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.

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.

SPX S&P 500 60-Minute Chart 200 EMA Cross

Another useful short-term market direction indicator is the 200 EA cross on the SPX 60-minute.  The green circle shows price moving above the 200 EMA the exact time that the market bulls punched the bears in the face on May 19. Price came back 6 hours later to back kiss the 200 EMA and bounced, verifying that up was the path ahead over the last month. Stocks never looked back printing all-time record highs last week the S&P 500 prints an all-time high at 2446.20 before collapsing in Friday's trade.

Note how price came down intraday Friday and tested price support at 2415-2416 and bounced. The 2415-2416 is a critical bounce or die price level going forward. The red lines show the negative divergence that created the price top and spank down.

The 2427-2430 area remains a very important support level. If it fails through here again, price may not recover. The bulls will be happy going forward if they simply keep the SPX above 2431. Market bears got nothing unless they can create a negative cross with price down through the 200 EMA which is at 2406 and rising. If 2406-2410 fails, markets will be unraveling very quickly and collapsing lower in a panic; carnage will result. 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.

YC2YR 2-10 Yield Spread (Yield Curve) and XLF Financials Weekly Charts

Banks make lots of money when the yield curve steepens since they can borrow at low rates and lend out money receiving high rates. A steeper yield curve causes traders to buy banks with both hands while a flattening yield curve means trouble ahead for banks. A flattening then inverted yield curve (2-year yield above the 10-year yield) indicates a recession ahead. The 10-year yield is at 2.20% and 2-year yield is at 1.33% for a 2-10 spread at 87 basis points.

Look at the intense flattening of the yield curve from mid 2015 to mid 2016. The banks obviously underperformed during that period printing lower lows and lower highs. The yield curve attempts to stabilize in the summer last year and the banks stabilize. Investors begin sniffing out a potentially rising yield curve and higher Treasury rates ahead and begin nibbling on the banks on the long side.

In early November last year, Trump wins the presidency. His Goldman Sachs henchmen Mnuchin and Cohn are in the back room shredding banking regulations clearing the road to more greed ahead. President Trump plans on greatly reducing financial regulations and will allow  banks to increase leverage. After all, Goldman Sachs and the other investment banks want to make more money and need their government stoolies to get the job done. Humorously, nothing will go wrong with more leverage in the investment banks, right? (40 to 1 leverage sunk Lehman Brothers in 2008 sending the financial crisis into a tailspin.)

The 10-year yield shot higher late last year and the usual pundits were proclaiming 3% and higher. With the universal consensus touting this target you knew it would not happen, and it did not. The 10-year yield drops and compresses the yield spread flattening the yield curve this year. Note that the yield curve leads the banks. The financials peaked in February after the yield curve had already peaked in December.

Every time the Whitehouse mentions that they are working on regulations the banks pop higher. So if Mnuchin and Cohn want to reward their former colleagues at GS and other investment banks with more profits, they simply grab a microphone and tout cuts in financial regulations. It is so easy for the privileged elite class to make money and line their pockets with cash.

The XLF continues to play out with a H&S pattern (purple bars) but the neckline has not yet failed at 23. If 23 fails, the price target at 21-ish is on the table. The XLF shot higher last week and is now printing a second right shoulder morphing into a hunchbacked Quasimodo H&S. Financial bulls win big with the XLF above 25. Bank bears win big if XLF fails under 23 below the H&S neckline.

Bank bulls win big if the YC2YR stops its slide and moves higher reflecting a steepening yield curve. Bank bears win big if the yield curve continues lower. Investors bot banks with both hands last week expecting a steeper yield curve. The bank bulls will be rewarded if the 2-10 spread moves above 90 basis points, then above one hundo, then 110 and so on. What will all these big-time investors and traders do if the yield curve falls below 80 bips? 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 NYA NYSE Composite Daily Charts

The central bankers have destroyed price discovery in the stock market over the last 8-1/2 years and no one really knows the true value of any asset these days. The long-term never-ending Keynesian policies are skewing data and chart relationships and clouding the economic and market picture.

Generally, you want to be buying stocks with both hands with the NYMO under -60 and you want to be throwing stocks out the window at +60 and higher. As seen from the chart, however, many of the bottoms in stocks (green circles) are occurring at only -10 or -20. Conversely, some of the short -term peaks in stocks (red circles) are occurring with a NYMO only at zero or +20. Note that the mid-May bottom was key and that occurred with a NYMO at -40 so this would be a good level to go long from.

The NYMO almost made it to +30 a few days ago which marked the top on Friday, 6/2/17. The NYA recovers late in the week last week and the Nazzy Comp prints a new all-time record high at 11754.75 and new all-time closing high at 11744.73. The NYA has printed three tops in the last 3 weeks. The first two come with a corresponding higher NYMO but the new price high in the NYA at 11755 comes with the NYMO negatively diverging; this hints that price may be running out of gas to the upside.

The NYMO is in no-man's land right now at 9.5. Watch the game proceed and if the NYMO moves below -30 and -40 you can begin nibbling on longs and if it moves lower you can buy more aggressively. Conversely, if the NYMO moves higher to +30 you can begin shorting more stocks and above +50 and +60, should it move that high, you can short much more aggressively. 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 30-Minute Chart 8 and 34 MA Cross

A useful very short term (VST) stock market direction indicator is the 8/34 MA cross on the SPX 30-minute chart. The 8 MA crosses down through the 34 MA late Friday signaling bearish markets for the hours and days ahead. However, the prior dips into the bear camp are short-lived. In addition, price and the 8 and 34 MA's are all clustered at 2432-2434 so a pivot on Monday morning in either direction is possible.

The market bulls need to curl the 8 MA back upwards and above the 34 MA to regain their mojo. The bears will be in good shape going forward as long as the 8 MA remains under the 34 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.

Saturday, June 10, 2017

AMZN Amazon and JWN Nordstrom Daily Charts; Amazon Flash Crash; Nordstrom Flash Spike

The computer gremlins were wreaking havoc in the stock market yesterday, Friday, 6/9/17. Citigroup and Amazon flash crash in the afternoon while Nordstrom flash spikes. The major stock indexes print new all-time highs early in the Friday session and then roll over to the downside from 11 AM on. As trading  proceeds towards 3 PM, equities are falling like a rock.

Traders that were drinking Fed wine and buying stocks without a care in the world after the opening bell are now staggering around in a state of confusion wondering why equities are falling off a cliff and beginning to accelerate lower.

At 2:38 PM EST, Citigroup flash crashes from 64.13 to 63.50, -1%, in seconds and then immediately recovers.

At 2:50 PM EST, Amazon flash crashes. Billions in market cap disappear in seconds. AMZN is at 978.30 at 2:48 PM. One minute later the print is 962.00 then whoosh. AMZN collapses to 927.00 a -5.2% drop in two minutes. As with most flash crashes, price immediately recovers. At 2:52 PM, AMZN recovers to 970. At 2:57 PM, price is up to 975.00. At 3:16 PM, AMZN finally fully recovers from the flash crash back to the 978.30 level. AMZN finishes the day down 32 points, a -3.2% hit, to 978.31 interestingly settling exactly on the price from where the flash crash occurred.

As usual, the exchanges remain quiet about the event. Traders brush it off as business as usual. Computer algorithms are blamed. Obviously, if a flash crash can occur in Amazon, it can occur in any individual stock or index. Perhaps the Amazon flash crash is another warning that more and larger flash crash events are on the come. One of these days, the flash crashes are not going to recover.

At 2:56 PM EST, Nordstrom’s flash spikes. JWN rocket launches from 46.00 to 47.52, +3.3%, in seconds. Price quickly flash crashes from 47.52 back down to 46.20 within the same one minute of time. JWN then proceeds higher and at 3:24 PM overtakes the 47.52 flash spike high. JWN finishes the day up +5.666% to 47.16. The flash crash in Amazon and corresponding flash spike in Nordstrom’s suggest that the computer algorithms are at fault. Money is flowing out of overpriced tech stocks and into retail stocks.

US stocks end the day mixed after falling off a cliff from 11 AM. Equities printed the lows for the day around 2:50 PM EST. This corresponds to the end of the fifth 65-minute segment of the session and the start of the sixth and final segment of the trading day from 2:55 PM to 4:00 PM.

The computer algorithm trading programs are keying off this 65-minute time structure for the regular trading session. Each trading day is split into six 65-minute segments; 9:30 AM (opening bell) to 10:35 AM, 10:35 AM to 11:40 AM, 11:40 AM to 12:45 PM, 12:45 PM to 1:50 PM, 1:50 PM to 2:55 PM and 2:55 PM to 4:00 PM (closing bell). Note that the flash spikes and flash crashes occur today at the end of the fifth segment. Algorithms may be programmed to take action during the final minutes of these various segments throughout the day.

Keystone's publication Flash Crashes, Fat Fingers and Computer Glitches, Oh My!: A Summary of Major System Outages at Global Exchanges 2010 through 2016 by K E Stone is available from Amazon for a buck 99. This year's flash crashes and flash spikes are added to the 2010-2017 edition that will be published by Amazon in January 2018. 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 9, 2017

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

The bulls keep pumping stocks higher with new all-time records occurring today across the board. The SPX prints a new all-time high at 2446.20 and the day is young. The standard deviation bands (pink) squeezed in tight and squirted-out the sharp move higher. Price was about to break down at 2427 yesterday and instead the squeeze was to the upside about 20 points thus far. The upper band is violated so the middle band at 2435 and rising is on the table. The price move has momentum, however, and power from the band squeeze, so the SPX may climb up the upper band for a few candlesticks.

The indicators are in full negative divergence (red lines) with the higher high in price forecasting that the top is in for this move. Again, today's joy has momo so you have to watch the chart indicators to see if any take out the prior highs from earlier this week. As long as those red lines for the indicators continue sloping downwards, neggie d, then the top is in for the S&P 500 in this 2-hour time frame.

The stochastics and RSI lurch higher over the last couple candlesticks so that hints that a couple or three candlesticks may be needed to top things out, and, if, as mentioned, the negative divergence remains, then price will roll over to the downside. This would be in sync with the low CPC put/call ratio hinting that a near-term top is very close. 2 or 3 candlesticks are 4 to 6 hours of trading time which would be anytime today or into Monday morning (for the top to print).

The blue circles show the gaps that are in play. Price has filled the gaps except for the 2435-ish and 2415-ish gaps on the downside. The maroon lines show the prior top in SPX earlier in the week. The rising wedge (maroon), overbot conditions and negative divergence indicated the top, which occurs, however, the MACD line remained long and strong (green line) hinting that price will  likely come back up again for another higher high after it pulls back, and it does.

The expectation would be for stocks to top out today or Monday morning. The only thing that can change this would be if one of the indicators poked above the high from a couple days ago. This would extend the top a couple more candlesticks. As always, if the central bankers talk happy talk or if the government promises goodies for companies, stocks can rally. The rising wedge (light purple lines) over the last month is interesting.
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, 6/10/17: The SPX top-ticked at 11 AM EST at 2446.20 a new all-time high, then promptly fell on its sword. The S&P 500 sinks to a LOD at 2415 a 31-point intraday crash. Wow. That came on with a vengeance. The SPX then recovered to close down 2 points on the day, -0.1%, at 2432. Selling volume is robust. The CPC spikes to 1.06.

CPC Put/Call Ratio and SPX S&P 500 Daily Charts; Near-Term Top At Hand

The drop in the CPC put/call ratio verifies the rampant complacency in the stock market. Ditto the VIX sporting a 9-handle day after day. Also the CPCE although that put/call should drop a bit more to signal the off-the-charts market joy. You know what happens when everyone is loaded on one side of the boat.

The red circles show market tops and green circles show market bottoms. Generally, below the red line is a good time to short the market while above the green line is time to buy stocks with both hands. What do you think will happen?

The CPC has been giving many erratic signals over the last few months due to the ongoing market instability. Institutions are hedging their long portfolios skewing the data to and fro but the general relation should continue working. The CPC indicates that a top is likely anytime, any day ahead. The full moon peaked an hour ago right before the market opened for the regular trading session and stocks are higher moving through the full moon each month about 65% of the time, and today, stocks float higher through the full moon.

The stock market is printing new record highs as this is typed. Everyday is a euphoric party. SPX HOD 2442.07. 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, 6/10/17: On Friday, 6/9/17, the SPX top-ticked at 11 AM EST at 2446.20 a new all-time high, then promptly fell on its sword. The S&P 500 sinks to a LOD at 2415 a 31-point intraday crash. The SPX then recovered to close down 2 points on the day, -0.1%, at 2432. Selling volume is robust. The CPC spikes to 1.06.

Monday, June 5, 2017

AAPL Apple Monthly and Daily Charts; Multi-Year Topping Process Continues

Apple has been one of the leaders this year. The FAANG (FB, AAPL, AMZN, NFLX and GOOGL) stocks are carrying the broad stock market higher with the whole joyous party printing new record highs day after day. Traders high-five each other proclaiming that the party will never end. Joe Retail Investor, anxious to prove himself among coworkers, says he took his whole life savings and placed it into Apple stock. He says famous investor Warren Buffett loves Apple stock so it is guaranteed to go higher. Billionaire Mark Cuban also touts the FAANG stocks. Fundstrat's Tom Lee proclaims that these stocks will climb from +20% to +40% higher from current levels. Every day is a euphoric party.

What do the charts say? As has been the case the last few months, Keystone has been highlighting the ongoing likely multi-year topping process in play. Looking at the monthly chart, the maroon lines show the negative divergence spankdown from overbot levels occurring at the May 2015 market top. The dissenter was the MACD line that remained long and strong so you knew that after a selloff, price would likely come back up for matching or higher highs, on this monthly basis.

Price dropped from the upper standard deviation band to the middle band and even the lower band in 2016 but the central bankers colluded to save the markets in early 2016 and the rest is history. Global indexes have been rallying ever since. Since price violated the lower band it made its way higher to touch the middle band late last year then up to the upper band for the last five consecutive months after the gap-up move. Thus, the middle band at 115 and rising is firmly on the table as well as the lower band now diverging south way down at 75. That 50-week MA at 101 and psychological 100 level will put up a big fight should price come down for a test perhaps next year.

The red lines show negative divergence in play for all indicators but the histogram is eking out more near-term upside juice. The MACD line has momentum as well. Overall, the expectation is that all indicators would not move above the prior highs which makes the multi-year top for Apple very likely. A jog move may be needed to burn off the remaining momentum (down-up-then down) but the chart is very likely indicating a multi-year top playing out. Price gapped up early in the year and is on an island above 127 so the 115-127 landing area is a reasonable target for the months ahead.

On the daily chart, the indicators are all sloping negatively over the last couple weeks but it is not neggie d until price would make a matching high. Nonetheless, it appears that price may be petering out and is agreeable to downside. On the weekly chart (not shown), the indicators are agreeable to downside ahead after a week or two more of topping out.

The tight bands squeezed out a big up move in May (pink arrows). The bands are squeezing in tight for another huge move to begin. Which way? Tight standard deviation bands indicate that a sharp move is at hand for price but does not predict direction.

Long holders of Apple have all their hopes riding on the iPhone 8 to be released in the months ahead. Apple receives an analyst downgrade this morning on worries about the iPhone 8 parts supply line. The charts are not enthusiastic about the road ahead. If you enjoyed AAPL's rise and made money, it is likely very wise to take if off the table and move on. You can scale out with 2, 3 or 4 trades over the next month or two and thereby perhaps benefit from a little more upside while you exit the back door which is far more important. It would not be surprising to see AAPL at 115-127 this year (a -12% to -20% drop) and sub 100 next year (-45% over the next year or two). 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 10:37 AM EST: AAPL is down -1% at 154 to begin the week. Two more analysts jump on the FAANG and AAPL bandwagon. Strategist Chris Verrone of Strategas and Brean Capital strategist Peter Tchir both tout lots more upside for these stocks especially Apple and to buy all the dips. The universal consensus on Wall Street is for AAPL to be at 180-220 next year but Keystone says 80-130. Who will be correct?

Note Added Saturday, 6/10/17: On Friday, 6/9/17, AAPL collapses -3.9% to 149 using the 50-day MA at 148.21 as support. The LOD is 146.02. Apple has not yet been able to overtake its all-time high at 156.65 from 5/15/17.

GE General Electric Weekly Chart; H&S; 16-Month Low; Gap

General Electric is one of the key 17 stocks that have led the broad stock market higher over the last few years, however, a rolling top is printing over the last 1-1/2 year and price now prints lower lows and lower highs on a weekly basis. Isn't it interesting that virtual fantasy-world and social internet stocks such as AAPL, FB, GOOGL and NFLX explode higher printing record highs but GE, a company based in solid tangible goods and services that impact daily physical lives, is sick.

General Electric gapped higher in October 2015 and has been on an island ever since above 25.00. Price will eventually come down to fill the gap, or, come down and collapse through the gap from 25 to 24 in a heartbeat creating an island reversal chart pattern.

The red rising wedge, overbot conditions and universal negative divergence made the top call easy last summer. Note the November 2016 US presidential election when Donald Trump defeats Hillary Clinton. Infrastructure spending, less regulation and lower taxes are expected so industrial stocks catapult higher, GE included, but it never made it back up to the July 2016 high. Price rolls over again.

The bright red line show price down at 27-ish at levels not seen since early 2016 about 16 months ago. So high-flying tech stocks that provide gadgets, software and the internet interface abilities are going parabolic in stock price while a company that makes machines, engines, medical equipment, oil and gas equipment and energy and power products sinks into the ooze.

You can draw a few different head and shoulders (H&S) patterns on the chart. The blue bars show a neckline at 28.5 and head at 32.0, a 3.5 difference so the lower target is 25.0 since the neckline has been ruptured. The 25.0 is the top of that gap from 2015 that is big enough to drive a truck through. The thin brown lines show a slanted H&S pattern with head at 32.0 about 4 points above the neckline so the price failure at 29.2-ish targets 25.2-ish the same area. Price would be expected to back kiss the neckline at 28.5 at some point forward.

The MACD line is weak and bleak so after a bounce, due to the positive divergence with other indicators and oversold stoch's and RSI, price will likely make another low, on this weekly basis, perhaps testing the 200-week MA at 26.22. President Trump is expected to tout his infrastructure program this week so GE may experience some lift from that talk. It is important that a major industrial stock is rolling over lower while Americans are busy living in a virtual fantasy world with their heads buried in smartphones (pumping Apple, Facebook, Google and Netflix stock higher). 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, June 4, 2017

May Publication of the Daily Chronology of Global Markets and World Economics 2017-05 is Available from Amazon; Global Stock Market Melt-Up; SPX, INDU, COMPQ, NDX, NYA, NIKK, KOSPI, BSE, DAX and FTSE Record Highs; SPX 2400+; INDU 21.1K+; COMPQ 6200+; NDX 5800+; Bitcoin 2792; Gold Golden Cross; WTIC Oil Death Cross; WTIC Oil 43; Brent Oil 46; Macron Elected President of France; Trump Fires FBI’s Comey; North Korea Turmoil; Venezuela and Brazil in Crisis; Puerto Rico Bankruptcy

The May Publication of the Daily Chronology of Global Markets and World Economics 2017-05 is available through Amazon. The historic market action continues with more all-time stock market highs printing in the major indexes around the world. The one-half of the United States that owns stocks are joyous day after day while the other half of the United States, that do not own stocks, watch the rich get richer while they become poorer.

The huddled masses continue struggling through eight years of high unemployment and debt. The gap between rich and poor in America is the widest in five decades. The United States is experiencing a gilded age (created by the Federal Reserve and other global central bankers); a society of the have’s and the have not’s.

May Cover Highlights;
SPX 2400+
INDU 21.1K+
COMPQ 6200+
NDX 5800+

The May chronology highlights the drama around the French election and President Macron’s rise to power. The 2017-05 publication chronicles the market reactions to the 5/5/17 and 6/2/17 US Monthly Jobs Reports. The world remains in turmoil with North Korea shooting off missiles, Venezuela and Brazil in chaos and radical Muslims carrying out terrorist attacks. Puerto Rico goes bankrupt with over $70 billion in debt and no money to pay. Despite the geopolitical drama and lackluster economic data, the stock market is pumped higher by central banker easy money. The central bankers are the market.

The chronology explains the price moves in global stock, bond and currency markets to key geopolitical events, central bank monetary policies and economic data releases. If you are trying to make sense of the markets this is the resource for you. No other publication exists where the stock, bond and currency moves are detailed and explained as world events take place in real-time.

You can re-live the real-time price moves and excitement in markets for any past events including Brexit (2016-06 and 2016-07), the US election (2016-10 and 2016-11), the drama behind the French election (2017-04 and 2017-05), economic data releases, monthly jobs reports, Fed meetings, etc...

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

The June 2017-06 chronology is tentatively set for publishing by Amazon on Saturday, 7/1/17.