one year ago. The task always provides comic relief. Keystone expected the SPX to finish lower this year but it continues higher fueled by the central bankers. And now, it is time to see how far off Keystone was on his prognostications.

Summary: The predictions in the table are not bad at all with the exception of the SPX targets. Overall, Keystone's predictions for 2014 turn out to be about 66% correct; better than most other folks can achieve. Perhaps the 2015 Predictions, to be released in a couple days, will fare better.

Keystone's 2014 Predictions
It’s time for another year of predictions that will provide for laughs in December 2014. Analyst and trader consensus is expecting the SPX to move above 2000 in 2014. Perhaps they will prove correct, perhaps not. The power of the central bankers, especially the Fed and BOJ, can never be underestimated. Keystone’s prognostications this year is for the broad indexes to place a multi-year top a la 2000 and 2007, either in January, or in April-May. (SPX moves above 2K but no multi-year top unless it is the current top)
Keybot the Quant, Keystone’s trading algorithm, navigates successfully through each year so simply reference Keybot’s status in the left margin if you ever want to know the current market direction. Keystone continues to hold short positions and inverse ETF’s betting against the markets but those trades are under water to begin the new year. Market bears should receive a turn at bat in 2014.
The consensus expects Treasury yields to move higher and inflation to rear its head in 2014. Keystone continues to consider the disinflationary and deflationary scenario as far more likely. All of 2013 was disinflationary and deflationary despite the bullish stock market.  Keystone’s prognostications for 2014 are provided in greater detail below. The predictions circle the globe from Japan to China to Europe, and then back to the States. Many of the predictions go against the main stream consensus. The predictions make for great bedtime reading—guaranteed to put you to sleep. (Treasury yields do indeed move lower proving the consensus wrong again in 2014)

SPX High for 2014: 1880 (current 1850-ish high may serve as the top) (will end about 200 handles higher in fairness low is about 1740)
SPX Closing Price for 2014 (SPX Begins at 1848): 1575 ($105x15) (400 handle miss)
SPX Low for 2014: 1480 (250 handle miss)
Dollar Range ($USD):  77-85 (79-90)
Dollar Closing Price ($USD): 83.50 (90-ish)
Dollar/Yen Range (USD/JPY): 94-107 (100-122)
Dollar/Yen Closing Price (USD/JPY): 97 (120-ish)
Euro Range ($XEU): 1.24-1.38  (1.22-1.40 dead-on)
Euro Closing Price ($XEU): 1.28 (1.22)
10-Year Note Yield Range ($TNX): 2.05%-3.05% (1.90%-3.00% dead-on)
10-Year Note Closing Yield ($TNX):  2.50% (2.25%)
30-Year Note Yield Range ($TYX): 3.25%-4.00% (2.70%-4.00%)
30-Year Note Closing Yield ($TYX):  3.50% (2.81%)
Unemployment Rate % Range:  6.1-8.0% (5.8%-6.7%)
Unemployment Rate % December 2014: 7.8% (5.8%)
GDP Average During 2014:  +1.5% (+3.5, -2.1, +4.6 and +5 is an average of +2.75%)
WTIC Oil Range ($WTIC): 70-105 (55-107 dead-on)
WTIC Oil Closing Price ($WTIC): 83 (55)
Brent Oil Range: 98-118 (56-112)
Brent Oil Closing Price: 103 (60-ish)
Natty Gas Closing Price ($NATGAS): 3.10-4.50 (2.98-6.50)
Natty Gas Closing Price ($NATGAS): 3.20 (3.00)
Gold Range ($GOLD): 1050-1550 (1140-1380)
Gold Closing Price ($GOLD): 1250 (1200-ish)
Copper Range ($COPPER): 2.3-3.7 (2.8-3.3)
Copper Closing Price ($COPPER):  2.75 (2.84-ish)
Commodities Range ($CRB):  220-300 (234-315)
Commodities Closing Price ($CRB):  275 (234)
China Growth Rate % Average for 2014: +6.7% and weakness will be evident (it is hanging in there at about +7% and weakness is evident with commodity demand dropping)

The universal consensus by analysts is that about 117 in earnings and a 17 multiple will yield a SPX 1990 and higher. The earnings are pumped higher by buybacks reducing the number of shares rather than healthy earnings, therefore, earnings should be 10% to 30% lower. Adjusting the numbers would be an SPX of 1390-1790. Lack of proper earnings will be an issue in 2014. Keystone’s target for 2014 is SPX 1575, 105x15, and 2015 should be much lower numbers for the SPX. How about that? You are getting 2015 predictions already as well. Keystone is obviously the only analyst calling for weaker markets in 2014. (incorrect call on equities; buybacks continue to fuel stocks and the central banker liquidity continues pushing all asset classes higher)
The path of the SPX this year is based on the weekly and monthly charts. The weekly chart is content with never seeing another price high here on out, however, the monthly chart wants to see the SPX come back up after a sell off occurs to begin the year in January-February. The price behavior in the first half of 2014 may be similar to the 2007 top from the summer time into the market top at October 2007. This was a 5-month event. Thus, the SPX will top out with a multi-year top during the first-half of 2014 either in January, or April-May. (no multi-year top, yet)
SPX drops to the 1550-1680 area January-March, a quick drop of -5% to -15%, then a V bottom and spike back up to 1750-1850 in April-May, then down for more extended correction of -10% and more, potentially -20% or more, into summer time, with a multi-year top occurring for equities either in January-February or April-May. The behavior during 2014 should mimic the behavior during the Fall 2008 and August 2011 crashes. Equities will then move sideways with a downward bias through the back half of the year and finish lower on the year, down about -15%, about 275 handles, to end the year at 1575. (incorrect the swoon led to a historic Fed and central banker-induced recovery from October to the end of year)
Volatility (VIX) will run consistently higher in 2014. (it has perked up)
The 18-year cycle is the most reliable stock cycle and markets remain in the secular bear until 2018 give or take a year or two. Sharp and strong countertrend cyclical rallies usually occur within the secular bears; the 2003-2007 and 2009-2013 rallies are examples. The secular bear will start to reexert itself in 2014. Equities will finish lower on the year. (secular bear that ends 2018 still not exerting itself, yet)
Traders will be disappointed that the January seasonality does not point to a bullish year ahead (first day of January, the first week, the month of January, and the year will all be down). (January down but stocks recovered during the year)
Traders will realize that the central banker easy money is no longer helping since the economy is not improving and the massive debt is hurting the country. This creates a bit of a panic upon realization that the Fed is between a rock and a hard place, like a deer in the headlights. Markets will move sideways to sideways lower for the remainder of the year. (traders still believe in the Fed)
Treasury yields will not move higher as everyone expects. The 10-year yield may move to 3.25%, 3.05% is called out as the top above, but that would be as high as it goes. The expectation is for the 10-year yield to move sideways to sideways lower all year long. Traders will realize the scenario about yields moving higher due to a stronger economy is not occurring. Traders will buy Treasuries as the year moves along, sending yields lower, as the global economy weakens and deflation takes control. Global traders will seek Treasuries as a safe haven keeping yields in check. (good prediction)
Inflation will remain on a milk carton in 2014. Wages will remain flat and inflation cannot exist without wages rising. The current ongoing disinflationary and deflationary period, that the Fed continues to desperately try and prevent, will remain in place. The Fed will ultimately fail with their Keynesian policies. (inflation remains absent and no wage growth)
The arguments over whether or not higher rates mean a healthier economy will be moot since the economic data will weaken in Q1 and yields will not rise. Since rates will remain subdued, traders and analysts will be surprised that stocks actually sell off. Yields and stocks will move in the same direction in 2014, both up together, and both down together, with down experiencing a healthier portion of the attention during 2014. Down stocks and down yields are reflective of disinflation and deflation. The concept that the economy remains in a disinflationary and deflationary funk will become more obvious to everyone. Cash is king in deflation. This behavior means that the grand 5-year experiment by the Fed with easy money Keynesian policies will be a failure. (inflation is not occurring as stocks trade at record highs)
Yellen will pause the tapering of stimulus very early in the year since economic data will weaken in Q1. At the least she will hint that she will stop the tapering in the near future. Her dovishness will help stocks recover from the initial sell off in January-March. She will try to time her money pumping with the BOJ pumping that will occur in April. As time moves along, traders will begin to worry since tapering is on standby and everyone starts to realize the Fed is not helping the economy anymore and only hurting the country. The move to pause or increase QE will signal that the Fed has gotten it wrong, just like during the Great Depression, and then the real trouble begins. (collusion of central bankers is the story with a tag-team approach to global money printing that keeps the party alive)
Yellen will be tested early in the year as all new Fed heads are tested. This will coincide with the markets selling off in January-March and her dovish deeds will help create a market bottom in March-April. (yes, but Yellen talks dovishly and pumps the markets all year long)
Those waiting for all the money on the sidelines to come into the market will continue waiting. The reason the money is not put to use in the stock market is that people are using it to live on, perhaps plan for a child’s college education and other living expenses. The wealthy have become wealthier courtesy of Chairman Bernanke but the average person is struggling. Joe Sixpack was stuck paying the bill to bailout the banksters and the Fed, that consists of ex-GS employees (it is all incestuous), is only concerned about making their wealthy friends wealthier. Folks sitting in leather chairs each day behind mahogany desks are very out of touch with the common person. Money sits on the sidelines since folks need that money to live on. (money does remain on the sidelines although the end of year sees a large influx of money into funds)
Social unrest will increase in the US as the gap between rich and poor expands due to the Fed’s policy of protecting the rich. (very prescient)
Markets will be weak in 2014 since the main drivers in the market peter out. The Fed and BOJ easy money will lose its luster. The ECB will have trouble implementing stimulus. China’s economy will finally decelerate. The buybacks that pumped stocks in 2014 will fade. The Russian and Chinese wealthy that have pumped asset bubbles in art, collectibles, vintage cars, real estate, vineyards, etc…, are all in. Traders realize that there are no more buyers remaining to push markets or asset bubbles any higher, and the money on the sidelines stays on the sidelines. Down is the path of least resistance for stocks. (the ECB will be pumping the markets and the buybacks continue so these drivers send stocks higher)
A lock limit down or flash crash event will occur in equities this year on par with the 5/6/10 Flash Crash. (there are numerous mini flash crashes and software failures not as big as 5/6/10, yet)
A major geopolitical event/s such as war, terrorism, and/or a pandemic will occur this year. Traders and analysts will comment on how the economy was doing well until the event happens and blame the event for the failure of the economy even though the global economy is already weak under the surface. (Ebola was a threat but it is contained, so far)
A dirty (nuclear radiation) bomb will be detonated somewhere in the world, possibly France or the US. (incorrect)
Congress and the President will play their baby games during February with the debt ceiling limit creating angst in markets and contributing to the market sell off early in the year during January-March. (the early part of the year was weak then stocks recovered)
Japan will try and create ‘shock and awe redux’ in April 2014 weakening the yen to pump Japan and US markets. It is only briefly successful helping the Japan and US stock markets move higher from mid-March into May where another market top occurs that may or may not be above the top in January-February. Markets will not see these highs again for months and years. (it plays out with more BOJ stimulus pumping stocks into the end of the year)
Japan is a troubled nation due to the ongoing Fukishima nuclear disaster, the worst environmental disaster in the history of the world. Japan stocks should be avoided. The country will be labeled as radioactive and its products, food, etc… will not be trusted by its own citizens as well as other countries (like China is labeled as placing lead in all their products). This negative connotation will greatly hurt Japan. The Japan government is preventing any negative news from Fukishima hitting the main stream press but this media blackout wall will crumble as the year moves along. Everyone will realize that Japan and the Pacific Ocean is being poisoned daily by radiation from Fukishima. Radiation effects will also impact the west coasts of Alaska, Canada, Washington State, Oregon, California and Mexico’s Baja peninsula. The nuclear disaster and radiation contamination sours the mood of all global citizens as reality sets in over the severe gravity of the situation. (the contamination from Fukishima continues but it is all swept under the rug; the EWJ Japan shares stumble sideways all year long; the NIKK is up)
Japan’s JGB’s explode higher in yield signaling the BOJ losing control. JGBS is a potential play. (Japan yields continue to drift lower)
China’s long-awaited hard landing finally arrives in the first half of 2014 and shock waves are felt around the world. (it's in progress at end of year)
China-Japan relations will continue to strain over the Japan islands dispute but China will be preoccupied by the hard landing occurring and Japan will have trouble handling Fukishima. The island dispute will continue, however, since China wants the oil in that region, but somewhat calmer heads will prevail in 2014 concerning the island dispute since both will have other fish to fry. (situation is calmer but both sides remain at odds)
North Korea will not be an issue although they will continue to rattle their saber. (Sony cyber attack)
The ECB becomes much more active and innovative pursuing QE type stimulus measures which will weaken the euro but Draghi and European markets will face difficult challenges. (true and yet to play out)
Emerging markets will languish all year long due to the China slowdown but in general, some emerging markets will fare better by the end of the year than the developed equity markets. (dead on with China's SSEC recovering into year end)
France, Italy, Greece, Portugal and Spain will all drag Europe lower and maintain the ongoing recession and depression across the continent. (the problems persist as an ongoing economic malaise)
Germany will experience sluggish and slower growth. Once this main driver of Europe weakens, fear will grow. (true)
European stress tests will linger on all year long and become more stink-laden over time. The ECB, EU and IMF will try to sugar-coat the stress tests but the stink of perhaps as many as 10% of the banks in serious financial trouble will hurt global markets. (the stress tests are only a minor blip)
The German High Court will accept the constitutionality of the OMT as the politico’s ram it down the German’s throats. This will cause social unrest in Germany. (the angst continues with ECB wanting to go full-blown QE but Germany saying nein)
Europe will have great trouble and angst finalizing the banking union. A framework will be finalized and the facility opened in the back half of the year but it will have operational problems. (everything is watered down over time)
France will be in the spotlight for much of the year. Their economy is a mess and their high Muslim population will lead to social unrest and terrorism in France. (problems persist including farmer protests)
The Middle East turmoil will continue. All countries and regions are dead-set on hating the US and killing each other so conditions will deteriorate likely leading to a larger conflict. (ongoing)
Syria will be exposed for playing games with the chemical weapons agreement. The country will fall into further chaos, Asaad will not make it though the year, and Syria will be a worse mess with warloads fighting to take over regions of the country. The Middle East will deteriorate into many regional wars. (very prescient considering the ISIS Islamic State radicals rise out of Syria and now control large parts of Syria and Iraq)
Israel will strike Iran to destroy nuclear enrichment facilities. (not yet)
Russia, the Saudi’s and other Middle East nations will complain that the US shale oil is hurting prices and their economies. The lower oil prices will destabilize the Russia and the Middle East economies. (very prescient dead-on prognostication with the oil collapse and the Saudi, oil shale companies and Russia drama)
Protectionism will increase as the slowing global economy causes countries to start slitting each other’s throats. (ongoing as tariffs and fees increase)
The Obamacare health insurance law will continue to create headaches and the uncertainty and hassle will hurt the US economy and jobs and weaken the GDP. (Obamacare is a confusing mess but it motors on and the GDP prints +5%)
The GDP in the US will be lower than consensus estimates as the year moves along and the global slowdown takes hold. The inventory build, which created the higher 2013 Q4 GDP, will be exposed since the higher channel stuffing did not lead to more sales and instead businesses must lower prices to unload inventory. (GDP prints +5% in Q4 with an average at +2.75% for the year which is above the say, +2% average consensus for 2014)
Asia loves their gambling casino’s and considering that on-line gambling is on the increase companies like WYNN should do well. (they did then huge flame-out during the year)
The housing recovery will stall. Chinese and Russian investors as well as hedge funds have been buying all the real estate bloating prices into a bubble. (housing is stagnant)
Housing starts will average below one million per month. (no, data is poking above one million)
The cash society will continue to increase as more and more folks work ‘under-the-table’ for cash as well as pay for goods and services with cash to avoid paying any government taxes. This behavior will hurt local, State and Federal government budgets. Politicians will respond by trying to raise taxes even higher which will only create a weaker US economy moving forward. (cash society on the increase)
Violence along the Mexican border will decrease now that marijuana is legalized. Other States will approve pot for recreational use as they see the big windfall profits that Colorado gains without any significant downside as many fear-mongers projected. (things are quiet on the drug-smuggling front with Mexico and Colorado data shows less highway fatalities, less teenage use of marijuana and less violent crime all after pot is legalized)
The Dividend Stock Bubble will burst sending SDY and DVY lower during 2014. Folks will regret that they did not sell long positions. Keystone is shorting the broad indexes (in near-term). (the dividend stock bubble grows)
The Biotech Bubble will burst sending IBB and biotech stocks lower. Keystone is short MYL. The biotech warriors CELG, GILD, BIIB and REGN are all shortable. (it burst a little then regrew to bigger proportions)
Financials will underperform in 2014. Keystone is long FAZ. (bad call, losing trade, financials moved steadily higher despite flattening yield curve (fueled by Fed's easy money))
A major bank will experience a significant security breach from computer hackers which will hurt the banks and markets in general. (true, JPM and others)
Young folks will become disillusioned and discouraged with America. The college debt issue will continue to intensify since young folks cannot find proper employment, and must now also support older folks with Obamacare, while they try to pay off student loans. Young folks will drop-out and tune-in, so to speak, like the 1960’s and 1970’s. (ongoing and the young folks are increasingly protesting)
Congress will make an attempt at repatriating multi-national funds abroad so they can be put to use in the US but the move will have little impact on the economy. Many companies are already using this cash as collateral for loans so the positive effects of repatriation will be limited. (Congress put the kabash on the tax inversions)
Deflation will finally receive the respect it deserves and the Keynesian policies by the Fed and other central bankers will be exposed as doing major harm over the last few years. Inflation will remain on a milk carton and not appear for a year or two or more away. Keystone believes the onset of inflation will begin and likely align with the end of the secular bear stock market in 2016-2020. Thus, inflationist proponents may have to wait at least another couple years. (deflation continues to be poo-poohed daily although global deflation continues)
Commodities will be flat in 2014 due to the disinflationary and deflationary global economy. Traders will wish they had hung out in the flat commodities by year end, however, since the broad indexes will all correct far lower off their bloated tops than commodities which have been beaten down. Keystone is long SMN (inverse basic materials). (The deflatonary environment is not biting as yet; the lower oil proces has folks giddy, materials sectors are up like everything else, SMN a bad trade)
Copper will drop and finish weaker this year. (true)
Gold miners should be top performers through 2014 although the outlook for physical gold is sketchier. Companies like NEM, MUX, IAG, KGC, ABX, etc… are favorites. Keystone is long MUX, IAG and NUGT to begin the year. (gold stocks all trail lower in 2014)
High-yield will be in trouble this year and HYG will sell off. (excellent call especially since no one else saw it coming except Keystone)
Telecom will be weak this year even though Treasury yields will not move significantly higher. (sector is flatish and mixed in 2014)
Coffee will be the best performing commodity this year. Do not play SBUX or DNKN. Play CAFE or JO. Keystone is long JO. (CAFE was up 14 to 28 doubling in value and JO up 21 to 43 also doubling)
HLF prints a multi-month or multi-year top at 79.8-82.3 in Q1 and will sell off for the bulk of the year.
Coal stocks may be a buy mid-year or later. (ongoing)
Air pollution stocks will run higher as China seeks to fix their horrible environment.
Global auto sales will be weaker than expected. Luxury car sales will disappoint in 2014. (F and GM lackluster performance in 2014)
Retail sales in the US were pulled forward from 2014 into 2013 so the retail sector will experience lackluster behavior in 2014, finally receiving a pull back from the obscene run higher over the last couple years. XRT and RTH will stumble lower during 2014. Keystone is short RTH. (retail slumps early in the year but takes off vertically in the back half--nothing can stop the American consumer)
Solar stocks will move sideways to sideways lower all year long. (yes, FSLR, TAN lower)
Shippers such as DRYS, DSX, GNK, FRO, etc…, may be a buy about mid-year but not in the first half despite everyone running to buy them to begin the year. The Baltic Dry Index will move lower and then travel sideways. Treasury yields will remain flat to lower verifying the weakness in the shippers. Mid-year, however, the shippers may be a buy into the holiday season. (ongoing, Baltic moving sideways at low levels)
AMZN will have a successful launch of its cell phone. AMZN stock will stay under 400 for the bulk of the year. (AMZN Fire phone is a dud but stock does stay under 400 all year and dipped under 300)
PCLN and GOOG will both fall back below 1000. (GOOGL now at 534 so that would be 1060 pre-split and PCLN got down to 1020--close but no cigar)
Defensive consumer staples companies such as PG, CLX, K, etc.. will outperform the broad indexes but this is not saying much. Most every sector will be beaten as the general equity markets weaken in 2014. (XLP does outperform as traders chase perceived safety and dividend stocks)
The healthcare sector XLV will underperform in 2014. Keystone is short XLV. (Nope, bad trade XLV is at the highs)
Solar flares will increase and coincide with the market tops in January and in April-May. The solar maximus in 2013 was a dud but early in 2014 the sun will make up for lost time. Communications will be affected by the X-class flares and plasma ejections early in the year. (only minor disruptions in 2014 no major events)

Saturday, December 27, 2014

SPX 30-Minute Chart 8/34 MA Cross Overbot Rising Wedge Negative Divergence

The green circle shows the positive 8/34 MA cross the exact point where the bulls punched the bears in the face; that was Fed decision day, Wednesday, 12/17/14. The central bankers are the market; it is absolutely shameful but this is the modern day world the Federal Reserve has created. The 8 MA is above the 34 MA signaling bullish markets for the hours ahead, however, the neggie d (red lines), rising wedge and overbot stochastics are creating an initial spank down move. If price stays under the 8 MA it will curl the 8 MA downwards creating a potential negative 8/34 MA cross. Bears got nothing until they receive the negative 8/34 cross. Watch to see if the RSI and money flow print lower lows (thin purple lines) which will signal continued weakness.

The strongest S/R in this 100-point range is 2093, 2089, 2075-2076, 2067, 2061, 2040, 2032 and 2002-2003. The 20-day MA is 2051.58 and rising and needs back tested. The SPX began December at 2067 so there may be price excitement on tap at this level as the year closes out. The projection is down and the negative 8/34 MA cross should develop. The 2075-2076 support is a reasonable initial downside target.

The central bankers rule the market and the push higher last Friday was in part due to traders sniffing out more Japan stimulus which occurs to the tune of $29 billion this weekend. Thus, the bulls may be able to push stocks higher on the easy money joy. Prior articles explain the ongoing global central banker collusion that has created the rallies off the October low and the current 7-day rally. (Type 'collusion' in the search box at the right for further study.) The central bankers are coordinating efforts to supply a steady pump to stock markets. The ECB meeting is 1/22/15 and the FOMC meeting announcement is 1/28/15 so the plan for the central bankers is to try and goose stocks in a coordinated manner to get to late January.

The BOE is due for some lip service to pump markets and Fed members will keep inserting dovish comments. The PBOC announces  a relaxation on banking regulations, a form of stimulus, which helped goose stocks late last week, however, the move may actually delay further triple R cuts for Chinese banks. The markets moving into 2015 are at the beckon call of the global central bankers. For Monday, if the Japan stimulus is priced in, then the technicals in the SPX charts shown this weekend should kick in to send stocks lower. The Japan stimulus may have been timed to boost the Santa Claus rally expectations and keep stocks sideways to sideways higher into the New Year. The S&P futures and Asian trading overnight and early Monday will identify the effects of the Japan stimulus. 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.

SPX 2-Hour Chart Overbot Rising Wedge Negative Divergence Price Extended

Here is an update for the 2-hour chart that has been dishing out drama over the last day or so. The RSI has not reached overbot territory but is in negative divergence moving flat as price makes new highs. In other words, the bulls do not have the strength to pop the RSI higher to the 70 overbot level, at least not yet, so the red lines display universal neggie d and a spank down in price is needed now. The pink dots show price extended above the moving averages also needing a mean reversion. The money flow is starting to print lower lows wanting to drag price lower. The MACD lines just performed a negative bearish cross.

The strongest S/R in this 100-point range is 2093, 2089, 2075-2076, 2067, 2061, 2040, 2032 and 2002-2003. The 20-day MA is 2051.58 and rising and needs back tested. The SPX began December at 2067 so there may be price excitement on tap at this level as the year closes out. The projection is down in this 2-hour time frame as long as the RSI does not print higher. The 2075-2076 support is a reasonable initial downside target. 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.

SPX Weekly Chart Overbot Negative Divergence Price Extended

The weekly chart prints a higher high on light volume. The price high comes with weaker indicators across mulitple time frames, negative divergence, as the red lines show. Note the MACD line over the last three weeks and the sneaky bulls are creating a sliver more of upside juice. The MACD line cross remains bullish as well. Thus, a jog move may occur over the next week or two, down-up-down as price peaks and drops. The alternate scenario to the jog move is simply down from here forward.

Price may honor the red rising wedge and come down to the lower rail this week then back up for a matching high to satisfy the tiny strength in the MACD line and then roll over to the downside losing the lower trend line of the wedge and collapsing in earnest. The 20-week MA support is 2005 and rising so on this weekly and more intermediate-term basis price may seek the 2002-2006 landing area.

The strongest S/R in this 100-point range is 2093, 2089, 2075-2076, 2067, 2061, 2040, 2032 and 2002-2003. The 20-day MA is 2051.58 and rising and needs back tested. This 2050-ish level is at the bottom trend line of the rising wedge pattern above. The SPX began December at 2067 so there may be price excitement on tap at this level as the year closes out. The projection is a near-term top now or in the direct days ahead, at most a week or two, and a move down to 2032-2067. 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.

SPX Daily Chart Fibonacci Retracements if the Near-Term Top is In

The low COC put/call ratio at 0.73 confirms rampant complacency in markets with traders completely fearless buying any stock since everything rises in a global central banker non-stop stock market pump. Investors are buying utility and other blue-chip dividend stocks with total disregard for price. Fund inflows are hitting levels not seen since the dotcom year 2000 bubble top and during the 2008 top. The wealthy that own stocks are celebrating a joyous year and they do feel and are richer which temporarily spurs the economy, however, the other half of America, that do not own stocks, are eating franks and beans after trying to enjoy a Tiny Tim style Christmas without the happy ending.

If markets receive the neggie d spank down as the red lines project, the first Fib retracement, the 38% Fib, is at 2043. The 2040 and 2032 levels are very strong support. The 20-day MA is 2052 so a confluence of support forms at 2040-2052. If price drops under the 2040 level, the 2032 will likely occur quickly and that is also near the 50% Fib at 2029.

The PMO lines produce a positive cross which emboldens the bulls despite the negative chart set-up. Note the low volume on Wednesday (Chiristmas Eve) and on Friday (the day after Christmas) the lowest volume of the year.

The strongest S/R in this 100-point range is 2093, 2089, 2075-2076, 2067, 2061, 2040, 2032 and 2002-2003. The 20-day MA is 2051.58 and rising and needs back tested. The SPX began December at 2067 so there may be price excitement on tap at this level as the year closes out. The projection is a near-term top now or in the direct days ahead and a move down to 2032-2067. As highlighted above, focusing on the 20-day and the 38% Fib retracement, a landing zone of 2040-2052 is on the table. 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.

SPX Daily Chart Price Extended Above Moving Average Ribbon Overbot Negative Divergence

The bulls are partying like its 1999 as they stroll into 2015. A new all-time high prints at 2092.70 and new all-time closing high at 2088.77. Traders sip eggnog spiked with Fed booze buying blocks of dividend stocks without any fear or worry. Despite the bullish euphoria, the overbot conditions (stochastics) and negative divergence (red lines) want to see a spank down in price. Ditto the pink dots that show price extended above the moving average ribbon; the SPX is above the 20-day MA above the 50-day above the 100 above the 150 above the 200 so a mean reversion is needed.

The MACD lines produce a positive cross which emboldens the bulls despite the negative chart set-up. The RSI has near-term upside juice so a jog move is likely where price will drop for a day or two, then recover for a day or two, then that will be the top where price rolls over (with the RSI and MACD line rolling over). If the RSI continues higher than that will continue to stretch the SPX out sideways to sideways higher. Note the low volume on Wednesday (Chiristmas Eve) and on Friday (the day after Christmas) the lowest volume of the year.

The strongest S/R in this 100-point range is 2093, 2089, 2075-2076, 2067, 2061, 2040, 2032 and 2002-2003. The 20-day MA is 2051.58 and rising and needs back tested. The SPX began December at 2067 so there may be price excitement on tap at this level as the year closes out. The projection is a near-term top now or in the direct days ahead and a move down to 2032-2067. 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.

SPX Support, Resistance (S/R), Moving Averages and Other Important Levels for Trading the Week of 12/29/14

SPX (S&P 500) support, resistance (S/R), moving averages and other important levels are provided for trading the week of 12/29/14. Levels shown in bold are strong resistance and support. Bold and underlined levels are very strong and important S/R. The SPX all-time intraday high is 2092.70 on 12/26/14 and the SPX all-time closing high is 2088.77 on 12/26/14. The bulls punch up through the 12/5/14 previous all-time highs.

For Monday with the SPX starting at 2089, the bulls need to touch the 2093 handle and bingo, the upside party will continue with an acceleration higher towards 2100. The bears need to push the SPX under 2084 to accelerate the downside. A move through 2085-2092 is sideways action to begin the week.

Rampant complacency is in the markets as shown by the low 0.73 CPC put/call ratio. The wine is flowing like water with traders in universal agreement that the Santa Claus rally now through 1/5/15 guarantees higher stock prices into the New Year. The boat is fully loaded on the bull side.

Looking at the big picture the strongest S/R in this 100-point range is 2093, 2089, 2075-2076, 2067, 2061, 2040, 2032 and 2002-2003.

The bears got nothing unless they push under 2084, if so, price will drop quickly for a test of 2079 and if that fails the sturdy 2075-2076 is next for a critical bounce or die decision. If the 2075-2076 fails, then price is going to battle at the December starting number at 2067.56 to determine if the month finishes positively or negatively come Wednesday at 4 PM EST. Price needs to back kiss the 20-day MA at 2051.58. The 2040 is extremely strong support and price needs to show this level respect. Price will also need to back test the 200 EMA on the 60-minute chart at 2044.71 and rising.

If markets drop as the CPC forecasts, despite the Santa Claus rally, the landing zone at 2032-2068 is feasible in the near term. Even if the bulls hold on for Monday and Tuesday and then Thursday and Friday (Wednesday markets are closed for New Year’s Day), at that point the top should definitely be in place for equities and the selling would be expected to already be in progress. It will be interesting to watch the battle where the  low put/calls say the top is in for stocks but the Santa Claus rally says full steam ahead. Keystone places more credence in the CPC forecasting a near-term top for stocks. 'If Santa Claus fails to call, there will be trouble for Broad and Wall' in 2015.

Monday will begin with high drama as the bulls are sitting at all-time historic highs. The Keybot the Quant algorithm remains long the market and the program is tracking VIX 14.68 as a key bull-bear line in the sand. The stock market drops if the VIX moves above 14.68. The market bulls will be happy traveling to SPX 2100 if the VIX stays under 14.68.

2093 (12/26/14 All-Time Intraday High: 2092.70) (12/26/14 Intraday High for 2014: 2092.70)
2092.70 Previous Week’s High
2092.70 Friday HOD
2089 (12/26/14 All-Time Closing High: 2088.77) (12/26/14 Closing High for 2014: 2088.77)
2088.77 Friday Close – Monday Starts Here
2084.30 Friday LOD
2079 (12/5/14 Intraday High: 2079.47)
2076 (11/28/14 Intraday High: 2075.76)
2075 (12/5/14 Closing High: 2075.37)
2073 (11/26/14 Closing High: 2072.83)
2071 (11/21/14 Intraday High: 2071.46)
2069.28 Previous Week’s Low
2067.56 December Begins Here
2056 (11/18/14 Intraday High: 2056.08)
2051.58 (20-day MA)
2046 (11/13/14 Intraday High: 2046.18)
2044.71 (200 EMA on 60-Minute Chart a Keystone Market Turn Signal)
2023.80 (50-day MA)
2019 (9/19/14 Intraday High: 2019.26)
2011 (9/18/14 Closing High: 2011.36) (9/4/14 Intraday High: 2011.17)
2007 (9/5/14 Closing High: 2007.71)
2005.83 (20-week MA)
2005 (8/26/14 Intraday High: 2005.04)
2003 (8/29/14 Closing High: 2003.37)
1996.34 (100-day MA)
1991 (7/24/14 Intraday Top: 1991.39)
1988 (7/24/14 Closing High: 1987.98)
1986 (7/3/14 Intraday Top: 1985.59)
1985 (7/3/14 Closing High: 1985.44)
1982.54 (150-day MA; the Slope is a Keystone Cyclical Signal)
1972.08 (10-month MA; a major market warning signal)
1968 (6/24/14 Intraday Top: 1968.17)
1963 (6/20/14 Closing High: 1962.87)
1956 (6/9/14 Intraday Top: 1955.55)
1954.38 (200-day MA)
1951 (6/9/14 Closing High: 1951.27)
1946.90 (12-month MA; a Keystone Cyclical Signal) (the cliff)
1934.99 (50-week MA)
1924 (5/30/14 Intraday Top: 1924.03) (5/13/14 Closing High: 1923.57)
1902 (5/13/14 Intraday Top: 1902.17)
1897 (5/13/14 Closing High: 1897.45) (4/4/14 Intraday Top: 1897.28)
1891 (4/2/14 Closing High: 1890.90)
1884 (3/21/14 Intraday Top: 1883.97) (3/7/14 Intraday Top: 1883.57)
1878 (3/7/14 Closing High: 1878.04)
1851 (1/15/14 Intraday Top: 1850.84)
1849 (12/31/13 Intraday High Top for 2013: 1849.44)
1848.36 Trading for 2014 Begins Here
1848 (1/15/14 Closing High: 1848.38) (12/31/13 Closing High for 2013: 1848.36)