The SPX in in a cyclical bear market currently after the failure of the 12-month MA at 4429-4431. The SPX 12-mth MA is the most important indicator in the entire stock market since it tells you very simply if US stocks are in a long-term bull, or LT bear market. The United States is in a bear market with a critical back test in play today and perhaps early next week.
The 10-mth MA at 4476 failed and this is an early warning system for trouble ahead. Old time stock traders and many algorithms follow the 10-mth MA religiously and there was lots of trouble ahead with the SPX dropping lower to test the critical 12-mth MA now at 4429-4431 where failure occurs and the start of a cyclical (months perhaps years) bear market.
The bears must defend 4429-4431 at all costs since their life is on the line. The bulls will throw confetti and booze all weekend long if they overcome 4429-4431. If so, the bull's will pump the SPX directly to the 10-mth MA at 4476 in quick order to back kiss that critical S/R. If bulls punch up through 4476, it is Happy Days Are Here Again, and the market path higher will be clear again.
The bulls may win the battle but lose the ongoing war. The SPX may punch up through 4429-4431 today or next week but rejected at 4476. The SPX would then drop back down to retest 4429-4431 which would then be acting as support where another cyclical bull versus bear test would occur. So lots of drama is on tap for the next day or few.
After commenting on the formation of the stock market top for the last couple years, waiting for it to set up properly, it is amazing to see it finally here. The top is not in on any chart until all the indicators go neggie d.
The sick Fed has printed money like madmen since March 2009 to protect America's wealthy elite class that owns the stock market. The Fed members preform the bidding (remaining dovish) of the wealthy because when they leave public office they are rewarded a quid pro quo like lucrative luncheon speaking engagements where the Wall Street investment banks hand the Fed crooks a couple hundred K per talk. People sell their souls so they can live like royalty during their time on Earth. Be glad the crony capitalism system is in its last throes.
The chart is ugliness beyond belief and it is even more heinous since it is a monthly chart with long-term implications. It has been a long time coming. Even money-printing for 13 years has its limitations. The Federal Reserve's sick Keynesian experiment for the last decade results in making the wealthy class rich beyond dreams, effortlessly, while screwing all other Americans. 30 million Americans shafted the other 300 million over the last decade and guess what? The 300 million want some of that money back.
All good things come to an end. There is a time to turn out the lights because the party is over, as Willie sings. Let's look at the technical mess. The key is the December and January candlesticks. Price makes the higher high in January, the all-time record high for the United States stock market at SPX 4818.62. Luckily, Keystone had an extra handkerchief in his pocket because his nose was bleeding when that occurred.
The matching and higher price high from January to December is important. When price makes another high, on any time basis, this is on the monthly basis, you can assess the chart indicators to see if negative divergence is in play which would necessitate a ditching of long positions and taking on shorts. Sometimes it is like herding kittens waiting for an index or ticker to set up properly with neggie d and all of you long time readers of the blog will remember how Keystone kept saying over the last year not yet since the MACD remained long and strong.
That changed with the January all-time record SPX price at 4819. The MACD went neggie d joining the RSI, histogram, stochastics and money flow. It's over. There is no technical reason for the SPX to come up again to make a high above 4819. Good night Irene, Irene Goodnight, as Eric would sing. So the collapse occurs and the SPX drops through the 10 and 12 MA's described above falling into the cyclical bear market going forward.
Now it is time for the back kiss. The SPX starts Friday morning, 3/18/22, the peak of the full moon, at 4412; the bulls only 18 points from victory. Can they do it? S&P futures are down -20 points about 2-1/2 hours before the opening bell in the States but by the time you get a cup of coffee it may be +20 points higher. The market is trading on lots of emotion, the Ukraine war, inflation, oil and gasoline prices, lingering covid concerns, the list goes on. Interestingly, stocks typically move higher through the full moon and lower through the new moon each month.
The upper standard deviation band was violated last year which sets up a visit to the middle band that is also the 20-mth MA at 4108. Note that the lows in February and this month have teased the touch of the middle band but did not. It is logical to expect a test of the middle band at 4108, at a minimum, as time moves forward. The lower band is also in play on the monthly basis at 3235 and rising.
The February and March candlesticks have long lower shadows (the March stick is still in progress for another 2 weeks) indicating that the dip-buyers are active. Check out the money flow bump at the end of last year and the overbot conditions into this year verifying a healthy amount of dip-buying occurring. Traders and investors believe that the stock market will keep going up forever with the help of an accommodative Fed (despite the start of a hiking cycle). Moral hazard lives. Sucka's.
The MACD prints a negative cross and points to more weakness on the monthly basis along with the stochastics and money flow. The RSI is buoyant this month encouraging the dip-buyers to buy. The Aroon is a big surprise. There has been a negative vibe in society over the last couple months but the bullish green line remains euphorically optimistic and the bearish red line remains extremely negative. Wow. This tells you that the angst you may feel over the last couple months and worry about stocks is nothing. Nada. Zilch. You ain't seen nothing yet, Sonny and Girly. The negativity this year is likely only in the first inning to use a baseball season analogy. There are 8 more innings of negative, bearish misery ahead for the US stock market. Are you ready?
The ADX shows the 2017 and 2018 period as a strong trend higher (pink box) but note that despite the wild orgy of upside since the pandemic, the ADX does not consider the current rally a strong trend higher. Isn't that something? [The ADX needs to move up through the 26-30 area to prove that a rally, or crash for that matter, is a strong trend higher, or strong trend lower, respectively.]
The chart is a bust. Can happy talk override the negativity. Of course it can. Maybe the war ends. Maybe the Fed decides to turn dovish rather than the new hawkish stance once the stock market begins crashing; this will save the day. So there is a lot of excitement ahead. There are gaps down below that need filled. The pandemic support level is down at 2200 and price may want to revisit that late this year or in 2023.
The SPX weekly chart is trying to stage a multi-week relief rally. The position of the MACD on the weekly chart today will tell you if the current rally has legs for a couple-few weeks, or, if price needs to drop a bit more and the multi-week rally to begin say a week or two out.
People will get excited about a weekly rally in the SPX but that will only provide opportunity to ditch long positions going forward. If you made a lot of dough during the Fed's gift to the wealthy over the last 13 years, take the money and run. The SPX monthly chart forecasts epic ugliness ahead for the next year or two. The chart makes the bears happy, as Sheryl sings. Plan accordingly. 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 10:20 AM EST: The SPX prints 4424.35 as the HOD thus far and then drops back to 4410. The SPX 12-mth MA is at 4429.11. The first test of this key 4429 resistance level, that divides a cyclical bear market from a cyclical bull, results in a slap down, but the bulls will regroup and attack again. The stage is set. Bring the popcorn.
Note Added 11:29 AM EST: The SPX comes up for another taste at 4422.77 at 11:14 AM and receives another spank down to 4412. The bulls will likely try again. The banks are trying to help the bulls but XLF is at 38.60 and if it loses 38.51, that will likely create market negativity. If banks rally, the SPX will take a run at the 12-mth MA at 4429.11.
Note Added 11:41 AM EST: The bulls attack the 12-mth MA at 4429.11 at 11:36 AM. Yarrr! Yahh! Thwack! Arrggh! The battle lasts 4 minutes and the bulls are spanked down again to 4417. The battle is raging on into munch time. The bulls will attack the 4429 fortress again. XLF is at 38.63 and could not provide enough oomph for the bulls, so far.
Note Added 11:47 AM EST: SPX 4415. XLF 38.60.
Note Added 11:53 AM EST: SPX 4418. XLF 38.63.
Note Added 11:55 AM EST: SPX 4412. XLF 38.60. XLF dips to 38.54. News about the call between President Biden and dirtbag Dictator Xi is hitting the wires.
Note Added Saturday Morning, 3/19/22: The full moon wins. Ding, ding, ding. XLF launches to 39.10 settling at 39.00. The SPX ends the day and week at 4463 with a 4-day snap-back rally. One of the characteristics of bear markets is the wild and strong relief rallies that occur, like now. The bulls succeed, however, in flipping the cyclical bear market back to the cyclical bull market but next week will have to play out to see if the bull's have legs. The scenario explained above with the 10-mth MA resistance at 4481-4482 is now in play. It is the last chance for the bears to stay in the game. The SPX HOD Friday is 4465.40 only 16 points from the confirmation that bulls will rule going forward. The bears are already stacking up furniture, tires, tree branches, even old cars, at the 4481 resistance line in the sand preparing for battle on Monday. It is smooth sailing for bulls above 4481-4482. Bears need to spank the SPX down from 4481 which will set up a back test for the 12-mth MA support at 4433. A fall back below 4433 will usher-in a year or two of stock market pain and misery (for bulls). The bulls are dining on Angus steak drinking the finest wines this weekend while the bears are consoling one another drinking stale leftover green beer from Thursday. Watch SPX 4481-4482 on Monday. 10-mth MA 4481; 200-day MA 4470; SPX 4463; 12-mth MA 4433; 50-day MA 4433; 50-wk MA 4424. Rookies will watch and comment on the 200-day while pro's watch the 10-month. Note that the cliff-edge for the market and demarcation between a cyclical bear and bull is at the 12-mth MA at 4433 and so is the 50-day MA at 4433 so the breach of the 4433 level is a big win for bulls yesterday. Bears must immediately reverse the rally and push the SPX back below 4433 early next week or they will be roadkill.
Note Added Tuesday Morning, 3/22/22, at 5:10 AM EST: In the Monday session, the SPX fell through the 12-mth MA at 4433 but recovered and ends the day at 4461. The NYA leaps to 16695 in the Monday trade but if you blinked a few minutes after the opening bell, you missed it. The NYA ends the session at 16607 with the 40-wk MA bull/bear line in the sand at 16685. The bulls maintain the cyclical bull market with the SPX 12-mth but the bears maintain the cyclical bear market going forward with the NYA 40-wk unless the bulls can find 78 NYA points. The battle for cyclical market control at the SPX 12-mth MA at 4433 and the NYA 40-wk MA at 16685 continues. One of them will flinch and that will tell you the longer term cyclical direction of the US stock market ahead.
Note Added Tuesday Evening, 3/22/22, at 6:20 PM EST: The bears fold like a cheap suit. The NYA catapults higher to 16735 ushering in a cyclical bull market in agreement with the SPX that jumps over 4500. The bulls are going to Rock n Roll All NIght and also party every day. Bears have a chance to reverse things but must do it within a couple days.
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