Happy Veterans Day. Thank you to all the vets out there for your service. On Friday, 11/8/19, the S&P 500 prints a new all-time record closing high at 3093.08. The all-time high at 3097.77 on Thursday, 11/7/19, remains the highest number the SPX has ever printed in stock market history. Will triple 7's mark the top as the 666 marked the bottom in March 2009?
Soybean Donny says he is not ready to roll back tariffs against China. The idiot child's play continues. Keystone told you last week after the announcement of the happy trade deal hype that it did not make sense. If tariffs would be rolled back that means that all leverage that Donny held is now gone here forward. It was hard to believe that he would agree to that and as seen overnight, King Trump says he is not rolling back tariffs. Duh. Futures slip lower on the news.
Dictator Xi is losing sleep after the CPI data shows escalating food inflation (mainly pork prices). The past Chinese dynasties fell during revolts and protests over lack of food. Xi has 1.4 billion bellies to feed. This is why China wants agriculture products to be part of a phase one trade deal with the US. At the same time Chinese operatives are in Brazil and other ag-rich nations kissing dupa trying to establish new food importers. Xi knows that hungry people eventually become violent wild animals. Rest assured that the United States operatives are also in Brazil telling that government that if they increase their ag trade with China that will hurt US-Brazil trade and relations. The US is more important to Brazil than China. This is the way the global game is played.
In Hong Kong, the riot police are shooting live rounds at the protesters and a demonstrator is down. One demonstrator is set on fire in another riot. Over 60 people are injured today. The violence escalates past the weekend after a protester (student) dies from a fall from a parking garage as police were breaking up the crowd. Flash mobs and violent acts are increasing. Fires burn in the streets. Humans set on fire and getting shot in the street is not a good thing.
Corrupt Executive Carrie Lam, and her communist puppet-masters in Beijing, destroyed Hong Kong. The HSI (Hong Kong's Hang Seng Index) drops -2.6% overnight below 27K creating gloom in the Asian theater that feeds into European trading. Dictator Xi will probably send troops into Hong Kong at some point forward to crush the revolt. The world is an ugly place; that is simply the way it is.
The SPX prints a shooting star candlestick five days ago, a hanging man three days ago, another shooting star, a doji, on Thursday, and a pseudo hanging man on Friday. These candlesticks all indicate a trend change but obviously a follow-through to the downside would be needed to verify the candlesticks. Friday's candlestick is not an official hanging man since the lower shadow should be twice the distance of the body so we'll call it a pseudo hanging man.
Price violated the upper standard deviation band so the middle band and 20-day MA support at 3031, and rising, is on the table. Price is extended above the moving average ribbon. The SPX is above the 20-day MA above the 50-day MA above the 100 above the 150 above the 200-day MA and needs a mean reversion lower. Note how the 150-day MA line slopes higher which indicates that the stock market is in an ongoing cyclical bull market pattern. The rising wedge pattern is bearish.
The RSI and stochastics are overbot agreeable to a pullback. The red lines show the negative divergence in play. It is an odd top since the trade deal positive news last week diminishes the neggie d influence. The trade deal hype creates the short-term momentum. The green lines show the long and strong RSI and MACD line in the VST time frame. The other chart indicators are neggie d over the multi-month period and in the near-term.
Thus, the RSI and MACD line may try to squeeze out a day or two more of upside juice but the multi-month neggie d can slap price down at anytime. Considering the uber low put/call ratios signaling rampant complacency and fearlessness in the stock market, a top is expected now. On Monday morning, 11/11/19, S&P futures are down -10. VIX 13.18. The bond market is closed today for Veterans Day.
The full moon peaks for the month tomorrow morning at 8:43 AM EST and stocks typically rally through the full moon. Futures are down but perhaps the dip-buyers will enter today and float stocks higher into tomorrow lunchtime. This week is OpEx so a Tuesday low typically leads to a Wednesday high so that would extend potential bullish joy into hump day. So bulls have seasonality factors providing wind at their backs the next couple days but the low put/calls are a powerful negative force and each day the market does not roll over is a gift for those long the market. Perhaps a Black Monday or Black Tuesday may be in the works after all; the window remains open (last week the set up was the same but Monday was a big rally day).
The SPX may drop today as the futures indicate but rally into hump day then fall apart from that top mid-week, or, simply begin falling apart now, as the doji and hanging man candlesticks forecast, and this negativity would overcome the positive seasonality factors (both are bearish outcomes). Tax loss selling is approaching and typically peaks the first week of December.
October did not live up to its negative hype. The largest stock market crashes have occurred in the month of October. September is typically the weakest month for stocks and now that this Sept-Oct time period is in the rearview mirror, traders are emboldened to think that stocks will rally higher through year-end. Considering the long-term charts, however, November may be the severe peak and drop month for stocks instead of October. The stock market may catch everyone off-sides now since the party is in full swing.
Everyone on Wall Street is partying in like its 1999, as Prince would sing, and says stocks will float higher into 2020. The stock market is one big bullish Sing-Along; take it away Sturgill Simpson. Traders are drinking Fed wine proclaiming it is time to enjoy the approaching holidays. Perhaps they will be eating crow and dining on humble pie come Thanksgiving? In all seriousness, these price highs you see in stocks may not print again for many years forward. If you are a young person, stay away from the stock market. Of course it always depends on the central bankers since they are the market. 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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