Sunday, July 31, 2016

NDX (Nasdaq 100) Weekly Chart Printing 16-Year Highs

The NDX closes at 4730.23 a new record closing high above the closing high from 3/27/00 at 4704.73. The all-time high is 4816.35 from 3/24/00. The power of the central bankers is truly astounding. 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 8:25 AM EST on Tuesday, 8/2/16: The NDX prints a new 16-year high at 4767.24 and new 16-year closing high at 4756.04. AAPL, GOOGL, MSFT and AMZN are the four largest stocks in market capitalization and all are tech stocks. The all-time high is 4816.35 so price is less than 50 points away. If the NDX prints a new all-time high, seven trumpets will sound.

INDU (Dow Industrials) and TRAN (Dow Transports) Weekly Charts Dow Theory Non-Confirmation

The Dow Theory non-confirmation continues. For a strong bullish stock market, the industrials are making new highs and this is confirmed by the trannies, and/or visa versa. Higher highs and higher lows in price will confirm that all is fine for bulls. Into early 2015 all was fine but in April-May 2015 the Dow Industrials made a new high but the Dow Transports did not confirm. The trannies made a lower high and started a downtrend. Stocks sold off.

The downtrend was in play with lower lows and lower highs until this year. In April, the industrials are up joyously, pumped by central banker easy money. And stocks continue higher. The industrials make a higher low and then over the last two weeks another higher high. The upside is so bright you have to wear shades. But not so fast since the trannies are a fly in the ointment. TRAN could only make a lower high in April.

TRAN languishes sideways unable to confirm the joy in the Dow Industrials, therefore, the big upside rally in equities remains in question. The market bulls need to push TRAN above the purple line at 8300 to signal sustainable upside in play. The longer that the trannies can not get up to 8300, the higher likelihood that stocks will roll over to the downside. The Dow under 17350 taking out the prior low would signal trouble ahead for stocks. 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.

EEM Emerging Markets Weekly Chart Inverted H&S

Over the last couple years, emerging markets were taken out back to the shed and beaten severely. As the year began, however, the possie d (green lines) said a healthy bounce is at hand, which occurs. EEM is a strong play this year and as price moves higher, the blue lines show the textbook inverted head and shoulders pattern in play. The head is at 28 and thick neck line at 34.5, a difference of 6.5 so the upside target is 41.0 (34.5 + 6.5). The thinner blue neck line is at 35.5, a 7.5 difference, so the upside target is 43.0. Those targets match up nicely with overhead price resistance levels.

The 200-week MA at 37.59 is key. Price has broken out above both necklines for the H&S pattern. Typically, price will retreat for a back kiss of the neck line (brown dots) before bouncing and heading higher again. Another potential play is waiting for price to come back up after a pull back and as soon as it overtakes the current price at 36-ish, blue dot, that would be a buy point. If price collapses back under the neck lines and under that 32.5 support, the inverted H&S pattern may be nullified and emerging markets may tumble lower as traders run for their lives.

The red lines show neggie d so that will send price lower in the near term for a few days or week or two, but the RSI and MACD are long and strong wanting to see higher highs with price after the pull back. This scenario jives with the brown dots and the positive bullish outcome with the inverted H&S leading higher. So the idea is that EEM is an attractive buy but not right now. Give it a few days or so sine it should pull back. Look for a pull back to the brown dots as a potential entry. If EEM moves above the blue dot and current prices it may run like a mad man to the 200-week in a flash. Keystone does not own a position in EEM currently. 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 (S&P 500) Monthly Chart Tight Standard Deviation Bands

The monthly charts receive a new data point on Friday since July ends. August trading begins Monday morning. The pink arrows show the ongoing tight band squeeze which will send equities strongly higher, or lower. Tight  bands only tell you that a large magnitude move is at hand, on the monthly basis, but do not dictate direction. The SPX is testing the top band at 2183. All-time record high from last week is 2177The bears must stop the upside move during August, otherwise the stock market may accelerate higher in September and October as per the tight band squeeze. Once the top band is touched at 2183 the middle band at 2052, and moving sideways, is in play. If bears can send stocks lower in August starting a reversal, the tight bands would squeeze price dramatically south. There is likely something epic on tap over the next couple months.

The red lines for the indicators show the neggie d from the October 2007 top to the May 2015 top and a spankdown would be expected, which occurs, but it is paltry over the last year; the central bankers are powerful.

The ominous red rising wedge lingers on the monthly chart wanting to extract its pound of flesh but the central bankers keep printing money refusing to let stocks adjust lower. The collapses from falling wedges are typically very dramatic and extreme. That pullback over the last year is only a pimple on the bear's butt. The ominous wedge pattern forecasts that a move to 1000-1500 would not at all be surprising over the next couple years.

The red lines also show negative divergence since the May 2015 top to present. Since the S&P 500 has printed a new all-time high at 2177 last week, above the May 2015 top, the indicators can be assessed, and each remains in negative divergence (the indicator is sloping down (negatively) while price is making new highs; this signals that price is running out of oomph). 

Over the short term, the last three months, the short green lines for RSI and MACD show a slight long and strong bias so the bulls may be able to keep stocks elevated for a month or two before the firm longer term neggie d overtakes the index. Stochastics are overbot and really have no further upside room.

The blue circle shows the textbook Tweezer Bottom Keystone has mentioned in the past. That marked the February low. The central bankers promised loads of easy money which sent markets higher prohibiting a further correction lower for stocks. The purple circle shows where the Brexit vote was tanking global markets but the BOE jumped in promising easy money for as far as the eye can see and global stocks never looked back galloping to new all-time highs riding the strong central banker winning horse; a horse that is always in the winner's circle.

The brown circle shows that the strongest volume period over the last five years is earlier this year during the stock market selloff. Price likely needs to come back down to test this price area to see how the volume will stack up. Note that new highs are made with price on volume that is only 75% of the selling volume earlier this year. If the rally had strong legs, you would think that the volume would be far greater.

The bears have the edge on the monthly (long term) basis despite the all-time highs occurring. Bulls have some near-term (a few weeks maybe a month or two max) mojo due to central banker joy. Watch the price behavior at the upper pink band. A close above 2180 would be important since Keystone's 80/20 rule says 8's lead to 2's so above 2180 should lead to above 2220. If price stays below 2180, that may hint that stocks will roll over. So in the near-term, pay attention to see if a close occurs above 2180, or not. 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.

July Publication of Daily Chronology of Global Markets and World Economics 2016-07 is Available from Amazon; SPX (S&P 500) and INDU (Dow Industrials) All-Time Highs; COMPQ (Nasdaq Composite) and RUT (Russell 2000) New 2016 Highs; NDX (Nasdaq 100) 16-Year High; Low Bond Yields; Italian Banks Collapsing; New UK PM Theresa May; Turkey Coup Fails; Terrorism Increases Around the World

The July publication of the Daily Chronology of Global Markets and World Economics 2016-07 is available through Amazon (AMZN). The epic market action continues.

July's headline balloons on the cover of this month's publication are;

SPX 2177 and INDU 18590 All-Time Record Highs
COMPQ 5176 and RUT 1225 New 2016 Highs
NDX 4743 New 16-Year high
Record Low Bond Yields
Italian Bank Turmoil
New UK PM Theresa May
UK Property Fund Redemptions Frozen
Turkey Coup Fails Erdogan's "Purge" Begins
Next POTUS is Either Clinton, Trump, Johnson or Stein
Terrorist Attacks Increase Globally

After the Brexit drama in late June, the BOE stepped in promising huge stimulus as well as reducing banking regulations which creates a strong recovery rally in stock markets. Central bankers such as the BOE, Fed, ECB, BOJ and PBOC keep pumping stocks higher. The chronology explains how the central bankers are the marketGlobal yields print new record lows led to the negative side by Switzerland, Japan and Germany. Theresa May is crowned the new UK prime minister. Cameron is sent packing after the Brexit vote.

The Italian banks are very sick and investment bankers, central bankers and politicians meet daily to figure away to recapitalize the garbage. The sick European banks may create global contagionDB (Deutsche Bank) remains ill and may take the entire financial system down.

The chronology describes the reactions to economic data such as the Monthly Jobs Reports in real-time. There is no other document available on the world wide web that records the action in real-time with common sense easy-to-understand detail. Inflation, that the Federal Reserve has tried to create for seven years with their obscene Keynesian programs, cannot exist without wage inflation occurring so each jobs report is very important.

The chronology explains the reaction in stocks, bonds and currencies to key events and economic data releases. If you are trying to make sense of the markets this is the resource for you. No other publication exists in this format where the stock, bond and currency moves are provided and explained as world events take place in real-time.

The chronology records economic history preventing revisionist tampering in future years. Many of the same asset managers telling everyone to go long the market in 2007-2008 repeat the same mantra in 2015-2016. The stock market topped out in May 2015 which placed anyone that listened to television pundits over the last couple years either flat or underwater on their long trades, however, the central banker go juice has pumped stocks higher from February to August to new all-time highs rewarding those that blindly remain long with full confidence in the Federal Reserve.

Analyst and strategist quotes and words are recorded in the chronology so credit or disdain can be handed out in the future. If a multi-year top is printing, the chronology serves as the most accurate accounting of the stock market topping process ever recorded in economic and market historyThe chronology is the most reliable and easy to understand source for explaining global marketsThe chronology is very easy to read and avoids using fancy ten-dollar college words.

As always, all monthly publications of the Daily Chronology of Global Markets and World Economics are available from the links in the margins or simply searching on Amazon or Google. The monthly publication contains updated information not posted on this web site as well as clarifications, edits and refinements to the ongoing daily blog text.

We are living through historic stock market and economic times. The daily chronology is the most accurate accounting on how the stock market tops and bottoms occur in real-time. The monthly publications are compatible with any electronic device and include an extensive Business Acronym List and Ticker Symbol List. The Acronym List is the most comprehensive business-related acronym list available on the internet. The chronology is not available in hard copy and only distributed around the world electronically.

Download this valuable resource today. Remember to support the KE Stone Series of blogs (Keystone the Scribe, The Keystone Speculator and Keybot the Quant) through donations, the daily chronology book sales and honoring advertisers that support the original free content provided in the blogs. The blog proceeds aid charities.

The free blog content is posted in proportion to the advertising, book and donation income received. Thus, you folks working at the large money-center banks around the world need to let some moths out of your wallets if you want this unique trading and economic information, that is not available elsewhere, to continue.

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Monday, July 25, 2016

SPX (S&P 500) 60-Minute Chart 200 EMA Cross Negative Divergence

The saga with the sideways action and tight standard deviation bands on the 1 and 2-hour charts continues. Price makes a matching or higher high while the indicators slope lower, negative divergence, so there is no oomph remaining and stocks should retreat. However, the central bankers are powerful. The Fed decision is on tap Wednesday afternoon and most importantly the BOJ on Friday morning. Big stimulus is expected from the Bank of Japan and this ongoing global central banker intervention maintains a bid under stocks.

Price was squeezed higher three days ago but retreated after hitting the top standard deviation line. Price then tagged the middle band but has not yet touched the lower band. Perhaps that is on tap at 2162. Technicals want to see a roll over to the downside but the central bankers are standing on the sidelines waving cash at everyone telling investors to not worry.

The SPX remains on the island above 2159 so an island reversal pattern remains in play as previously highlighted (purple lines). Thus, the 2159-2162 is a key support level for price currently. If it is lost, price will likely be at 2153 and lower in a flash. Market bears got nothing substantive unless they push under 2123. The 200 EMA on the 60-minute is 2123 and price is above signaling bullish markets for the hours and days ahead. If 2123, is lost, stocks will be falling in earnest. Above 2123, the bulls continue smoking fat cigars dabbing the ashes in the bears face. 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 11:07 AM EST: The SPX falls under the LOD and is now down to 2163 testing that lower standard deviation band and the base of the island at 2159. Bulls need to hold this 2159-2163 area or the bears will bite off a chunk of market flesh. Stocks are typically buoyant, about 80% of the time leading into the Fed decision so if the bears want to create some selling this is their window now into tomorrow morning.

NTDOY Nintendo Daily Chart Riding the "Pokemon GO" Wave Fibonacci Retracements

One day a hero, the next day a zero. Nintendo catapults higher on the popularity of the Pokemon GO. Look around any park and other community places and you will see many faces buried in smartphones playing the mobile game. Nintendo rocket launches from 17.5 to 37.5 a huge 114% gain; a double. Traders were high-fiving each other telling one another how smart they are.

Today, Nintendo says the Pokemon GO game will not have a material impact on its earnings. Traders hit the sell button. Note how price retreats to the 62% Fibonacci retracement at 25-ish. Watch to see if this level holds, or not. If not, the door would be open to a 100% retracement back to the 17-18 sideways zone. Price will likely bounce in here and may stutter sideways into Nintendo's earning release this week where more information on Pokemon may be provided. Humorously, if you are over 25 years old and out there playing Pokemon, it is time for you to get a job. 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.

FTSE London Stocks Brexit Collapse and Big BOE-Induced Rally Afterwards

The bottom fell out of the pound and UK stocks after the Brexit vote. Long traders were screaming bloody murder. Investors were jumping from windows; fortunately the windows were on the first floor. The central bankers save the day, however, never allowing markets to fully correct over the last eight years. This time BOE (Bank of England) Governor Carney keeps the carnival going by running to a microphone proclaiming that the central bank will provide huge stimulus in August (pink circle). In addition, banking regulations will be tossed out the window to help promote lending. Traders trip over each other while guzzling BOE wine buying stocks with reckless abandon with all the proposed easy money. Can it be more obvious? The central bankers are the market.

The FTSE catapults from 5800 to nearly 6800 riding a magic carpet fueled by central banker Keynesian stimulus; a huge +17.2% gain in only one month's time. Traders cheer Carney for his money printing and celebrate lousy economic data since this guarantees more BOE stimulus and higher stock prices that make the wealthy super rich. What a glorious world! Well, if you are rich it is a glorious world; not so much if you are one of the faces in the huddled masses.

The red rising wedge says the move is long in the tooth. Ditto the neggie d shown by the red lines for the indicators. Stochastics are overbot but the RSI did not reach overbot territory as yet. Looking at the FTSE weekly chart, the MACD line has more juice, so this hints that the index will  pull back in the days ahead perhaps a week or so, but then likely come back up for another higher high in early August. If you made a  bunch of money on the way up with UK stocks, it would likely be prudent to take the gains then entertain a reentry in a few days time after a pull back. 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.

Sunday, July 24, 2016

SDY Dividend ETF Weekly Chart Dividend Stock Bubble Expands

The central banker intervention continues to create the bottoms in stock charts and prices remains above key moving averages verifying the never-ending Keynesian intervention. Traders don rose-colored glasses. Waiting for the dividend stock bubble to pop is like waiting for Godot. Keystone has been posting the SDY and DVY charts for the last couple years chronicling the top in the bubble but dividend stocks will not roll over.

This year, a new leg of life is breathed into the beast with more Fed, ECB, BOJ, PBOC and other central banker easy money. The bottom four weeks ago where SDY bounces off the 20-week MA support now at 81.23 was created by the BOE that came in to the markets promising boatloads of stimulus to save the day after the Brexit vote. The central bankers are the market and have been since early 2009.

Investors are chasing yield and perceived safety in dividend stocks especially over the last six months. Uncle Frank, and Granny Nell, that lives in the small bungalow at the edge of town, both took their entire life savings and bought dividend and utility stocks last week just like the nice young man on television said to do. People are going to get hurt badly.

The red lines show negative divergence in the near-term, and over the longer term, except for the MACD line that is running to the moon now in nosebleed territory. The long and strong MACD will want another higher high in price after a pullback in this weekly time frame. That top, say anywhere from one week to three months out, should be the final act in the dividend bubble saga. The monthly chart is very similar only showing 1 to 4 months more of juice available to allow higher prices.

If central bankers keep pumping, that may keep the party going. This week the FOMC announces its rate decision on Wednesday but there is no expectation of action. More importantly, the BOJ has promised more easy money juice and the NIKK and other global stock markets have rallied so the Bank of Japan had better deliver the goods on Friday or there may be some hari-kari going on. BOE Governor Carney goosed the FTSE and global stock markets to save the day after the Brexit vote promising mountains of stimulus to begin in August so he had better deliver a brand new shiny pony as well next month

That big intraweek spike lower in August 2015 on the chart was during China Black Monday on 8/24/16 when the Shanghai Index, SSEC, fell -8%. The Dow dropped nearly 1,100 points at the opening bell but recovered quickly since central bankers always save the day.

The ADX shows a strong uptrend in place in 2013-2014 that petered out in late 2014. Interestingly, dividend stocks stumbled sideways for over one year and the ADX shows that the sideways trend was a very strong trend. Then, as 2016 began, the sideways trend was not strong and price broke up above the sideways blue channel and the divvy bulls never looked back. The recent trend higher in price, however, is not a strong trend with the ADX moving down to 20.

Aunt Agnes just called; she said she took her life savings and bought telecom and dividend stocks last week. Agnes said the guys on television guarantee huge gains in dividend stocks and she does not want to miss the train leaving the station. She would be better served if she cashed in her ticket and did not get on the train.

The dividend stock bubble grows but the projection is for a significant multi-year top to occur at anytime over the next three to four months. Interestingly, that places markets in the ominous October time frame. Price should seek the middle band at 81.23 and climbing and the lower band at 76.43 and moving higher is also a target. It would not be surprising to see SDY down in the 62-74 range one year from now. The same technical analysis holds for DVY and for many individual dividend stocks. Watch that MACD line; as soon as it rolls over it will likely take the whole enchilada lower and begin a multi-month and multi-year slump lower for dividend stocks and the broad stock market. Those running into dividend stocks with reckless abandon are going to likely regret the decision when they look back one year from now. 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 10-Year Treasury Note Yield Weekly Chart

Pundits are parading across television screens proclaiming 1% on the 10-year. Interestingly, they are all the same Einstein's that called for the 10-year yield to run to 4% in late 2013. At the end of 2013, Keystone pointed out the negative divergence in the chart and a smack down from 3% which was the complete opposite of 90% of the punditry's forecasts. It is not rocket science. The red lines show the neggie d and yield received the spank down back then as expected.

So, with all the noise now from analysts and market participants that 1% on the 10-year is guaranteed, that indicates that it may not occur; the consensus is typically wrong. Can the 1% occur somewhere down the road? Sure. Especially if a deflationary spiral develops. Global traders may seek the perceived safety of Treasuries and drive the yield under 1% but that outcome is probably not likely at least through the intermediate term (several months).

The green lines show the positive divergence in play now that will want to bounce yield (remember, higher yields reflect lower prices, in other words, traders shun notes and bonds so price drops and yield rises). The RSI and stochastics are drifting lower this year which may place the yield in a stuttering sideways move for another month but the expectation is for basing and a move higher in yields going forward. The 1% crowd will likely be disappointed.

The RSI and stochastics are oversold hinting that a basing is currently taking place for yield. There is a spaghetti of lines on the chart but note the positive divergence in the indicators over the last 5 years (thin green lines). Yield came down to test the 2012 lows and the indicators were not as weak hinting that yields will recover going forward. Yield punctured the lower standard deviation band (pink) so the middle band at 1.72% is definitely in play as an upside target and also the upper band at 2.03% with both of these targets trending lower (the targets will drop as the days and next couple weeks play out).

The neon circles for the ADX show when the strong trends occur. The strong trend lower in yields in 2011 into 2012 ended in the summer time 2012 and yields reversed and moved higher. The uptrend in yields was strong in late 2013 but the neggie d on the chart told you that that parabolic rise in yields was going to end abruptly, and it did. The strong trend higher in yields ended as 2014 began. The only other strong trend was in early 2015 when yields were rising but that petered out in the springtime in 2015.

Over the last year, the ADX remains under the low 20's indicating that there is no strong trend in place for this trend lower in yields. This hints that yields will recover going forward and the prognosticators looking for a 1% yield in the near-term receive a few more slaps to the face. Slap, slap. If the downtrend in the 10-year yield was strong and heading towards 1% the ADX should be above 30 running towards 40; it's not.

Mixing all this mumbo-jumbo together and sprinkling on some magic dust, the projection would be for yields to move through the unexciting 1.55%-1.90% range for the weeks and months ahead. 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.

Tuesday, July 19, 2016

BPSPX S&P 500 Bullish Percent Index

The BPSPX is back on a double-whammy buy signal for the stock market. In June, the BPSPX fell under the 70% level which is a market sell signal and then the six percentage point reversal occurs off the top creating a double-whammy sell signal. Price reverses six percentage points off the bottom from 50 to 56 issuing a market buy signal. Then the BPSPX overtakes the critical 70% level creating the double-whammy buy signal.

The market bulls are okay as long as they keep the BPSPX above the 70% level. Markets are in trouble if 70 fails since that will be an initial market sell signal. If a six percentage point reversal occurs from 72.20 to 66.20, that would create a double-whammy sell and stocks will be falling in earnest. Watch it closely each day 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 Sunday, 7/24/16: The BPSPX continues higher last week to the 74.40 level so the bulls are using the bears as a punching bag. The SPX prints a new all-time closing high at 2175. Same analysis holds; bulls are fine above the 70% level. Bears will growl if the BPSPX loses 70 and stocks will be falling in earnest under 68.40 (74.40-6.00).

SPX (S&P 500) 1-Hour Chart Negative Divergence Overbot Bull Flag Ascending Triangle Island Reversal Tight Bands Forecast Big Move

The SPX 1-hour chart has lots going on as the chart patterns and spaghetti of lines indicate. The S&P 500 printed a new all-time closing high at 2166.89 yesterday, 7/18/16, but not a new all-time high. The all-time high is 2169.05 from Friday, 7/15/16. The pink arrows show the standard deviation bands squeezing in tight in this one-hour time frame. A large move is coming likely from 20 to 30 handles or more perhaps today. Tight band squeezes do not predict direction only that a large magnitude move is at hand. Interestingly, the tight bands in June led to some additional lift then collapse in price down to 1990.

The important 200 EMA, a critical level that identifies a near-term bull market from a bear market, is at 2108 with bulls in control over the hours and days ahead. The SPX crossed up through the 200 EMA, which Keystone highlighted at the time. Note the textbook successful back kiss (for bulls) on 7/6/16 and then price took off skyward.

For the bulls, the two-leg bull flag pattern in blue is targeting the 2180-2205 area. There is some art involved in the bull flag projections so the case could be made that the pattern has played out. Price is making new record highs so, by definition, is rising but the neon lines show the potential for an ascending wedge pattern over the last four days if you say the base line is 2167-ish. The vertical side is about 20 handles so if price breaks out higher, the ascending triangle would target 2190-2195. The pattern jives with the bull flag target.

For the bears, price remains on an island above 2158-ish. The S&P 500 gapped higher from 2152-ish to 2158-ish and sits on the island for the last four days. An island reversal pattern would occur if price drops lower to the 2157-2159 level, then, in an instant, prints 2152 and lower falling back down through the gap. If the island reversal does not occur, then price may simply venture lower and fill that gap at 2152-2157.

The red lines show the rise in prices for the last week with negative divergence in the indicators. RSI and stochastics were/are at overbot levels. Price is running out of oomph to move higher but looking for the top the last few days is like waiting for Godot. The negative divergence should create a spankdown.

Stocks are usually bullish moving through the full moon each month which peaks in a few hours. However, the uber low CPC and CPCE put/call ratios indicate excessive complacency and lack of fear and are viewed as far more important than a seasonality factor. The low put/calls forecast a drop in the SPX of about 40 to 120 handles from current levels.

Adding another level of complexity, the ECB rate decision and President Draghi press conference is on Thursday. The central bankers are the market. So if Draghi flaps his dovish wings, stocks go up. If he balks and wants to delay more stimulus, stocks tank. As always, for the last eight years, the central bankers control the market.

What does all this mumbo-jumbo mean? Considering the negative divergence and the low put/calls, the expectation is for stocks to sell off from current levels. The tight bands indicate the flush lower may be fast. The wild card is the ECB on Thursday. If stocks rally today and try to remain buoyant into the ECB meeting, the low put/calls have to extract their pound of flesh so the forecast would remain for a pull back in stocks. Keystone is holding/adding near-term shorts looking for the top in here. These are not your grandfather's markets. The central bankers have destroyed price discovery, market functionality and economic cycles over the last few years. 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 8:55 PM EST: The bulls push the Dow higher for new all-time record highs but the SPX lags. Interestingly, the Dow floats higher into the peak full moon which occurred a couple hours ago. The same analysis holds. The bulls are trying to keep the party going into the ECB meeting Thursday morning since Draghi may provide more dovish talk that would provide further market lift. The upside also has momentum on its side. Note how SPX price today kept teasing the 2159-ish level (the top of the gap) and chooses to remain on the island. Tomorrow may be a very exciting day. The tight standard deviation bands on the 1 and 2-hour charts for SPX, INDU, COMPQ and RUT indicate some big excitement is imminent. Perhaps Draghi may lay an egg on Thursday?

Monday, July 18, 2016

CPC and CPCE Put/Call Ratios and SPX (S&P 500) Daily Charts Signal Near-Term Market Top At Hand

The CPC and CPCE put/calls are printing firmly in complacent territory. There is no fear in markets since the central bankers always pats everyone's behinds. When the boat is fully loaded to one side the markets typically go the other way. The bull party euphoric complacency continues today; long traders are drunk as skunks off the flavorful Fed wine, buying stocks with reckless abandon while donning lamp shades on their heads.

The red circles show stock market tops and the green circles bottoms. What do you think will happen? This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

Note Added 5:03 AM EST Tuesday Morning, 7/19/16: The bulls keep partying higher with another rally in the Monday trade. Keystone presses near-term shorts. The expectation is for a 40 to 120-handle drop in the SPX based on the low put/calls. The wild card this week is the ECB meeting on Thursday morning. Tuesday will determine if the bulls can keep stock markets moving sideways with an upward bias for two more days into the critical ECB announcements, or, if markets simply begin to flush lower in earnest to take a rest from the parabolic one-month rally. Thursday will be a pivot day. If ECB President Draghi provides more easy money, that will pump stocks higher. If he balks and is hesitant that would likely accelerate a move lower in stocks. The central bankers are the market.

Friday, July 15, 2016

SPX (S&P 500) 2-Hour Chart Negative Divergence Tight Bands Bull Flag Inverted H&S

The bulls keep slapping the bears around with help from JPM and continued positive central banker talk that the easy money spigots are flowing. The RSI sneaks out more juice but tops out after that spike higher a couple days ago. Price is on an island above 2159, where it is printing as this is typed, and may perform an island reversal dropping like a stone through the gap to 2153 and lower. Otherwise, price may simply venture lower to fill the gap.

The red lines show neggie d that is rolling price over to the downside. The MACD cross is negative. The tight standard deviation bands are interesting. A big move is at hand in this 2-hour time frame. Price will either rocket higher, or quickly collapse. The blue two-leg bull flag targets 2180 and price tagged 2170 that is close enough for government work. The brown lines show an inverted H&S; the head at 2000 and neckline at 2105 targets 2210 (2105+105).

The expectation is lower prices unless a central banker touts more dovish talk. The tight bands say price will likely either be at 2210-2230, or, 2100-2120, say, early next week. Someone will be happy and someone will be sad. Watch to see if an island reversal occurs described above. It looks like something exciting should happen between now and Monday lunch time. Low put/calls indicate rampant complacency and a near-term market top. 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.

Tuesday, July 12, 2016

SPX (S&P 500) 2-Hour Chart Negative Divergence Developing

Here is an update for the 2-hour chart from a couple days ago. The SPX and INDU are at new all-time closing and intraday highs. The MACD continues higher so the bears are slapped around with higher highs in price. The red lines show the set up from the other day. So a couple candlesticks are needed to see if the MACD rolls over and it does not; that bugger still has an upward lift to it. The bulls are strong. The current candlestick will continue printing, however, and that MACD line can easily be flat after the opening bell tomorrow (Wednesday). The expectation would be for a market top anytime over the next four hours. If that MACD line slopes down after the opening bell, the top may be in at the get-go.

As always, the only thing that can change the forecast is the central bankers or other positive news, such as bank earnings, that is not yet priced into the chart. This morning, former Fed Chairman Bernanke shows up in Japan, high-fiving PM Abe and BOJ Governor Kuroda espousing the greatness of Keynesian economics. The Three Stooges were drinking sake like madmen and planning a helicopter ride to drop money from the sky. The BOJ plans to provide huge stimulus so stocks catapult higher; the NIKK is up +7% in two days. Thus, stocks should top out now as long as a central bank does not intervene.

The upper standard deviation band is violated so the middle band at 2121 and rising is on the table. The neon lines show a two-leg bull flag pattern in play, first leg from 2000 to 2105, which is 105 points, then sideways consolidation with a drift lower forming the flag, then price begins the second leg from 2075-ish so the target is 2180. This is what the bulls are cheering for. The indicators, however, should roll over and forecast a drop in price. Sometimes estimating the bull flag targets is more art than science; the second leg has already ran a long way.

The red lines show neggie d but that pesky MACD line is a single hair higher over the last four hours. The expectation is for a market top on Wednesday and that would fulfill the negative divergence on the 2-hour chart above and the complacent put/calls and the elevated NYMO. Keystone placed trades on the short side this afternoon. Positive bank news or other market jawboning will likely extend the top a few more hours. 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.

NYMO McClellan Oscillator and SPX (S&P 500) Daily Charts Signal Top At Hand

NYMO is moving into lofty levels consistent with a market top and time to selloff.The CPC and CPCE put/calls remain low indicating the ongoing complacency. VIX printed a 12-handle indicating complete lack of fear. There is no reason to worry since central bankers always support the stock market. Traders stagger around each day, inebriated from Fed wine, buying stocks with reckless abandon and total disregard for valuation.

The green circles are attractive market bottoms where ideal entries on the long side occur. The red circles are market tops. What do you think will happen?This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

Monday, July 11, 2016


The prior record all-time high was 2134.72 and this folded like a cheap suit at the opening bell. The new all-time record high is 2139.59 but the day is young and in fact, the SPX is printing more new record highs as this is typed. HOD 2140.61.

The SPX must close above the bright green line at 2130.82 to print a new all-time record closing high. Buy programs are kicking in the robots are running stocks higher in a straight line. At 11:15 AM EST, the new all-time record high is 2140.69. UK PM Cameron will resign Wednesday and Theresa May is the new prime minister. 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 (S&P 500) 2-Hour Chart S&P 500 NEW ALL-TIME RECORD HIGH

The SPX prints a new all-time record high at 2139.34 and the day has to still play out. The S&P 500 has never been at this level in history. The SPX will need to remain above 2030.82 at the closing bell to print a new all-time closing high. The central bankers are powerful. The BOJ is planning to pump markets with more easy money and the NIKK rallies +4% overnight. It is a bullish market orgy around the globe.

The drop and 'V' recovery after the Brexit vote is obvious on the chart. The blue lines show an island reversal pattern when stocks bottomed after the initial Brexit collapse. The BOE stepped in promising more stimulus and lowering bank regulations which created the bottom. The central bankers are the market. Stocks gapped back up through the gap on the downside creating an island reversal. Stocks continue to rally expecting more juice from the ECB, PBOC and BOJ. The Fed will not be able to hike rates since inflation will not occur due to lack of wage inflation so that keeps the easy money flowing State-side. Every day is a party. Fed Chair Yellen is carried around on trader's shoulders as everyone is drunk off Fed wine and buying stocks with reckless abandon and total disregard for valuations. The party is in full swing and the band is playing Happy Days are Here Again.

The red lines show neggie d forming on the 2-hour chart. Stoch's are overbot. The green lines show long and strong behavior for the indicators which desires a higher high in price. The MACD line is long and strong so the expectation would be for another run to new highs (above this morning's highs) in the one to three hour time period ahead (this afternoon). Thus when price comes back up, say, while you are eating a lunchtime sandwich, check to see if  the MACD rolls over with negative divergence. If so, the top is in. If the MACD keeps sloping higher than price will want to make another higher high in the 2-hour candlestick timeframe.

The low CPCE put/call was highlighted previously. This is consistent with a near-term market top occurring at anytime forward; it may be hours or a few days. The 2-hour chart above hints that this afternoon is a candidate for the market top, however, the daily chart shows subtle signs of further buoyancy. Thus, what may unfold is a top this afternoon then down a day or two but back up to the current highs again, say, as the banking earnings hit the tape later this week.

Sticking to the here and now, the 2-hour hints that stocks may top out this afternoon, as long as the MACD line curls over to the downside as price makes a new high. The VIX is up and stocks are up today so one of them is wrong. 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 11:22 AM EST:  The SPX new all-time high is 2140.69. RSI is flat. MACD line remains long and strong but other indicators prefer negative divergence. Thus, price may need two candlesticks to jog down, then back up again for another higher high; when the MACD line may roll over with neggie d. So a potential market top is between 2 PM and the closing bell, otherwise, tomorrow morning.

Sunday, July 10, 2016

INDU Dow Industrials and TRAN Dow Transports Daily Charts Dow Theory TRAN Death Cross

From a Dow Theory perspective, new highs in the Dow Transports must be confirmed by new highs in the Dow Industrials, or visa versa, to prove that up is the direction for stocks while each must confirm each other in the down direction to confirm a bear path ahead for stocks.There are many rules that different technicians follow concerning Dow Theory but let's keep the analysis simple.

The green dots in September and October last year were printing higher highs until November when both the trannies and industrials could not print a higher high. Stocks then slid lower and the bear path was confirmed by lower lows and lower highs in both the trannies and industrials. The bottom occurs in February and both indexers begin printing higher highs until April when the trannies balk. TRAN prints a higher high in April but you can call it flat. Note the INDU catapulting higher in April.

Both print a low in May and then a lower high in June so the direction is down. The bears looked in good shape, then great shape when the Brexit vote was a surprise and Britain decides to leave the EU. The bear joy was short-lived since the BOE stepped in to save the day as the central bankers always do and stocks recover strongly. Other global central bankers plan to or have begun more stimulus programs and are colluding to goose stock markets higher around the world.

The Dow now makes a higher high as the green dot on the right-hand side shows, however, trannies have not confirmed to the upside as yet. The market bulls will need TRAN above the 7950-ish level to receive verification that a strong upside equity rally has legs.

While the Dow Theory drama plays out, a death cross occurs for the Transports forecasting a downward path ahead. If TRAN cannot move above 7950-ish, the broad stock market and transports should roll over to the downside. If TRAN moves above 7950-ish, there are big-time stock market record highs on the way. 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 on Monday Morning, 7/11/16, at 10:39 AM EST. The SPX prints a new all-time record high at 2139.34 and the day is young. TRAN is only up a smidge +0.1% to 7691.

SPX (S&P 500) Daily Chart Expansion (Megaphone) Pattern

The SPX is printing an expansion pattern as shown by the red lines. This is also called a megaphone pattern and the handle is drawn for the megaphone to create the depiction. Price runs up towards the top trend line at 2130-2140. The upper standard deviation line is 2137. The all-time record closing high is 2131 and all-time intraday high 2135.

The red lines for the indicators show negative divergence in play over the last few months but the short green lines show a near-term long and strong rally. The MACD cross turns positive. The stochastics are in overbot territory. Money flow is stalled. The thought (guess) would be that price prints the new record highs in the 2135-2145 range sometime this week but then retreats sharply lower. The bottom target line of the megaphone pattern is 1975-2000 in August.

The two large selling volume candles need retested so price will likely retreat to between the two thin blue lines. At that time the bulls need to show that within that same price range they can print strong bullish volume numbers to prove that stocks have lots of upside ahead. Price is elevated above the 20-day MA above the 50-day above the 200 so a mean reversion lower favors the bears. The 2130-2150 range will be very interesting this week. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

Note Added on Monday Morning, 7/11/16, at 10:41 AM EST. The SPX prints a new all-time record high at 2139.34.

CPCE Put/Call Ratio and SPX (S&P 500) Daily Charts Signal Near-Term Market Top At Hand

The VIX collapses to 13.40 and the put/call ratios also tumble lower indicating rampant complacency in markets. The central bankers are colluding to provide more stimulus so not one is worried about the stock market selling off. After the Brexit vote, the BOE swoops in to save the day promising more stimulus in August and also reducing the rules on banks to encourage lending. Other global central bankers plan to keep pumping markets as well. So every day is a party and there is no reason to worry. The low put/call, however, says when no one is worried that is time to worry.

The red circles show significant market tops over the last year which occur when the bullish euphoria becomes too excessive. What do you think will happen? Yes, stocks will likely top out in the days ahead, probably this week, and the only question is how far down they will move once they do sell off. If stocks print new highs early in the week it will be interesting to see if a thrust higher occurs before the complacency knocks it all lower. The banks report earnings this week so a potential market top may occur mid to late week due to the financials. 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 on Monday Morning, 7/11/16, at 10:43 AM EST. The SPX prints a new all-time record high at 2139.34.

Wednesday, July 6, 2016

Keybot the Quant Turns Bullish

Keystone's trading algorithm, Keybot the Quant, whipsaws back to the long side in a wild day of trading. The bears were celebrating in the morning and then slapped around in the afternoon. Keybot flips long at 1 PM at SPX 2097. Bulls need higher semiconductors to light the way higher for stocks. Bears need higher volatility and lower copper and commodities to push equities lower. Markets are unstable; it would not be surprising to see another whipsaw move back to the bear side. More information is found at Keybot's site;

Keybot the Quant

Tuesday, July 5, 2016

Keybot the Quant Turns Bearish

Keystone's trading algo, Keybot the Quant, flips to the bear side today at SPX 2091. The drama continues, however, since the model is already in position to potentially whipsaw back to the long side. Watch volatility and chips. Market bears win big if VIX moves above 15.88. Market bulls win big if semiconductors, SOX, moves above 678. More information is found at Keybot's site;

Keybot the Quant

Monday, July 4, 2016

SPX (S&P 500) Support, Resistance (S/R), Moving Averages and Other Important Levels for Trading the Week of 7/5/16

SPX (S&P 500) support, resistance (S/R), moving averages and other important levels are provided for the holiday-shortened trading week of 7/5/16. Levels shown in bold are strong resistance and support. Bold and underlined levels are very strong and important S/R.

For the S&P 500 in history, the all-time record high is 2134.72 on 5/20/15 and the all-time closing high is 2130.82 on 5/21/15. The all-time record intraday low is 666.79 (the infamous 666) on 3/6/09 and all-time closing low is 676.53 on 3/9/09.

For 2016, the intraday high for this year is 2120.55 on 6/8/16 and the closing high for this year is 2119.12 on 6/8/16. The intraday low for this year is 1810.10 on 2/11/16 and the closing low thus far this year is 1829.08 on 2/11/16. The intraday low in 2015 was 1867.01 on 8/24/15 and intrayear closing low for 2015 was 1867.61 on 8/25/15. Obviously, a failure under the 1810-1868 zone would lead to a catastrophic path ahead for stocks. A move above 2118-2121 paves the way to new all-time highs at 2135.

The SPX is above the 200 EMA on the 1-hour chart at 2076 which signals bullish markets for the hours and days ahead. If the SPX fails at 2076, stocks will be falling down the rabbit hole. The bulls will continue living large if the SPX remains above 2076. The SPX begins July at 2099. The SPX is 55 points above the starting year number at 2044; the S&P 500 is up +2.7% on the year.

For Tuesday, 7/5/16, the first day of trading this week for US stocks, the SPX begins at 2103. The bulls need to touch the 2109 handle and bingo, price will thrust higher to immediately test the critical 2118-2121 range mentioned above. The bears need to push below 2098 to accelerate the downside. A move through 2099-2108 is sideways action for Tuesday.

The new moon peaked for the month at 7 AM EST today and stocks are typically bearish moving through the new moon. Conversely, the new month, and especially new quarter, should receive new money into the market creating buoyancy in stocks. A Bradley turn is 7/5/16 so remain alert for an abrupt and dramatic move in the stock market at any time forward.

If the SPX pushes up through the 2109-2110 resistance, price will run higher to 2118 very quickly for a key test of this very strong 2118-2121 resistance level. A move above 2118-2121 and price is likely headed to new record highs.

If the bears push under the strong 2098, a test of 2094 will occur in a heartbeat. If that fails, 2089 support is next. The 2076-2079 support level is very important. Market bulls are partying like its 1999 if they remain above 2079. Bears will create mayhem if 2076 fails.

Looking at the near-term picture the strongest price support/resistance is 2135, 2131, 2129, 2126, 2121-2123, 2118, 2110, 2102, 2094, 2089, 2083, 2081, 2079, 2067, 2046, 2042, 2032, 2022, 2019, 2011, 2002, 1997, 1993 and 1985-1988.

Note: If the list below displays any blank spaces, view it in a different browser.

2135 (5/20/15 All-Time Intraday High: 2134.72)
2133 (7/20/15 Intraday High 2132.82)
2131 (5/21/15 All-Time Closing High: 2130.82)
2130 (6/22/15 Intraday High 2129.87)
2128 (7/20/15 Closing High: 2128.28)
2126 (4/27/15 Intraday High: 2125.92)
2124 (6/23/15 Closing High: 2124.20)
2121 (4/24/15 Intraday High: 2120.92) (6/8/16 Intraday High for 2016: 2120.55)
2120 (2/25/15 Intraday High: 2119.59)
2119 (6/8/16 Closing High for 2016: 2119.12)
2118 (4/24/15 Closing High: 2117.69)
2117 (3/2/15 Closing High: 2117.39)
2116 (11/3/15 Intraday High: 2116.48)
2111 (4/20/16 Intraday High: 2111.04)
2110 (11/3/15 Closing High; 2109.79)
2108.71 Previous Week’s High
2108.71 Friday HOD
2104 (12/2/15 Intraday High: 2104.27)
2102.95 Friday Close – Tuesday Starts Here
2103 (12/2/15 Closing High: 2102.63)
2102 (4/20/16 Intraday High: 2102.40)
2098.86 July Begins Here
2097.90 Friday LOD
2094 (12/29/14 Intraday High: 2093.55)
2091 (12/29/14 Closing High: 2090.57)
2082.24 (20-day MA)
2079 (12/5/14 Intraday High: 2079.47)
2076.65 (50-day MA)
2076 (11/28/14 Intraday High: 2075.76)
2075.70 (200 EMA on 60-Minute Chart a Keystone Market Turn Signal)
2075 (12/5/14 Closing High: 2075.37)
2073 (11/26/14 Closing High: 2072.83)
2071 (11/21/14 Intraday High: 2071.46)
2056 (11/18/14 Intraday High: 2056.08)
2050.00 (10-month MA)
2049.67 (20-week MA)
2048.92 (20-month MA)
2046 (11/13/14 Intraday High: 2046.18)
2044 (12/31/15 Closing High: 2043.94)
2043.94 Trading for 2016 Begins Here
2042.27 (100-day MA)
2036.47 (100-week MA)
2032.68 (12-month MA; a Keystone Cyclical Signal) (the cliff)
2023.15 (200-day MA)
2022.83 (50-week MA)
2021.98 (150-day MA; the Slope is a Keystone Cyclical Signal)
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 (8/26/14 Intraday High: 2005.04)
2003 (8/29/14 Closing High: 2003.37)
1993 (1/15/15 Closing Low: 1992.67)
1991.68 Previous Week’s Low
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)
1981 (2/2/15 Intraday Low: 1980.90)
1968 (6/24/14 Intraday Top: 1968.17)
1967.61 (150-week MA)
1963 (6/20/14 Closing High: 1962.87)
1956 (6/9/14 Intraday Top: 1955.55)
1951 (6/9/14 Closing High: 1951.27)
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)
1868 (8/25/15 Closing Low: 1867.61)
1867 (8/24/15 Intraday Low: 1867.01)
1859 (1/20/16 Closing Low: 1859.33)
1851 (1/15/14 Intraday Top: 1850.84)
1849 (12/31/13 Intraday High Top for 2013: 1849.44)
1858.86 (200-week MA)
1848 (1/15/14 Closing High: 1848.38) (12/31/13 Closing High for 2013: 1848.36)
1829 (2/11/16 Closing Low for 2016: 1829.08)
1838.46 (50-month MA)
1814 (11/29/13 Intraday Top: 1813.55)
1812 (12/9/13 Intraday Top: 1811.52) (1/20/16 Intraday Low: 1812.29)
1810 (2/11/16 Intraday Low for 2016: 1810.10)
1809 (12/9/13 Closing Top: 1808.37)
1807 (11/27/13 Closing Top: 1807.23)