Sunday, July 23, 2017

SPX S&P 500 Monthly Chart; Overbot; Rising Wedge; Negative Divergence; Upper Band Violation; Price Extended

The monthly charts will receive new data points in six trading days. The month of July ends on Monday, 7/31/17, and the bulls remain on track to print another happy upside month. July began at SPX 2423.41 so  you may want to jot this number on  sticky note and keep it next to the computer for the week ahead. Bears need 50 points of downside in 6 days to create a negative month for July.

Keystone has been posting this S&P 500 monthly chart monitoring the progress of the multi-year stock market top in play. Look at the bulls trying to squeeze out more juice with the RSI and MACD line. If the RSI moves higher than the peaks in 2013-2014, the stock market top will likely extend towards the end of this year and perhaps early next year. If the RSI and MACD remain neggie d (negative divergence; the indicator is sloping downwards as the price makes new highs sloping upward) the multi-year top is at hand say anytime over the next three months; this outcome is expected.

Remember, the central bankers are the market so if they decide to goose the stock market with more easy money that can further extend the upside joy. The May 2015 top was a textbook multi-month and/or multi-year top as Keystone forecasted and described back then, however, the central bankers are powerful and the un-Godly Keynesian goosing of equities occurred in early 2016 at that Tweezer Bottom (blue circle) by the central bankers that always save the day.

Keystone can update the chart with the July data point and the month of August underway perhaps next week some time if the US and international audience is supportive and would like to see the updated analysis.

The expectation is that a major multi-year stock market top is in progress of printing. It would not be surprising if the stock market top prints now through October and these prices are not seen again for several years. Plan accordingly.

The rising wedge pattern remains ominous ready to completely crush all bullish hope at some point forward. The collapses from rising wedges can be quite dramatic. Price is testing the upper trend line. The RSI and stochastics are overbot agreeable to a pull back in this monthly time frame (which means it can last several months and longer). The red lines for the indicators show the neggie d in play that wants to spank price lower. Price is extended above the moving averages requiring a mean reversion lower.

Price has tagged the upper standard deviation band over the last few months but has not yet shown respect to the middle band. The SPX should move lower to show respect and kiss the middle band at 2201, and rising, as time moves forward. The lower band at 1886 is also in play for the months and year or two ahead and is definitely on the table considering the ominous and dangerous rising wedge pattern. Watch your wallet.


If you are a  young person new to trading, do not get caught up in the television cheerleading and bull market hype. You are simply being fattened up for slaughter. Place and keep your money in cash despite the naysayers and television commentators calling you a fool. Relax and take a trip to the beach. In the months ahead you will deploy that cash at more reasonable valuations as everyone else is crying and moaning about all the money they lost. 

A disproportionate amount of the FAANG stocks are owned by investors under 30 years old. If you have enjoyed big profits in FB, AAPL, AMZN, NFLX and/or GOOGL, scale-out of those plays going forward and park the money in cash to keep your powder dry for the future. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

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