Saturday, October 10, 2015

SPX S&P 500 Weekly Chart

The weekly chart shows price drastically violating the lower standard deviation band (orange) so a move back to the middle band at 2041.81 and dropping is needed and price is approaching that goal. This middle band, which is also the 20-week MA, should be in the 2030-2040 range next week which interestingly lines up with the projections and forecast on the previous SPX daily chart.

Keystone described the market topping process over the last year; the wicked rising wedge, the overbot conditions, and of course the neggie d that sealed the fate of bulls (red lines for the indicators). Price ran out of upside oomph even with all the obscene central banker money printing ongoing. In the summer of 2014, stocks were at a significant top. The money flow was long and strong (green line) until July 2014 and at that price peak the expectation would be for only one more top and then the big spank down would occur.

This forecast occurred as expected with the September-October 2014 collapse. But once again, the Federal Reserve, colluding with the other global central bankers, orchestrated a dramatic reversal pumping stocks higher with obscene Keynesian liquidity. It is absolutely shameful what the Fed and other central bankers have done to markets. Former Fed Chairman Bernanke is out hawking a book last week to rewrite history around the financial crisis and makes himself out to be a hero when in fact he and his henchman including Yellen and Evans, destroyed capitalism and free markets with corporate bailouts and quantitative easing so obscene that Caligula would blush.

So stocks go vertical from the October 2014 low. The chart was cooked with neggie d so the recovery clearly shows that the central bankers were the sole force in creating higher markets late last year and into this year. Use the search function box at the right margin or the archives to find Keystone's missive in October 2014 that describes in complete detail how the Federal Reserve and other central bankers colluded to save the stock market.

The central bankers continue the charade into this year but even all the money printing in the world  could not hold back the negative divergence, overbot conditions and red rising wedge pattern that delivered initial vengeance for their obscene deeds. Markets were  never permitted to properly clear and correct in early 2009 so the market bears will eventually receive their pound of flesh using disinflationary and deflationary forces.

Placing the macroeconomic drama aside, the 100-week MA at 1976 was instrumental in holding down price over the last couple months but last week the SPX punched up through. The 20-week MA crosses down through the 50-week MA a bearish signal and indicates a cyclical bear market is underway and will continue unless the 20 crosses above the 50. For the double bottom in price, the RSI, histogram and stochastics were positively diverged helping to create the bounce. The money flow and MACD, however, remain weak and bleak as price printed the low one week ago. This hints that price will eventually come back down to the lows again.

The RSI now prints a higher high, long and strong, ditto the stochastics so there is near term upside juice. Back kisses of the 20-wk MA at 2042 and dropping and the 50-wk MA at 2059 moving sideways are on the table. Watch to see if the bulls gather steam if the RSI and stochastics move above the 50% levels into bull territory. The 2020-2060 range is on the table for the next week or two. However, the weak and bleak money flow and MACD line, and the fact that the indicators did not ever become oversold, suggest that price needs to come back down to the lows. This would set up a weak finish to the year not the strong finish the consensus is already calling for.

Note the consolidation area in early 2014 which would serve as a downside target area at 1820-1890. The 1900-ish area is a neckline for a potential H&S pattern with a head at 2135 so the downside target should 1900-ish fail would be 1665 (1900-235). Confidence is being lost in the Fed and other central bankers. Wages are not increasing and inflation cannot exist without rising wages (more companies are laying off workers these days due to lackluster business activity) so the grand 6-1/2 year Federal Reserve economic experiment may prove to be a disastrous failure that only served to make the wealthy filthy rich and create future social unrest between the rich and poor in America. 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.

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