Sunday, December 31, 2017

Keybot the Quant Turns Bearish

The Keybot the Quant algorithm flips to the short side at SPX 2678 during the final minutes of trading Friday as the year ended. The chips collapse into the closing bell and volatility jumps creating the flush lower in stocks. For the first week of trading in 2018, utilities, chips and volatility are running the show. More information is found at Keybot's site;

Keybot the Quant

Friday, December 29, 2017

UTIL Utilities Weekly Chart; Battle Continues at the 50-Week MA

The market bulls are winning the battle at the important UTIL 50-week MA at 719.62-ish. The bulls managed to close the trap-door and avoided falling through. The drama continues. If UTIL 719.62 fails, the stock market will be in trouble. The end of year positive seasonality and Santa Claus rally has been buoying stocks this week.

The blue circle is 726.63 an important number for all of next week. Bears will be okay if they keep UTIL below 726.63 and then below the brown line for the week of 1/8/18. Of course, if the bears can push UTIL under the 50-week MA at 719.62 this sets the stock market on a troubled path ahead.

Conversely, if UTIL rallies above 726.63 today and closes the week above the bulls will be planning a joyous upside rally next week. Tax-loss selling did not occur this year in early December since taxes will likely be lower in 2018 so there may be a bunch of selling occurring in the stock market to begin the year.

If UTIL remains between 719.62 and 726.63, the stock market will stumble along sideways with a slight upward bias. If UTIL moves above 726.63, the bulls will ramrod the stock market to new record highs. If stocks rally but UTIL does not move above 726.63, stocks will roll over to the downside. If UTIL drops below 719.62, the trap-door opens for equities, and, since the utilities have been playing around at this level already, this time a sharp failure may occur and send stocks sharply lower in quick order. So utilities are very important as the new year begins.

Ditto volatility. Market bears need VIX above 10.43 which will signal stock market trouble. The Keybot the Quant algorithm remains long but if either utilities or volatility turns bearish as described, either one would do, and if the SPX drops below 2683, Keybot will likely flip short. S&P futures are up +10 about one-half hour before friday's opening bell.

Today is EOM, EOQ4, EOH2 and EOY2017. The monthly charts receive new data points today. 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 New Year's Day: The drama with utilities continues into the new year. For the week of 1/2/18 through 1/5/18, UTIL 719.63 and 726.63 are important. UTIL price begins at 723.37 to create theatrics. If UTIL fails through 719.63, the stock market ill likely go into a mini free fall. If UTIL moves above 726.63, the stock market will be floating higher to new record highs. If 719.63 fails, run for your life.

Tuesday, December 26, 2017

UTIL Utility 1-Minute Chart; Testing the Critically-Important 50-Week MA at 719.61

The market bears are jumping up and down on the utility trap-door at 720. The 50-week MA at 719.61 is a critical level for the broad stock market. Bad things would be expected to happen to the stock market if the trap door opens. With price at 719.35, the trap-door is opening. Can the bears open the trap-door all the way to tank the market or will the bulls manage to secure the trap-door and prevent trouble for equities? The battle continues with price dancing on each side of the trap-door deciding what to do.

Semiconductors are key today as well. If the market bears can maintain weak utes and get the chips to start falling more, they can push stocks lower. This is an odd week of trading, the last week of the year, with low volume. It may be an exciting week 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.

Note Added 3:04 PM EST: UTIL is at 719.17. The 50-week MA is at 719.60. The bears are winning by 43 cents. Watch the UTIL 50-week MA very closely this week. The SOX is at 1258.66. The market bears will growl very strongly if a couple more points are lost in the chips.

Note Added 3:13 PM EST: UTIL is at 718.98. The 50-week MA is at 719.60. The SOX is at 1258.69 hesitating to move lower. Bears have the markets on a silver platter if they want it. Jam the chips lower and stocks would likely fall apart. The bulls know this and are aggressively buying chips to support the sector.

Note Added 3:21 PM EST: UTIL collapses to 718.47. Time to strap in the shoulder harness. The ride may become quite bumpy ahead. Bulls are trying to jam SOX higher, now at 1259.28, to nullify the drastically-negative impact of the UTIL 50-week MA failing. The tension continues.....

Note Added 3:21 PM EST: UTIL 718.24. SOX 1259.38. Bears need the SOX to lose a couple-three points which will likely flush markets south. Bulls need to move UTIL above 719.61 to close that trap-door as soon as possible and survive another day. The longer the trap-door remains open, the more likely that stocks will fall apart.

Note Added 3:28 PM EST: UTIL 718.17. SOX 1258.77. She's slipping. SPX 2679.

Note Added 3:33 PM EST: UTIL 717.88. SOX 1258.63. SPX 2678.50. The S&P 500 is testing the lows from Friday and today. This is for all the marbles. Stocks will either bounce or die now into the closing bell. Decision time. TRAN is slipping negative. Banks, XLF, are down -0.4%. The utility trap-door is open.

Note Added 4:24 PM EST: UTIL 717.03. SOX 1258.88. SPX 2680.50. The bulls ran the clock out. Nothing to see here folks, move along, folks, move along now, move along. The bulls limp into the closing bell. The utility trap-door is wide open so something very negative can happen to the stock market at anytime even tomorrow's opening bell. If UTIL remains under 719.61, something negative is going to happen. Watch the chips. A couple points lower in SOX and the stock market will fall apart.

Sunday, December 24, 2017

Template for 2018 Market Predictions

Here is a template for anyone interested in recording your own predictions for 2018. The task is useful in developing your forecasting ability over the intermediate and longer term and will provide comic relief come December 2018. It is very difficult to forecast the markets and economy 12 months in advance which is all part of the fun.

Bet against someone else to see who has bragging rights at the end of next year. Of course, revise the list to add or delete market parameters of interest. Closing Prices are for end of year 12/31/18. The Price Range is the high and low during 2018.

Keystone will assess the successes and failures on the 2017 Predictions over the coming days and also post his 2018 Predictions in the days ahead. The power of the central bankers is unstoppable for the last nine years; it is epic and remarkable. All the ticker symbols can be typed into stockcharts.com to view the charts.

2018 Broad Market Predictions
SPX High for 2018:
SPX Closing Price for 2018:
SPX Low for 2018:

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:
30-Year Note Yield Range ($TYX):
30-Year Note Closing Yield ($TYX):  
Will Yield Curve Flatten or Steepen?

Unemployment Rate % Range: 
Unemployment Rate % December 2018:
GDP Average for 2018: 

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): 
Silver Range ($SILVER): 
Silver Closing Price ($SILVER): 
Copper Range ($COPPER):
Copper Closing Price ($COPPER): 
Commodities Range ($CRB): 
Commodities Closing Price ($CRB):  

China Growth Rate % Average for 2018:

2018 Sector Predictions
Technology Sector (XLK) Higher or Lower in 2018?
Semiconductor Sector (XSD, SOX, SMH) Higher or Lower in 2018?
Financials Sector (XLF or KRE) Higher or Lower in 2018?
Semiconductors (SOS or SMH or XSD) Higher or Lower in 2018?
Technology Sector (XLK) Higher or Lower in 2018?
Airline Sector (XAL) Higher or Lower in 2018?
Energy Sector (XLE) Higher or Lower in 2018?
Industrials Sector (XLI) Higher or Lower in 2018?
Materials Sector (XLB) Higher or Lower in 2018?
Transportation Sector (TRAN or IYT) Higher or Lower in 2018?
Retail Sector (XRT or RTH) Higher or Lower in 2018?
Consumer Staples Sector (XLP) Higher or Lower in 2018?
Consumer Discretionary Sector (XLY) Higher or Lower in 2018?
Homebuilders (XHB) Higher or Lower in 2018?
Home Construction Sector (ITB) Higher or Lower in 2018?
Real Estate Sector (XLRE) Higher or Lower in 2018?
Utilities Sector (UTIL or XLU) Higher or Lower in 2018?
Health Care Sector (XLV) Higher or Lower in 2018?
Biotech Sector (IBB or XBI) Higher or Lower in 2018?
Telecom Sector (Pick one VOX, XTL or IYZ) Higher or Lower in 2018?

2018 Predictions for the 21 Multi-Year Bull Market Leaders
AAPL (Apple) Higher or Lower in 2018?
AMZN (Amazon) Higher or Lower in 2018?
AVGO (Broadcom) Higher or Lower in 2018?
BA (Boeing) Higher or Lower in 2018?
CELG (Celgene) Higher or Lower in 2018?
CRM (Salesforce) Higher or Lower in 2018?
FB (Facebook) Higher or Lower in 2018?
GE (General Electric) Higher or Lower in 2018?
GOOGL (Google) Higher or Lower in 2018?
HD (Home Depot) Higher or Lower in 2018?
MA (MasterCard) Higher or Lower in 2018?
MSFT (Microsoft) Higher or Lower in 2018?
NFLX (Netflix) Higher or Lower in 2018?
NKE (Nike) Higher or Lower in 2018?
NVDA (NVIDIA) Higher or Lower in 2018?
PCLN (Priceline) Higher or Lower in 2018?
RTN (Raytheon) Higher or Lower in 2018?
SBUX (Starbucks) Higher or Lower in 2018?
ULTA (Ulta Beauty) Higher or Lower in 2018?
UAA (Under Armour) Higher or Lower in 2018?
V (Visa) Higher or Lower in 2018?

List Further 2018 Prognostications Below:
List domestic and global economic and political forecasts below.

Friday, December 22, 2017

UTIL Utilities Weekly Chart; Weekly Downtrend Begins; 50-Week MA Failure Would Be Ominous Signal for the Stock Market

Light volume and calm trading is expected on this last day of trading before Christmas weekend. However, an ominous signal occurs for markets in yesterday’s trading. Utilities are in free fall. PCG crashed -13% and EIX -7.3%. SCG -10%. UTIL is testing its 50-week MA at 718.32. The LOD yesterday was 714.57 rupturing the 50-week. UTIL ends the day at 719.23 above the 50.

The UTIL 50-week MA is typically a trap-door signal for the broad stock market. The seasonality joy, tax bill euphoria and government spending bill create the short-term market happiness trying to keep stocks elevated into the holiday weekend. The collapse in utes is extremely serious. Many trading algorithms, such as the Keybot the Quant algo, have the UTIL 50-week MA programmed into the models so a failure of this parameter can lead to a free fall in the stock market.

Keystone has not yet called the top in the stock market this year because the utilities have not rolled over. Now they are. The utes typically roll over coincidentally or up to 2 months ahead of the broad stock market when a major stock market top prints. Thus, exercise caution in all trading going forward. The rising wedge pattern is ominous and looking at the drop you can see why Keystone always says the collapses from rising wedges can be quite dramatic.

The other significant development in the chart is that utilities have now fallen into a weekly downtrend which is a bad signal for the stock market. Count 15 weeks back with the candlesticks and that price determines if the current week is above or below and thus if the weekly trend in utes is higher or lower. This is old-time technical analysis that only the old-timer's understand. This week, utes fell through the level shown for the candlestick before the blue circle. Next week, the comparison number is the blue circle so utes remain in a weekly downtrend as long as price stays below the blue circle.

Even more important and concerning, is that UTIL collapsed lower below the 15-week lookback comparison number for the first two weeks of the new year shown by the brown circle. If price stays below there, utes will remain in a weekly downtrend for the foreseeable future and there is likely serious trouble coming very fast for the US stock market.

With today the last day of trading before the Christmas weekend, a market event may not occur, however, considering the low trading volume expected, if UTIL fails through the 718 level, a stock market collapse would be firmly on the table. This situation remains in play next week and into the new year. Watch the UTIL 50-week MA at 718 like a hawk since it tells you a lot about the direction of the stock market ahead. If the UTIL 50-week MA fails, the stock market may go into free fall.

Watch the UTIL 718 level at the opening bell this morning; it is for all the marbles. Will price bounce, or die? 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 at 12:43 PM EST: It is lunchtime in the States on the East Coast, and UTIL is at 720.70 with the 50-week MA at 718.35. LOD 720.34. The devil is dancing on the head of a pin. Stocks are maintaining buoyancy since the trap-door at UTIL 718 did not open; yet. SPX 2680. INDU 24730. COMPQ 6950. RUT 1544. VIX 9.89. Market bears do not have any hope with the VIX below 10. The drama continues.

Note Added Saturday, 12/23/17: The bulls win the game on Friday keeping UTIL above the 50-week MA. This saga continues next week and into next year.

Monday, December 18, 2017

SPX S&P 500 Daily Chart; SPX Prints All-Time Record High 2694.97; Overbot; Rising Wedge; Negative Divergence; Price Extended; Upper Band Violation; Tax Bill Eve

The stock market rises on the tax bill hype printing a new all-time high at 2694.97 and new all-time closing high at 2690.16. The S&P was only 5 points from 2700. The tight bands squeezed out a strong upside move (yellow arrows). The red lines show negative divergence in play wanting price to roll over to the downside but the MACD remains long and strong wanting another higher high in price after any pull back occurs in the daily time frame. The RSI and stochastics are overbot agreeable to a selloff. Ditto the red rising wedge which is a bearish pattern.

Therefore, a jog move would be a projection, down one day, say Tuesday, then up the next for another new high, say Wednesday when President Trump is perhaps signing the tax bill into law, and that would be the top. When price comes up after a pull back you need to see the MACD line go neggie d that will tell you the top is in.

The CPC and CPCE put/call ratios collapsed to uber lows indicating complacency and a near-term top at hand and this jives nicely with the chart above. A hump day top may be in the works and from there the SPX should retreat to the 20-day MA at 2635 for starters. Price is extended way above the moving averages so a mean reversion lower is needed. The SPX violated the upper band at 2692 so the middle band, the 20-day, is on the table at 2635 and rising.

The ADX is moving higher. Market bulls need to see the ADX above 30 since that will prove the upside trend is strong and more upside joy is ahead and the bull rally will be extended. The bears need to crush the ADX right here and start pushing it lower to prove the upside trend has failed.

It would not be surprising to see the SPX testing the 50-day MA at 2597-2601 the first week of January, or sooner. The tax bill impact on the market, however, remains an unknown until mid-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.

CPC and CPCE Put/Call Ratios and SPX S&P 500 Daily Charts; Rampant Complacency Signals Near-Term Market Top At Hand



Keystone highlighted the low CPC and CPCE put/call ratios over the last couple weeks but the bulls continue to enjoy upside momentum. The happy central banker talk last week and current joyous tax bill talk send stocks higher. The market is news-driven. The rampant complacency continues as evidenced by the uber low CPC and CPCE put/call ratios. Traders are drunk as skunks on Fed wine and ECB champagne while smoking BOJ crack. Traders are in a euphoric stupor, donning lampshades on their heads and buying stocks at the ask. No one is concerned about a stock market selloff. This is also verified by the low VIX (volatility).

The low CPCE signals another stock market top in the near term (red circles) that will occur at anytime forward. The SPX print up at 2694.97, the highest number in the history of the stock market may serve as that near-term high. The SPX was only 5 points from 2700 today.


The red circles show what happens when traders become too complacent. What do you think will happen? The bears were jipped with the other shallow lows since the happy central banker talk and tax bill talk overruled the negativity. The euphoric bullishness is so off the charts now, however, that stocks definitely need to sell off and take a breather. It will not be surprising to see the SPX drop from 20 to 80 handles so 2600-ish is definitely on the table for early January.

Reference the SPX support/resistance information in the prior post. The downside support is 2680, 2676, 2668, 2660, 2652, 2639, 20-day MA at 26362634, 2628, 200 EMA on the 60-minute chart at 2627, 2606, 2601 and the 50-day MA support at 2597. Note the air pocket from the 2620's to 2606. The top can occur at any time any day forward. If you enjoy profits from a spike in your longs during December, take the money and run. The tax bill impact on the market remains an unknown until mid-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.

BRKA Berkshire Hathaway 2-Minute Chart; Warren Buffett's Pride and Joy Prints Above 30,000 First Time in History

Billionaire Warren Buffett leaps to his feet the orthopedic pillow in his leather chair falls on the carpet. Berkshire Hathaway, BRKA, prints above 300,000 tagging 300.1K. Buffett cheers then briefly grabs his chest. What an accomplishment for the “Oracle of Omaha.”

Buffett purchased his first share in Berkshire Hathaway 55 years ago. BRKB, better priced for the retail investor, is up +1% to the 200.00 level a record high. The wealthy class is truly blessed in America. One share of Buffett’s stock is worth more than $300,000. He never believed in stock splits. 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.

COMPQ Nasdaq Composite 1-Minute Chart; Nazzy Comp Prints Above 7,000 First Time in History

The Nasdaq Composite prints above 7K for the first time in history. The bulls are unstoppable. The euphoria and joy over the new tax bill is sending stocks to the stratosphere. 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 Support, Resistance (S/R), Moving Averages and Other Important Levels for Trading the Week of 12/18/17

SPX (S&P 500) support, resistance (S/R), moving averages and other important levels are provided for the trading week of 12/18/17 the second-to-last week of the year. Levels shown in bold are strong resistance and support. Bold and underlined levels are very strong and important S/R.

The all-time record high print for the S&P 500 is 2679.63 12/15/17 and the all-time closing high is 2675.81 on 12/15/17. 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. Former Federal Reserve Chairman Bernanke implemented QE1 in March 2009 to save the stock market and protect the wealthy elite class that own large stock portfolios.

For 2017, the intraday high is 2679.63 and closing high is 2675.81. For 2017, the intraday low is 2245.13 from the first trading day of the year on 1/3/17 and the closing low for the year is at 2257.83 on 1/3/17 (these lows occurred one-year ago).

For 2016, the intraday high is 2277.53 on 12/13/16 and closing high at 2271.72 on 12/13/16. For 2016, the intraday low is 1810.10 on 2/11/16 and the closing low for 2016 is 1829.08 on 2/11/16. The intraday low in 2015 is 1867.01 on 8/24/15 and closing low for 2015 is 1867.61 on 8/25/15.

The upside orgy in the SPX continues fueled by central banker easy money and the euphoric talk concerning the US tax-cut bill. Everything is going the bull’s way. Friday was the highest print in history for the SPX at 2680. Strong support is at 2668. If this fails, the 2659-2660 support is next, then 2651-2652.

For Monday, the S&P futures are up 11 points, so a new record at SPX 2686 is likely. The bears need to push below 2659 on Monday to gain any downside traction. Stocks are usually lower through the new moon that peaked for the month overnight but equities move higher this month. Markets are news-driven by the tax bill joy. Markets will be closed for Christmas Day next Monday so stocks are typically buoyant the couple days before a three-day holiday weekend.

The strongest support/resistance for the SPX (S&P 500) is 2680, 2676, 2668, 2660, 2652 and 2639. The 20-day MA support at 2630 needs to be tested at some point forward. The month began at 2648 with 9 trading days remaining in the month, quarter, second half of year and year (EOM; EOQ4; EOH2; EOY2017).

Note: If the list below displays any blank spaces, view it in the Google Chrome browser. If you experience any difficulties viewing the blog sites or disabling Adblock, you have to view the sites in Google Chrome. The data is current up through 12/17/17.

2730
2720
2710
2700
2690
2680 (12/15/17 All-Time Intraday High: 2679.63) (12/15/17 Intraday High for 2017: 2679.63)
2679.63 Previous Week’s High
2679.63 Friday HOD
2676 (12/15/17 All-Time Closing High: 2675.81) (12/15/17 Closing High for 2017: 2675.81)
2675.81 Friday Close – Monday Starts Here
2672
2670
2668
2666
2665 (12/4/17 Intraday High: 2665.19)
2664
2663
2662
2661
2660
2659.14 Friday LOD
2659
2658
2657
2652
2651.47 Previous Week’s Low
2651
2649
2648
2647.58 December Begins Here
2646
2645
2644
2642
2641
2640
2639
2637
2635
2634
2630.27 (20-day MA)
2630
2629
2628
2627
2626
2625
2622.58 (200 EMA on 60-Minute Chart a Keystone Market Turn Signal)
2620
2606
2605 (12/1/17 Intraday Spike Low: 2605.52)
2601
2600
2599
2597 (11/7/17 Intraday High: 2597.02)
2595
2594.20 (50-day MA)
2591
2588
2585
2584
2580
2579
2578
2575
2573
2569
2567
2566
2564
2560
2555
2551
2549
2548
2545
2544 (10/25/17 Intraday Low: 2544.00)
2541.31 (20-week MA)
2541
2540
2538
2536.31 (100-day MA)
2535
2534
2532
2530
2529
2521
2520
2519
2512
2510
2508
2507
2503
2501.34 (150-day MA; the Slope is a Keystone Cyclical Signal)
2500
2497
2496
2494.21 (10-month MA)
2491 (8/8/17 Intraday High: 2490.87)
2488 (9/25/17 Intraday Low: 2488.03)
2484 (7/27/17 Intraday High: 2484.04)
2483
2482
2481 (8/7/17 Closing High: 2480.91)
2480
2478 (7/27/17 Closing High: 2477.83)
2477
2476
2475
2472
2469
2468.22 (200-day MA)
2468
2465.38 (12-month MA; a Keystone Cyclical Signal; the cliff)
2465
2454 (6/19/17 Intraday High: 2453.82)
2453 (6/19/17 Closing High: 2453.46)
2450
2448
2445
2443
2442.33 (50-week MA)
2442
2441
2439
2438
2436
2434
2431
2429
2428
2426
2423
2422
2419
2417 (8/21/17 Intraday Low: 2417.35)
2416
2415
2412
2406
2404
2401 (3/1/17 Intraday High: 2400.98)
2400
2396 (3/1/17 Closing High: 2395.96)
2394
2390
2389
2387
2382
2380
2378
2375
2373
2370
2368
2365
2363
2361
2359
2357
2356
2355
2353
2351
2349
2345
2343
2342.85 (20-month MA)
2342
2340
2338
2336
2335
2329
2322
2311
2300
2299
2298
2297
2296
2293
2290
2289
2286
2285
2281
2280
2279
2278 (12/13/16 Intraday High; 2277.53)
2277
2275
2274
2273
2272.53 (100-week MA)
2272 (12/13/16 Closing High: 2271.72)
2271
2270
2269
2268
2265
2263
2260
2258 (1/3/17 Closing Low for 2017: 2257.83)
2254
2252
2249
2245 (1/3/17 Intraday Low for 2017: 2245.13)
2241
2239 (12/30/16 Closing Low: 2238.83)
2238.83 Trading for 2017 Begins Here
2238
2234 (12/30/16 Intraday Low: 2233.62)
2214
2213 (11/25/16 Intraday and Closing High: 2213.35)
2212
2211
2210
2209
2207
2206
2205
2202
2200.65 (150-week MA)
2200
2199
2198
2195
2194 (8/15/16 Intraday High: 2193.81)
2191 (12/1/16 Closing Low: 2191.08)
2190 (8/15/16 Closing High: 2190.15)

2187 (12/1/16 Intraday Low: 2187.44)

Saturday, December 16, 2017

Keybot the Quant Turns Bullish

Keybot the Quant flips back to the long side on Friday at SPX 2668 with the stock market popping due to strength in copper and in the semiconductor stocks. For Monday, as the chips go, so goes the markets. More information is found at Keybot's site,

Keybot the Quant

Friday, December 15, 2017

SPX S&P 500 2-Hour Chart; Negative Divergence

The market bulls are partying like its 1999. More joyous chatter on the tax-cut bill in Congress pumps the S&P 500 to a new all-time high at 2672.33 the highest number ever printed in history. Bears are slapped in the face with the central bankers and then when they take a rest, the happy tax-cut bill talk sends prices higher.

The 2-hour chart is not looking for more upside, however, and is more in tune with the previous CPCE put/call ratio chart looking for downside. Perhaps the tax bill is a sell-the-news event? Price makes the new all-time high but the chart indicators are universally negatively diverged (red lines) wanting to see a spankdown.

If more happy tax bill talk occurs today, the upper band at 2675 must be respected but even if that prints, the indicators will likely remain neggie d. Note how price did retreat to the middle band on the previous selloff but the bulls rammed it higher again on the dovish central banker talk this week and the tax bill euphoria. ECB's Draghi flaps his dovish wings yesterday paring back on stimulus but saying the QE program may run long after September 2018; the central bankers cannot help themselves. The central bankers are the market.

The expectation is for a pull back so it will be interesting to see how it plays out today. 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 Saturday, 12/16/17: The wild upside stock market orgy continues after Senators Rubio and Corker (who originally voted no) said they will vote yes on the tax bill. The new tax legislation is a done deal and will be signed next week so stocks catapult higher. Markets remains very news-driven. When charts are hit with a news event it may take a little bit of time to price it in. Let's see how the chart looks after the upside push. The SPX pierces that upper band at 2678 printing a HOD on Friday at 2679.63 the highest number ever printed in history. Since the upper band is violated, the middle band at 2664, and rising, is on the table. The neggie d shown above remains in place. The stochastics push higher but now they are overbot. The MACD line is trying to squeeze out a smidgeon of life but overal, a roll over to the downside would be expected. The SPX daily chart has its indicators remaining negatively diverged wanting to see a spankdown but the pesky MACD line squeezes out a sliver more of upside juice with the tax bill happy talk so it may take a couple more days to fully top out. Perhaps down in the 2-hour time frame on Monday, then price comes back up again, then roll over for extended down say, starting mid week or so. Interestingly, the tax bill will likely be approved by Congress on Tuesday, then perhaps signed into law by the president on Wednesday. Either that will be a sell the news event in line with the charts, or, the euphoric joy over lower taxes will create another spike higher in equities and delay the top by a couple more days. And the other possibility, albeit very unlikely, is the bill hits a procedural snag next week and something goes amuck which would be a double-whammy to the downside along with the charts. Considering the odd, erratic adn unstable behavior ongoing in markets, and recent system outages and technical glitches being swept under the rug, do not rule out a flash crash event in the market up ahead; it would be the black swan no one sees since everybody is too busy buying stocks at the ask.

BPSPX S&P 500 Bullish Percent Index Daily Chart

The BPSPX is on a double-whammy buy signal after it reversed 6 percentage-points to the upside and then crossed above the 70% level. In late September, you knew consistent upside market joy would continue.

Market bears need to reverse the BPSPX by 6 percentage-points to create sustainable downside weakness in stocks. Lets call the top tick at 77.80 so taking away 6 is 71.80. The 71.80 would create a market sell signal and if the BPSPX  slips under 70, that will create a double-whammy sell signal and stocks will begin falling in earnest. The market bulls will remain joyous as long as the BPSPX remains above 71.80. If the BPSPX floats higher, simply subtract 6 from that top tick number and that will tell you when the bears are in firm control on the downside (it would be above the 71.80 number). 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 Saturday 12/16/17: The BPSPX finishes the week sticky at 77.80 so the above analysis holds. Bulls have no worries as long as BPSPX remains above 71.80. Bears take firm control of the stock market sending stocks lower when BPSPX falls below 71.80. When the 70% level fails, stocks will be tumbling lower in earnest.