Recapping the last few days, the expectation was for a near-term pullback to begin as reflected by the uber high NYMO and low put/call ratios (this has not changed). However, the Whitehouse and global central bankers are firing both barrels to pump stocks higher and reward the wealthy class that own large stock portfolios. Last week, the Whitehouse staff says the US-China trade talks are going great. Then President Trump tweets the same. Then another spokesman. Then another happy tweet. You get the idea. Each happy trade talk news bite pumps the spoo's 5 or 6 handles.
Federal Reserve Chairman Powell then flaps his dovish wings decreasing further rate hike expectations. Stocks catapult higher, the SPX adds 30 handles, on the joys of central banker easy money. The central bankers are the market. That ongoing joy is then goosed further by a triple R cut by the PBOC (China's central bank). The central bankers are sick. All they know is printing money.
The global central bankers act in collusion to get the maximum bang for their buck (higher stock markets). This is evidenced by the step-wise news releases. This week, ECB President Draghi is next to hint that stimulus and accommodative monetary policy may remain in place longer. Traders cheer the central bankers. These modern-day money God's create stock market rallies that can easily be raped for effortless profits but only if you have the capital.
The hits keep on coming. Fed's Ester George, a hawk, now turns dovish and says it may not hurt to hold off on rate hikes for now. These central bankers are making it up as they go along. Fed's Kaplan speaks dovishly. This happy talk creates lift in the stock market that is also boosted by the OpEx week Tuesday to Wednesday bullishness. Fed's Kashari sings a dovish song but that is expected.
On top of all this obscene global central banker intervention and jawboning, the BOJ plans to not change its ongoing monetary policy. Investors cheer the central bankers while buying stocks and singing, "Happy Days Are Here Again."
The chart shows the C&H (cup and handle) pattern. The base of the cup is 2350 and the break-out line (brim) is 2510 so that is 160 points difference. Thus, the upside target is 2670. It is odd that price did not come back to kiss the break-out line after it broke out. Also, it would be expected to have a slight hesitation at the 20-day MA but it did not. Price keeps jumping higher. Oh yeah, Keystone forgot. The central bankers are pumping like madmen so that overrides everything and creates the solid upside trend in equities. The world is awash in liquidity.
The charts are pricing in this central banker largess. The money flow and MACD line are still long and strong so at least one jog move is likely; down one day then up one day, to see if these two parameters turn neggie d. The top is in when neggie d is across all the indicators (red lines). That should happen anytime over the next couple-few days and very likely today through Friday.
The SPX may drop to the confluence of the C&H break-out line and the 20-day MA at 2510-2518. The selling can be gauged once it begins. The SPX weekly chart has long and strong indicators so after a pull back in the daily time frame, the SPX should then rally again towards 2700. 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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