SPX S&P 500 Daily Chart; Golden Cross

The month of March and Q1 2019 ends last Friday; EOM and EOQ1, respectively. The bulls stage an amazing record-setting comeback in Q1 reversing much of the Q4 crash. The central bankers are printing money like madmen to support global markets and the sick Keynesian monetary policy path continues to provide bullish joy. The central bankers are the market.

There is a lot of spaghetti in the chart above; it reminds Keystone of a grade school drawing he did as a youngster many decades ago. Back then he could not color within the lines either. The red rising wedge, overbot conditions, negative divergence and upper band violation called the top in late September and early October and down she went. The light blue lines show a two-leg bear flag pattern that played out. The first leg down is from the all-time record high at 2941 to 2605 a drop of 336 points. The sideways consolidation flag then forms. Typically, the flag behavior has a sideways to sideways up bias but that sideways consolidation was more straight sideways. The second leg down begins from 2806 so the downside target is 2470-ish which was achieved. The SPX dropped another hundo points after that.

At the end of last year, price had violated the lower band and the RSI and stochastics were oversold wanting to see a bounce. Ditto the positive divergence on the RSI. However, the histogram, MACD line and money flow remained weak and bleak wanting to see lower lows in price after any bounce occurs. The central bankers had different plans. On 1/3/19 (blue circle), the stock market was toast. The SPX rolled over and was beginning to accelerate downwards. The weak and bleak chart indicators would have flushed price below the 2350 low and potentially all H*ll would have broken loose; stocks could have potentially went into free fall. The Fed blinked.

Chairman Powell pulled a 180-degree turnaround transforming from a hawk into a dove during the last four months. He is now singing like a canary, er actually a dove, about the greatness of keeping rates lower for longer (more easy money to goose the stock market and make the wealthy richer). National Economic Adviser Larry Kudlow is calling for a 50-bip rate cut the last couple days humorously as he says the economy is great. Pause for laughter.

At the same time, the PBOC (China's central bank) cuts the triple R ratios for banks allowing them to lend more money and stimulate the economy. Other global central bankers chime in. The BOJ does not plan to change its monetary policies. The ECB becomes more dovish as President Draghi eyes his retirement in a few months time. Booooiiiiiinnnngg. The central bankers save the day again just like early 2016 (the central-banker-induced Tweezer Bottom) and many other examples. The central bankers are the market.

The ADX shows that the downtrend in Q4 last year was a very STRONG trend lower. The impressive record-setting recovery in Q1, however, is NOT a strong trend. The Aroon shows the turn verification signals. Bulls are okay until the red line crosses above the green line.

Looking at the price action over the last month, the overbot conditions, rising wedge, upper band violation and neggie d all conspire to whack price lower. The ongoing central banker largess and US-China trade talk hype, however, are creating buoyancy in the stock market.  In fact, any dip in the stock market causes President Trump to run to Twitter to boast about the economy (King Trump's happy talk snippets typically add a handful of spoo's each time).

Looking at the volume candlesticks, the big up volume day was 3/15/19 (brown circle) when the FBI Special Counsel Mueller report was released. Both 3/15 and 3/18 were up days since the report summary by Trump's DOJ head Barr let the president off the hook for any wrongdoing. Comically, nearly 3 out of 4 Americans either do not believe the Barr summary or are confused and do not know what to believe about the matter. 1 in 4 Americans will support Trump no matter what happens.

Barr pulled only 74 words from the actual Mueller report to support his conclusion. Initially, Barr would not disclose how long the report was but over this past weekend now says it is 400 pages (probably over 60,000 words). Americans remain confused since they waited two years for a report on the president's potential actions and behavior and only know now what they knew a month ago (only idiots expected that Trump was colluding with Putin or other Russians and Mueller proved that this did not occur; the main concern was Obstruction of Justice and Mueller chose to punt on this subject; this lack of recommendation opened the door for Barr to sweep the report under the rug and say all is fine, nothing to see here, move along, move along).

The smart money dumped shares after that two-day pop. Also, note a few days ago that after another up day, the down day the next day was higher volume. This is distribution (brown circle). Joe Retail, probably all hyped-up and happy over the Mueller report, runs into the stock market to buy shares. The smart money gladly distributes their shares to the bag-holding sucka's.

That top from a few days ago would be expected to hold as per the chart indicators that are all negatively diverged. There is no reason (from the chart's perspective) for price to make a new high again (unless their is news). Global markets are rallying overnight to begin the new week of trading on 4/1/19. New money typically comes into the market at the start of a month, especially a quarter, likely creating some of the equity buoyancy. President Trump was hyping the trade talks with China on Friday creating happiness. The China PMI data overnight is better than expected (it is stupid to say it was a surprise, however, since the PBOC is pumping the commie markets and economy like a madman).

S&P futures are up +19, now check that, now +22, about 5-1/2 hours before the US regular Monday trading session begins. If the bump in the futures are reflected in the SPX cash index, that would pump the S&P 500 to 2856. Interestingly, that is only 24 points away from the 2880-ish level where a gap occurred on the weekly chart (this may be where the SPX tops out at, say, mid-April or so and it should be a multi-week top).

On this morning's potential pop higher for the SPX that would be a matching high to the price high from a few days ago, watch the chart indicators. As price makes a matching or higher high, as long as the indicators remain below the thin red lines in the right margin, the SPX will remain in neggie d and another roll over to the downside would be expected. The uber low CPC and CPCE put/call ratios, that signal rampant market complacency, continue to need to extract their pound of bull flesh.

The 50-day MA at 2755 is a hair from crossing above the 200-day MA at 2756 to form a Golden Cross. When a golden cross occurs, which will be today, price will actually tend to pull back. This is because it took many, many days to bring that 50-day higher to create the positive cross so price is tired and needs a rest. After a typical pullback is expected, in this time frame a few days is likely, the S&P 500 will continue higher for weeks and months to come if the golden cross remains in play.

Despite the potential happy start to the week, the expectation would be for the SPX to roll over to the downside again, perhaps sharply lower to allow the put/call complacency to play out. So the action in the daily chart should be choppy lower. The SPX weekly chart displays a long and strong MACD line so it will want to see more highs on this weekly basis (the SPX will come back up again after any short-term weakness in the daily chart) which hints at a significant top printing in mid to late April (this month). Once the weekly chart goes neggie d, that will usher in several weeks of downside. Perhaps that is when the low put/calls will take their pound of flesh? Of course markets are trading on emotion and news these days which may alter the path forward. 

The 150-day MA continues to slope negatively signaling that the broad stock market remains in a cyclical bear market pattern since December. Will the global central banker largess pump the world's stock markets higher for another decade? Everyone seems to think so, however, the game has changed since late last year. The Federal Reserve had started the process of reversing the one-decade of obscene Keynesian spending but failed.

As Chairman Powell began hiking rates, the economy stalled and stocks crashed in Q4. It is obvious that the central bankers will not be able to extract themselves from the 10-year Keynesian mess they created. They succeeded in their goal, however, to make the wealthy class filthy rich. The privileged class is sleeping on bags of money courtesy of the central banker money-printing over the last decade. The middle class, poor and disadvantaged do not benefit from the central banker money-printing. One-half of Americans do not own a single share of stock.

The wealthy do not give a rat's behind about the United States. The privileged elite can go live on an island with white sand beaches once the class war violence begins in America (when the recession arrives) especially after accumulating vast wealth due to the dovish central bankers. The central bankers are happy since they will be rewarded with lucrative speaking gigs (a quid pro quo) once they leave public office. The investment banks and wealthy class reward the retired central bankers for maintaining a dovish stance during their tenure. This is how the crony capitalism system operates in America.

This is the new Gilded Age. America is the land of the have's and have not's. Everything changes once the recession arrives in the weeks and 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.

Note Added 12:53 PM EST:  The SPX is up 25 points, +0.9%, to 2859. The bulls are running. The banks jump higher creating the upside joy. Chips are strong. The S&P 500 squeezes out a higher high but with negative divergence across all indicators on the daily chart. The SPX 2-hour chart also appears to be setting up with neggie d again so the joyous rally may not have staying power in the hours and day or two ahead. Considering the uber euphoric stock market joy, with traders feeling even more fearless this week, the CPC and CPCE put/call ratio's will be interesting. Note that with the big pop in equities, volatility is also higher. One of them is wrong. Retail Sales data was weak this morning but traders cheer weak data as they have for the last decade. This means the Fed will keep printing money which will flow into stocks and make the rich richer. Too bad for the one-half of America that does not own stocks.

Note Added 3:08 PM EST: You can see that the golden cross for the broad stock market (SPX) occurs. The 50-day MA is 2760.17 and the 200-day MA is 2756.74. Bingo. The bulls cheer while chugging-down Fed rum, ECB champagne and PBOC rice wine. Remember, price typically pulls back after a golden cross (price typically rallies after the death cross forms) and the key thing to watch is if the cross remains in play say a couple weeks or month down the road. The SPX is up 31 big points, +1.1%, to 2865. Bulls are buying stocks at the ask without any fear or worry. Timmy Trader, emboldened by the easy and effortless stock market gains, throws a dart at the stock sheets and quickly buys the ticker long. Tommy Trader is buying big blocks of index shares guaranteeing to all that stocks will only go higher from here. New money floats into markets to begin a month and quarter which provides buoyancy in equities. The global central bankers are flapping dovish wings providing the all-clear for bullish traders tripping over each other buying stocks with reckless abandon.

Note Added 4:29 PM EST:  The bulls jog off the field with their chests puffed-out after opening a can of whoop-*ss on the bears today. The SPX gains 33 huge points, +1.2%, to 2867. The Golden Cross forms. The banks gapped-up at the open and the broad stock market never looked back. The stock market was correct and volatility wrong since the VIX loses its gains and finishes negative at 13.40 (SPX and VIX move inversely over 90% of the time). Timmy plans to have his pet parakeet, Livermore, pick stocks this evening that he will buy tomorrow. Tommy says Aunt Martha just gave him her entire life savings to invest long in the stock market. She is afraid of missing out on the big upside party. Talking heads on television say the stock market joy can continue indefinitely.