Wednesday, June 28, 2017

PKW Buyback ETF Monthly Chart; Negative Divergence; Overbot; Upper Band Violation

Buybacks are the mother's milk of higher stock prices creating a never-ending rosy scenario for bullish traders. Central banker easy money provides plenty of cash for companies to implement huge share repurchase programs. The intent of the Federal Reserve's and other central banker's monetary policies is to provide easy terms so companies will buy capital equipment and hire workers to create a recovery. Screw this.

For the last few years, the greedy wealthy, investment banks and privileged class instead use the central banker money to fund buyback programs. The repurchase programs pop stock prices higher providing pocket fulls of money for those that hold large stock portfolios. The rich take care of their own. Every day of life is easy and great if you are wealthy and own a lot of stocks.

PKW is a buyback ETF. Obviously, it runs insanely higher over the last few years as buybacks are all the rage. However, the monthly chart is topping out. The daily and weekly charts are negatively diverged and want to see a retreat in price in the near term. The monthly chart displays universal negative divergence over the last 3 and 4 years (red lines). The bulls are trying to create a sliver more of strength (short green lines) which would be another month or two but the overall longer term neggie d should take command and roll PKW over to the downside.

The stochastics and  RSI are overbot open to a move lower. Price has violated the upper band so the middle band at 47.73 is on the table. It appears that the buyback game is coming to a conclusion. The obscene buybacks drove stock prices to their record highs last week. What happens when the buyback joy is over?

When everyone looks back a year or two from now, they will ask how could we not see it all coming (a drastic selloff in the stock market)? In the 2007-2009 financial crisis, subprime lending was clearly the culprit as well as the nefarious activity by the banksters. The thing that everyone is missing now is that the PE's are actually a lot higher than reported if adjusting for the impact of buybacks.

The buybacks have pumped most stocks at least +30% higher in price than they would have been without the buyback programs. This shorter term joy always occurs but it leads to longer term disappointment. The buyback eliminates stock shares so the earnings per share automatically moves higher. Isn't financial engineering great? Thus, if the PE is say, 18.5 now with earnings at 130 that yields the SPX at 2400. But taking away the buybacks, earnings would be more likely down at 90 to 110 (or adjust PE higher) which is an SPX at 1700-2100.

The 8-1/2 year central banker Keynesian experiment continues. The Fed has not been able to create inflation all these years despite their radical money-printing. Deflation likely wants to take a chunk of flesh out of markets since it was cheated from properly clearing markets back in 2009. A huge fuel supply for higher stock prices is buybacks but the buyback train is sputtering and likely running out of gas. 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, 7/3/17: The banks release stress test results last week and all pass to no surprise. The Federal Reserve loosens restrictions on the banks due to the passing grades. The banks announce dividend hikes and big buybacks. Financials rally. This is how the Wall Street game is played. PKW ends the week at 53.67.

DAX Germany Daily Chart; Neggie D Spankdown; Testing 50-Day MA

The DAX is printing at 12608 right now (red dot) falling below the 50-day MA support at 12611 that now becomes resistance. The upper standard deviation band was violated mid-month so the middle band is on the table and even the lower band. Price comes down to tag the middle band, dances there, and then fails and is very close to the lower band now at 12590.

The red lines show the ominous rising wedge pattern for price while all the indicators were negatively diverging. In addition, the indicators were coming off overbot levels. All these bearish indications forecast and create the spankdown that occurs. The indicators are weak and bleak so lower lows would be expected after any bounce would occur in this daily time frame.

Price likely wants to touch the lower band since it is in the neighborhood. That would place the middle band at 12730-ish on the table. The DAX likely wants to play around at the 12520-12600 range for a few days and then recover higher.

The DAX weekly chart is negatively diverged across all chart indicators so when price recovers in the daily time frame it will likely be a good opportunity to go short since the weekly charts wants to see weakness for a couple weeks or month. The monthly chart is topping out like other major global stock indexes so a multi-year top is on the table for the DAX this year.

The DAX is currently deciding to either bounce, or die, from the 50-day MA. 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, June 26, 2017

SPX S&P 500 Support, Resistance (S/R), Moving Averages and Other Important Levels for Trading the Week of 6/26/17

SPX (S&P 500) support, resistance (S/R), moving averages and other important levels are provided for the trading week of 6/26/17. Friday, 6/30/17, identifies the end of the month, end of the second quarter and the end of the first half of the year, EOM, EOQ2 and EOH1, respectively.

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 print is 2453.82 on 6/19/17 and the all-time closing high is 2453.46 on 6/19/17. 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.

For 2017, the intraday high is the 2453.82 and closing high is 2453.46. 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 thus far is at 2257.83 on 1/3/17. 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 stock market (S&P 500) prints the highest number in history at 2454 last Monday. The Dow Jones Industrials print above 21.5K. The band is playing, “Happy Days Are Here Again.” Traders are drunk as skunks buying stocks with reckless abandon and total disregard for price. The market complacency is proven by the low CPCE and CPC put/call ratios and multi-decade low in the VIX hanging around the 9 and 10-handles. Market bulls rule and bears do not have any hope with the subdued volatility.

The key price support and resistance levels are 2454, 2453, 2446, 2434-2436, 2431-2432, 2428, 2419, 2415-2416, 2412 (where June began), 2404, 2400-2401 and 2394-2396.

The SPX price is at 2438 remaining above the 20-day MA support at 2432 and above the 50-day MA above the 100 above the 150 above the 200-day MA. The moving average ribbon is stretched to the upside so price will need a mean reversion lower. The 50-day MA support is 2402.

The recent stock market rally began in early November when Trump won the US presidential election. The SPX has ran from 2080 in November to the record high at 2454 last week.

The new moon peaked on Friday evening. Stocks are typically bearish moving through the new moon but the S&P futures are +5 on Monday morning about 2-1/2 hours before the opening bell. The stock market closes early next Monday and will be closed next Tuesday for the July 4th Independence Day holiday. Trading volumes will likely trail off and remain subdued from Thursday, 6/29/17 through Wednesday, 7/5/17. In general, trading volumes may be light over the next couple weeks.

June ends on Friday as well as Q2 and H1 so window dressing is in play this week where funds buy the strongest stocks to show clients they own the winners in the monthly statements. Window dressing may provide lift in stocks early in the week. Two Italian banks are bailed out which is creating global market joy to begin the new week. June began at 2412 so if the bears want to create a negative month, they had better get busy sending stocks lower over the next five days.

For Monday, 6/26/17, with the S&P 500 beginning at 2438, the bulls need to push up through that 2440-2442 resistance level and it is smooth sailing to 2446 in quick order. Above that and price will seek 2451 and if that is taken out the all-time highs at 2453-2454 are on the table.

The market bears need to push the SPX under 2434-2436 to push lower to test that key 2431-2432 level to accelerate the downside. If the 2431 level is lost, price will immediately test 2428 and if it fails, the SPX will be at 2415-2422 in quick order. If the SPX loses the 2422 level (200 EMA on the 60-minute) this week, the stock market will begin accelerating lower. For now, the bulls rule.

A move through 2431-2441 is sideways action to begin the new week of trading.

Note: If the list below displays any blank spaces, view it in a different browser. The data is current up through 6/25/17.

2453.82 Previous Week’s High
2454 (6/19/17 All-Time Intraday High: 2453.82) (6/19/17 Intraday High for 2017: 2453.82)
2453 (6/19/17 All-Time Closing High: 2453.46) (6/19/17 Closing High for 2017: 2453.46)
2441.40 Friday HOD
2438.30 Friday Close – Monday Starts Here
2432.30 (20-day MA)
2431.11 Friday LOD
2430.74 Previous Week’s Low
2421.80 (200 EMA on 60-Minute Chart a Keystone Market Turn Signal)
2411.80 June Begins Here
2401.78 (50-day MA)
2401 (3/1/17 Intraday High: 2400.98)
2396 (3/1/17 Closing High: 2395.96)
2381.13 (20-week MA)
2376.35 (100-day MA)
2334.07 (150-day MA; the Slope is a Keystone Cyclical Signal)
2297.16 (10-month MA)
2286.86 (200-day MA)
2278 (12/13/16 Intraday High; 2277.53)
2276.34 (12-month MA; a Keystone Cyclical Signal; the cliff)
2272 (12/13/16 Closing High: 2271.72)
2269.18 (50-week MA)
2258 (1/3/17 Closing Low for 2017: 2257.83)
2245 (1/3/17 Intraday Low for 2017: 2245.13)
2239 (12/30/16 Closing Low: 2238.83)
2238.83 Trading for 2017 Begins Here
2234 (12/30/16 Intraday Low: 2233.62)
2213 (11/25/16 Intraday and Closing High: 2213.35)
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)
2181.69 (20-month MA)
2146.51 (100-week MA)
2135 (5/20/15 Intraday High: 2134.72)
2133 (7/20/15 Intraday High 2132.82)
2131 (5/21/15 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)
2120 (2/25/15 Intraday High: 2119.59)
2118 (4/24/15 Closing High: 2117.69)
2117 (3/2/15 Closing High: 2117.39)
2116 (11/3/15 Intraday High: 2116.48)
2115.36 (150-week MA)
2111 (4/20/16 Intraday High: 2111.04)
2110 (11/3/15 Closing High; 2109.79)

Sunday, June 25, 2017

BPSPX S&P 500 Bullish Percent Index

The market bears were singing songs and carrying-on as stocks pulled back (slightly) during March-May. The SPX was on a double-whammy sell signal having reversed six percentage-points off the top and fallen through the critical 70% level. But instead of bear joy, the bulls fight back and punch the bears in the face starting late May.

The bulls regain the important 70% level a market buy signal but the situation remains in flux. A six percentage-point reversal off the bottom 19 trading days ago would be the 73.4 level (67.4 + 6.0) and provide a double-whammy buy signal for the stock market.

Thus, the stage is set. The market bulls win big if the BPSPX moves above 73.4. There will be nothing but blue skies and rainbows ahead. The bears win if the BPSPX falls back below 70 which would restart the double-whammy sell signal and move the stock market strongly lower. Who will win? 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.

Friday, June 23, 2017

SPX S&P 500 30-Minute Chart; 8/34 MA Cross; Sideways Symmetrical Triangle

For the VST, the 8/34 MA cross on the SPX 30-minute chart is a very useful indicator. Look at the battle. Both key moving averages are at 2438. Thus, if price is above this level, the 8 MA will move above the 34 MA and bulls win going forward. If price slips under 2438, the 8 MA will stab down through the 34 MA and send the stock market lower.

The sideways triangle is in play with a vertical side at 32 points. So a breakout from 2440 targets 2472. A break down from 2434 targets 2402. Price is making a decision right now and has limited space available inside the apex of that triangle; it must choose a direction. The average of the two MA's is 2437.87 so this is the magic number. Bulls win  big above 2437.87 and then above 2440 while bears win big under 2437.87 and then under 2434.

Interestingly, the new moon peaks this evening at 10:30 PM EST and stocks are typically weak moving through this darkest time of the month. Thus, equities favor a downward bias into Monday. The low CPCE put/call ratio was previously highlighted so a market top is near. The S&P 500 either receives the beginning of a spank down today, that may send price from 20 to 40 points lower and maybe a lot more, or, the bulls muscle out a sideways to sideways higher move into the weekend but this will then top out probably early next week and roll over to the downside. 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 11:12 AM: High drama. The SPX price, and 8 and 34 MA's on the 30-minute, are all at ...... wait for it ....... 2438. Price must make a decision up or down. Bulls win big above 2439. Bears win big under 2437.

Note Added 12:13 PM: The drama continues. Interestingly, the central bankers are jamming volatility lower, the VIX drops under 10 to 9.98, however, the SPX is having trouble moving higher. This is a divergence with both stocks and volatility leaking lower. One of them is wrong. Either the SPX will spike higher or the VIX will spike higher. With the VIX pushed lower, the SPX should have already launched above 2440, 2442 and higher but instead remains sticky at 2438-2439. The S&P 500 may be running out of gas. The battle at 2438 continues as traders grab a lunchtime sandwich.

Note Added Sunday, 6/25/17: The S&P 500 ends the trading last week at.... wait for it..... 2438. So the drama continues. Last week ended with the bull-bear wrestling match in full swing. The SPX traded up to 2441 but could not break out higher. Then price collapsed lower to 2431 but then bounced sharply higher to end the day at ... wait for it....2438. The 2438 level is a popular pivot point and remains in play on Monday morning. Adding to the excitement is the chart above with the 8 MA resistance at 2438.64, the SPX price at 2438.30 and the 34 MA support at 2437.53 to end the week. The bulls are favored in this VST time frame as evidenced by the 8 MA above the 34 MA, however, it remains a crap-shoot since the moving averages and price all sit on top of each other at 2438. Flip a coin. The bulls and bears have plenty to think about before trading begins tomorrow morning. The stock market is a huge bull versus bear tug-o-war struggle and the center of the rope is at SPX 2438 to begin the week. Who will win?

Thursday, June 22, 2017

CPCE Put/Call Ratio and SPX S&P 500 Daily Charts

The CPCE put/call ratio plummets to a low not seen in over one-half year. The 0.50 reading indicates that traders are complacent. There is no fear that the stock market will ever go down. The central bankers keep pumping equities higher to reward the wealthy (that own large stock portfolios) so there is no reason to worry. Investors are drunk as skunks performing jigs of joy as they buy stocks with total disregard for price. Every day is a party; the put/calls drop and the VIX (volatility) keeps printing a 9 and 10-handle.

The red circles show the market tops over the last year. The green circles show the market bottoms. What do you think will happen? Above the green line at 0.80 represents fear and panic and blood in the streets. Investors are screaming and panicking, some jump out of windows; hopefully they are only on the first floor. This panic tells you to buy the stock market with both hands.

If you have been contemplating cashing out of some long positions, the chart above tells you to hurry up and throw them overboard and nibble on the short side. The stock market would be expected to top out at any time, any  hour, any day ahead, due to the rampant complacency, and tumble lower giving all the fearless people something to worry about. 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.

WTIC Oil Weekly Chart; Oversold; Positive Divergence Developing; Lower Band Violation

WTIC continues moving lower but this morning is attempting to steady itself at 42.77. Looking back, that green inverted head and shoulders (H&S) pattern is text book but after price broke above the neckline at 50 it was unable to remain above. The inverted H&S remains in play and the price action now can be considered  a new right shoulder forming. The head at 29 and neck line at 50 is a 21-point difference so a serious upside breakout would target 71.

Alas, oil prices sink lower. Price violates the lower standard deviation band so the middle band at 49.56, and falling, is on the table. The stochastics are oversold and the money flow is positively diverged wanting to see a bounce in the weekly time frame. This gels with the daily chart that is open to some recovery upside over the coming days.

However, the RSI and MACD line remain weak and bleak wanting lower lows in price after any bounce occurs. The indicators favor lots of sideways ahead perhaps through the white channel. Note the large selling volume over the last five weeks.

The expectation is for a bounce in the near-term any day forward and a week or so of up, then back down to the current lows and lower for a week or two after that and that price low may serve as the low for the weekly chart in that 41.0-42.5 range. Then prices likely move sideways to sideways higher going forward. The set up is not attractive for trading and Keystone has no positions in the oil patch since choppy sideways may be the path 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.

Wednesday, June 21, 2017

WTIC West Texas Intermediate Crude Oil Daily Chart; Oil Descends Into Bear Market; Lower Band Violation; Oversold; Positive Divergence

Keystone highlighted the Death Cross when it occurred at the end of May and early June. All the oil bulls that were long oil from 50 pooh-poohed the Death Cross laughing at anyone that pays attention to such foolish chart indications. Well, they are not laughing anymore as they sit in front of the computer shirtless with oil printing a 42-handle.

The drop from the February top at 55 to yesterday's low at 43 is a -22% drop. The price sits at 43.51 in the chart which is a -21% drop from the top. Oil is officially in a bear market. When a stock or index falls -10% that is deemed a correction. A drop of -20% is a bear market. Thus, oil has dropped from the correction phase into bear market territory.

Now that oil has plummeted, the silly humans are wringing hands and professing that oil is doomed going forward. Of course that negative sentiment and the chart indicators above will bounce price in this daily time frame. The indicators are universally positively diverged (green lines) as price prints a new low signaling that price wants to bounce and recover to take a breath from the massive drop. The stochastics are oversold also agreeable to a bounce.

Price has violated the lower standard deviation band (purple) so the middle band at 47.15 and dropping is on the table. The middle band, which is also the 20-day MA, is falling sharply and will likely line up with that 45.50 resistance level. The positive divergence may bounce oil price to the 44.4-45.5 area over the coming days. Keystone does not hold any positions in the oil patch currently.

Oil is at levels not seen since last November. Moving under 42 will likely send the price to 37-38. The oil bulls have a shot at stabilizing prices if they can maintain this sideways range at 42-46 for a few weeks. 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 Thursday Morning, 6/22/17: WTIC continues slipping lower yesterday down -2.2% to 42.53. Currently, oil is at 42.79. The MACD line makes a lower low on the daily chart so the psoitive divergence on the other indicators should bounce price, in the daily time frame, then price will likely come down once again, at that time a more firm base is likely for the daily time frame (so a day or two of up then a day or two of down then several days of up). Oil is likely headed for lots of choppy sideways action. If short the last couple weeks it is likely best to exit the trade. OI is not attractive long or short now since choppy sideways is likely the direction ahead. Brent oil joins WTIC in bear market territory. Brent oil is now down more than -22% off its February top.

YC2YR US Treasury Yield Curve 2-10 Spread Weekly Chart; Record Narrowing to Decade Lows

The 2-10 yield spread is under 80 bips again this morning to 79.5 basis points teasing levels from last year and from late 2007; one-decade lows. The 5-30 spread is also indicating a flattening yield curve at the narrowest levels since 2007.

Treasury yields are; 2-year 1.35%, 5-year 1.76%, 10-year 2.15%, 30-year 2.73%. The 2-10 spread is 80 bips and the 5-30 spread is 97 bips. German 10-year bund yield 0.25%. The US-German 10-year yield spread is 190 basis points and narrowing.

Comically, the television pundits, commentators and money managers are all standing on soap boxes proclaiming that the banks are the best investment going forward. Fred Fafooshnik, a retiree that sits each morning at the local coffee shop, is bragging that he took his entire life savings and placed it into the banks just like the guy on television advised.

Banks need a steeper yield curve to make lots of dough not a flattening yield curve. 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, June 20, 2017

Keybot the Quant Turns Bearish

Keystone's proprietary trading algorithm, Keybot the Quant, flips to the short side today at SPX 2242. Market bears need to see VIX above 11.62 and the stock market will be flushed strongly lower. Market bulls need either JJC above 29.41 or RTH above 81.50 to stop the stock market selling and restart the rally. If volatility remains bullish and copper and retail stocks bearish, the stock market will stagger along sideways with a slight downward bias.

As always, stay alert for a potential whipsaw tomorrow. More information can be found at Keybot's site;

Keybot the Quant

Thursday, June 15, 2017

SPX S&P 500 Daily Chart; Negative Divergence

The SPX daily chart remains buoyant despite the universal negative divergence in place since nine trading days ago. Price closes at a new high at 2440.35 on 6/13/17 . The all-time record high is 2446.20 from 6/9/17. Price now prints the matching high and the indicators remain universally negatively diverged (red lines). The chart wants to see a spank down.

The upper band (pink) was violated nine days ago but price has not yet come back to the middle band, which is also the 20-day MA support, at 2415 and rising, so this remains firmly on the table. The lower band at 2367 is also on the table. Price is elevated above the moving averages so a mean reversion lower is needed.

The blue circles show the numerous gaps that exist on the downside. All those Swiss cheese gaps will need filled at some point going forward. The market bears should be in the driver's seat with a trip down to 2415 very likely, at a minimum. Of course if the central bankers pump markets higher with happy talk or if the Trump administration touts tax reform, less regulations and/or infrastructure spending, this rhetoric can create some additional buoyancy.

The neggie d with the chart indicators wants price to retreat now. In addition, the weekly chart is negatively diverged so the move lower may be a trend for a month or two. As explained in previous charts, a month or two of lower prices may then lead to a month or two recovery in the stock market and at that time, perhaps a July-September window, the stock market may print a multi-year top in price. Another possibility is that this current high that is expected as described above is the multi-year high. Perhaps the 2446.20 may never be seen again for many 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.

Tuesday, June 13, 2017

SPX S&P 500 Monthly Chart and Wilshire 5000 Index Market Cap/GDP Quarterly Chart; Buffett Indicator; Stock Market at Excess Valuations

Billionaire investor Warren Buffett says the most valuable tool in assessing the stock market is the ratio of total market cap to GDP (both number units are in millions, billions and trillions of dollars). The ratio takes on many variations but all point to the same conclusion. Dividing the Wilshire 5000 Index market cap by the GDP yields the FRED chart above. Multiply the y-axis by 100 to yield a percentage for the ratio. The St Louis Fed provides valuable economic data and charts and the link for the above chart is provided below.

For the red circle, the dotcom bubble top, Q1 2000, the WLSH/GDP market cap to GDP ratio is 1.18 or 118%. The stock market is valued 118% above the GDP an overvalued condition. If the Wilshire market cap is less than GDP the stock market is undervalued. The dotcom bubble pops in early 2000 and stock slide lower into the 2003 bottom which was placed as the bombs fell over the Middle East in the start of the Gulf War. War is bullish. The bright green circle is at Q1 2003 at 0.65 or 65% an undervalued market.

Stocks rally from 2003 to 2007 due to former Fed Chairman Greenspan pumping stocks higher by lowering interest rates. Greenspan wanted to make sure all his rich buddies and the wealthy class as a whole made lots of money and in the process created the housing bubble. The marroon circle is Q2 2007 at 100% where stocks are becoming overvalued again. The housing bubble popped and took everything lower in the 2007-2008 financial crisis.

During 2004 through 2007, anyone that could fog a mirror was given a mortgage loan; that did not end well. The greedy banks packaged the subprime garbage loans (for people that could not afford the houses) in with reliable borrowers' loans and the rating agencies rated this bundle of good and bad debt as triple A. Of course, once the failed house-of-cards system began to collapse it deteriorated into the 2007-2009 financial crisis.

The stock market was never allowed to correct properly in early 2009 as capitalism would dictate and instead former Fed Chairman Bernanke stepped in to stick-save the stock market by implementing QE 1, a crazy Keynesian money-printing policy. The dark green circle is Q1 2009 at 56%.

In early 2009, the politicians, investment bankers and central bankers collude to tell everyone they are saving the financial system to help the common people when in fact this elite class was only protecting their own wealth. They needed to pump stocks higher and save their investments and that was Bernanke's mission. Only a couple months after leaving the Fed, Bernanke was paid a quarter-of-a-million dollars to show up at a token luncheon sponsored by the investment banks. A quid pro quo? This is how the crony capitalism system works in America.

Shamefully, in late 2008, former President George W Bush said he had to destroy capitalism to save it (by bailing out companies and printing money). It is not free markets or capitalism if stocks are not allowed to go through a correction phase and instead everyone wants a constant never-ending rising stock market.

The American financial system is a 'pseudo-free market crony capitalism system'. It benefits about 15 million people at the top of the food chain, the elite privileged class in the United States, while screwing the other 300 million. The central banker easy money  pumps stock higher and this behavior continues for the last 8-1/2 years. The final conclusion of the Federal Reserve's grand near-9-year Keynesian experiment has not yet played out.

The pink circle is in Q1 and Q2 2011 at 94%. The blue circle is Q4 2011 at 85%. Bernanke stepped up to the plate proclaiming "QE Infinity." He announces plans to print money like a madman and the stock market took off to the upside again from 2011 forward. In addition, other global central bankers now colluded with the Federal Reserve (BOJ, ECB, BOE, etc...), and this continues through the current day, to continue pumping all global asset classes higher with easy money.

So here we are at the brown circle at 127%-130% the highest ratio number in history. Stocks are overvalued. Can they remain overvalued for many  more weeks and months? Sure they can. Can it all collapse and fall apart tomorrow? Sure it can.

If you are a novice investor or young trader, stay away from the stock market this year. If you miss any additional upside in stocks, so what? You are young and will make lots of money on your savings in the future. Sit back and watch how this plays out. You may experience the bargain of a lifetime in 2018 and 2019 with stocks at fire-sale prices.

The biggest beneficiaries after the 1929 stock market crash were the people that had placed all their money in cash and got out of the stock market before it fell apart. Stock prices tumble lower and the prices are extremely attractive but no one had any money to buy after the great wash-out. Those that did have a lot of cash stashed bought blue-chip companies for pennies on the dollar. A few short years later they were multi-millionaires. 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.

The FRED chart above can be accessed at the St Louis Fed site.

Sunday, June 11, 2017

SPX S&P 500 Monthly Chart; Overbot; Rising Wedge; Negative Divergence; Upper Band Violation; Multi-Year Stock Market Top Developing

Keystone has been posting the SPX monthly chart monitoring the multi-year topping process for the stock market. The S&P 500 prints a new all-time high at 2446.20. Look  at that RSI ramp higher. Interestingly, the RSI is not yet above the prior peaks during the 2015 market top. Watch this closely going forward. The RSI is sloping upwards this year so it has momo in the short term, therefore, the stock market may perform a jog move (down one month, then up one month, then roll over creating a multi-year top perhaps in July-August).

The chart indicators remains negatively diverged (red lines) with the new record high in price. The S&P 500 is floating higher on fumes. The indicators have run out of gas (neggie d). The upper gold band has been violated so the middle band down at 2181 and rising is on the table going forward on this monthly basis. In addition, the lower band at 1888 is on the table should price tap the middle band.

The old-timer's watch the 10-month MA closely. Many algorithms have this level programmed as well as the 12-month MA (Keybot the Quant has the 12-mth MA programmed into its model). The 10-mth MA is at 2297. This level signals serious trouble and destruction ahead for the stock market i fit fails. A drop through the 12-mth MA at 2276 and stocks could easily be in free fall tumbling in earnest without a bottom in sight.

The red rising wedge is very ominous since the collapses from rising wedges can be quite dramatic. The SPX weekly and monthly charts are agreeable to topping out and rolling over. The monthly chart is very significant since this top is likely a major multi-year stock market top and current prices may not be seen again for many years once the market begins moving lower. It may be well into the 2020's before the stock market recovers if the ominous monthly chart plays out for the remainder of this year and over the next couple years. The 18-year secular bear cycle is 2000-2018 so the chart lines up with the expectation that the next couple years will be bad for stocks before the secular bull 18-year cycle begins from 2018-2036.

The expectation is for a multi-year stock market top to occur at anytime now through September. The thought is that is will occur sooner rather than later. The ramping up in the RSI in the very near term hints that stocks may sell off in say, May into June, but then bounce again in June-July to print matching all-time highs, then roll over as the RSI will be firmly negatively diverged at that time both over the last few years and over the near time frame.

Mixing all this windbag talk together and sprinkling on some magic dust, a major multi-year stock market top is likely at hand anytime now through August (this summer into Labor Day). Early August has been a horrible time for markets in the last few years.

As always, if President Trump touts infrastructure spending, tax reform or lower regulations, especially for banks, stocks will rally and delay the top. Ditto if the Federal Reserve or other  global central bankers promise more Keynesian easy money.

Generally speaking, if you are a novice investor stay away from this market. If you enjoyed big profits during the long rally, take the money and run. Leave a lot of your dough sit in cash for the weeks and months ahead. Who cares if you miss a few percent of upside? You must realize that you are picking up nickels in front of a bulldozer. There is a risk of -20% to -30% of downside, or more, versus eking out a few more percent of upside. Do not get caught up in the hype.

The only game-changer to the chart would be if the RSI pokes above the prior highs which would extend the multi-year topping process into late this year and/or early next year.

The reason television commentators and money managers are cheerleading stocks is because the institutions are in a distribution phase. They need to cash in on profits and hand their shares over to a bag-holding sucka and the best way  to accomplish this goal is to get Joe Sixpack all caught up in the excitement and having him buy stocks at the top tick. 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 Weekly Chart; Overbot; Negative Divergence; Upper Band Violation

Keystone posted the SPX weekly chart highlighting the likely top 5 weeks ago (red lines) which occurs but interestingly, price comes back up for another higher high. There was plenty of market drama last week with the UK election, ECB meeting and former FBI Director Comey testimony on Capitol Hill. The SPX prints a new all-time record high at 2446.20.

Note that with the new price high the chart indicators remain negatively diverged (maroon lines). Price is moving higher on fumes; there is no underlying strength remaining. Stocks are typically bullish heading into a Fed meeting and Chair Yellen provides the rate decision and holds a press conference on Wednesday afternoon, 6/14/17. Yellen's decision may be the catalyst for the downside in stocks to begin, or, if not, a jog move may occur where price is up next week then moves lower the week or so afterwards. The neggie d says price is out of gas for further upside on this weekly basis.

Price has violated the upper standard deviation band so the middle band at 2367 and rising is on the table. The blue rising wedge is very ominous since the collapses from rising wedges can be quite dramatic. It would not be surprising to see the rising wedge send the SPX to 2050-2200 over the coming months. The expectation is for stocks in the nearer-term is to top out in this weekly time frame and begin moving lower for a few weeks or 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.

SPX S&P 500 Daily Chart; Overbot; All-Time Record High 2446.20; Negative Divergence; Upper Band Violation

The red lines on the daily chart show negative divergence in play. The neggie d along with the overbot stochastics want to see price move lower. The money flow may have a tiny smidgeon of energy to create another jog move (down one day up one day then roll over to downside) but the indicators in total would like to see price slapped lower.

Intraday Friday the SPX was sent lower with a wild 31-point drop in the SPX off the 2446.20 all-time record high. Price recovered into the closing bell to end the week. Note the Friday candlestick with very long shadows representing the new all-time high at 2446.20 and the LOD at 2415.70 ending in the middle at 2432. This behavior indicates a knock-down drag-out battle between bulls and bears ongoing.

Price violated the upper band (pink) six days ago so the middle band is in play at 2409 and rising. The SPX came down to 2415 on Friday but it would need to actually touch the middle band, which is also the 20-day MA, to show it the proper respect it demands.

The 200 EMA on the SPX 60-minute chart posted earlier is down at 2406 and rising call it the 2406-2410 area. It is interesting that the middle band is in this same range, thus, a magnetic pull is developing that may foretell a potential test of this critical 2406-2410 level. This would be epic drama since a failure from 2406-2410 and stocks would likely collapse quite dramatically.

The chart does not show a reason for price to move higher. What can save the market bulls is if President Trump or one of his henchmen start touting infrastructure spending, lower regulations, or tax reform which will automatically goose stocks higher and the charts would need to reset. 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.