SPX S&P 500 Daily and Weekly Charts

We took a look at the SPX monthly and 2-hour charts over the last few days so a study of the daily and weekly charts is in order to fit the overall time line together. The spaghetti in those charts look like a Jackson Pollock. The previous SPX 2-hour chart is topping out right now. The SPX monthly chart is also topping-out with negative divergence across all indicators. For this recent push higher the last couple weeks, the MACD line on the monthly chart is trying to push higher to extend the long-term top by a month or two. Overall, the SPX monthly chart is signaling a significant long-term top is in play right now that will begin a multi-month and likely multi-year move sideways and sideways lower for equities. Part of the reason it will happen, aside from the technicals, is that no one expects it to happen. Boy, they will all be surprised over the coming months and few years.

The technicals are all about time frames. When someone says they are bullish or bearish it must always be qualified with a time frame. Most money managers avoid providing times because that way they never have to admit their wrong. You must focus on the four timelines; the hourly, daily, weekly and monthly. You can be bearish, say, in the VST (very short term; hourly) but bullish in the daily time frame and then bearish again in the weekly time frame or any other combination.

The SPX daily chart is important since the 2-hour chart is topping-out. When both charts are topping-out together, that leads to a multi-day down move. You can see on the daily chart price is moving higher, now almost tagging the upper standard deviation band (purple) at 3456. The middle band at 3349 and lower band at 3242 are in play. That move higher comes with long and strong RSI, MACD, and money flow. Stochastics are trying to flatten now and negatively diverge, which is bearish, and are overbot agreeable to a pullback. However, the daily move has a couple-few days of buoyancy available still yet, unless negative news hits the markets.

Marrying the 2-hour and daily together, the top in the 2-hour will likely lead only to a day or two of sogginess. Price will come back up again to satisfy the daily chart which will top out in the days ahead. The uber low CPC and CPCE put/call ratios and elevated NYHL tell you a stock market top is at hand. After a low CPCE reading, the top may occur immediately, or, sometimes it takes a few days even week or so to top out. Over the last couple years, the tops are taking longer to lock into place due to the central banker intervention. Simply mixing the 2-hour adn daily chart analyses together and sprinkling some magical technical dust on top, hints that stocks will top out today due to the 2-hour (unless there is happy stimulus talk) and probably remain soggy into Monday or Tuesday when stocks will rally higher for another matching price high mid-week but then top out on the daily basis next week.

The bond market is closed on Monday for Columbus Day. It is also Thanksgiving in Canada so happy turkey day to all you friendly Canucks. CPI is Tuesday and PPI on Wednesday. The second presidential debate was scheduled for Thursday in Miami with a town hall type question and answer event, but President Trump backed out after the debate commission wants to handle it virtually. It does not matter which corrupt silver-haired white guy wins the election; Americans are only picking the person that will be overseeing the ongoing collapse of crony capitalism. It will consume all of their time. Retail Sales, Industrial Production, Business Inventories, Consumer Sentiment and a new moon are on tap next Friday.

Staying on the daily chart above, the ADX shows that the strong rally this summer was a strong trend higher but that disappeared in early September when stocks went south. Price is rallying again but the ADX is down at 15 and dropping which means that the both the move lower in the back half of September and the move higher in stocks the last two weeks are not considered strong trends. The negative Aroon cross occurs and remains in play favoring the bears on the daily basis.

The brown circles show the distribution days. On the daily chart, the smart money dumped off shares to the bag-holdin' dumb money 15 times. Did you buy during this time from the nice guy in the suit and tie that just so happened to have a bunch of AAPL and AMZN shares available only for you, but only if you acted today? Yes, every top needs bag-holdin' sucka's. That blue line on the daily at 3230-ish is key support; all hope for longs will be lost when it fails.

For the SPX weekly chart, which is more spaghetti-O's, the red lines show the negative divergence top but, like the pesky RSI that did not want to die on the daily chart, the MACD is playing games on the weekly chart. Keystone highlighted this during the top call 6 weeks ago. The door was left open for more upside in price since the MACD line was ambiguous as to whether it was still moving higher, or flattening-out and going neggie d. The move higher in SPX price in recent days is due to that RSI on the daily and the MACD on the weekly. There is not a lot of juice there but enough to create the buoyancy in price, and adding in some stimulus positivity, Happy Days are here again.

The SPX price may be coming up for a double-top, or M-Top. Watch the thin maroon lines in the right margin. Price would be expected to stall, especially on negative stimulus or other news, but if it continues higher for a week or so more and comes up for the matching high from a few weeks ago, the top is in on the weekly basis as long as the indicators do not go above those thin maroon lines which would be expected. In other words, a matching high in price would occur but the indicators would all be in neggie d so the top is in and a multi-week drop would be expected going forward.

The pink boxes for the ADX on the weekly show that a strong downward trend was starting in early 2019 but the Federal Reserve and other central bankers are always there to step in and save the day and begin the big 2019 rally. The ADX was finally starting to show the rally as a strong trend in early September right when stocks topped-out. The ADX is down at 23 showing that the long rally off the March low, despite the fact that it is record-setting, is not considered a strong trend higher. It should not be because it is central banker induced. The charts show all if you know how to read what they say.

The Aroon positive cross remains in play for the Aroon. The green line is overbot and the red line oversold at zero so both will be moving towards the center which is in a bearish direction perhaps resulting in the negative cross. The brown circles show four solid distribution weeks occurring this year where the smart money is sloughing off shares to the dumb money.

So the 2-hour is topping out now. The daily likely wants to top out next week. The weekly chart is agreeable to roll over at anytime and if the rally continues for another week or two would likely be in universal neggie d creating a firm top at that time (this month). The monthly chart is in universal negative divergence calling a multi-month and multi-year top right now; there may be some fumes remaining to try and keep stocks elevated into the holidays but at this time it is nothing of great importance.

Thus, if a day, swing or nimble trader, there is a top likely on tap today but that move will only last several hours say into Monday or so. Then price will likely come back up next week, say Tuesday and Wednesday to satisfy the daily chart. You have to watch that chart to see if the indicators go neggie d but a top is likely next week. Choppy action on the daily next week and then the top will appear.

October is now set p as a potential crash month. September is a worse month than October percentage-wise for stocks but the big crashes have occurred in the bewitching month of October. People are surprised when Keystone calls this long-term stock market top now considering that 99.9% of Wall Street say stocks will continue higher. Financial Manager Jeff Saut is on CNBC assuring viewers that stocks are in a secular bull market and will run higher for six or seven years forward. Tower Hudson's Ben Laidler is a screaming bull proclaiming that a big melt-up will occur into year-end. Laidler is looking for big economic growth in 2021. The ongoing confidence that stocks will continue higher is another feather in the bear's cap and verifies the uber complacency and bullish euphoria in place now (which occurs at market tops). 

The election is a wild card but it probably will not make a lot of difference. Part of the rally the last few days is likely to the polls shifting in Biden's favor. Wall Street does not necessarily care who wins they just do not want to see the election drag on longer than the wee hours of the morning on 11/4/20. Millions remain without jobs and as more businesses close their doors the recession will begin hitting hard as the cold winds blow. Social unrest will increase and a class war is on the horizon. 30 million Americans screwed the other 300 million over the last five decades and payback time now begins.

There is not much more time remaining. Of course the Fed and other central banks will try their best to pump more but they are at the end of the line. All politicians and government officials, even doctors and scientists, have lost credibility. This is what happens in the bread and circus days; everything is entertainment. You would be wise to get out of the stock market. We are likely witnessing an epic top right now that business students and the general population will talk about for decades to come. 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.