The slope of the 150-day MA is a very useful tool for identifying a cyclical (weeks and months, sometimes a year or three) bull market versus a cyclical bear for any stock or index. If long a stock, you want the wind at your back so you want an upward-sloping 150-day MA which represents a cyclical bull. if you are short a stock, you want the 150-day MA to be sloping lower to show that you are trading in sync with the negative trend.
The S&P 500 chart is the same as the Dow Industrials. These two major indexes show the strong cyclical bull market continuing through the May 2015 top in the stock market. In August 2015, the 150-day MA slope turned negative ushering in a cyclical bear market. That lasts until late March this year when a cyclical bull market came back in play and remains. Market bears obviously need to roll the 150-day MA back to the downside but by definition, this will only occur if price moves below the 150 to drag it down. The bulls are celebrating their good fortune and most of all their rich Uncle Fed that always assures higher stocks to make the wealthy richer.
The COMPQ (Nasdaq Comp) and RUT (Russell 2000) behavior is represented by the COMPQ chart. Note how tech and the small caps are not as joyous as the broad market SPX and the Dirty Thirty. Interestingly, you can almost make the case that the 150-day MA continues to trend negatively. However, at the right side of the chart, the 150-day MA is moving higher so you would deem it a cyclical bull market pattern. Bears will need the COMPQ to drop under the 150 to pull it lower and roll it over to begin another cyclical bear. For now, the bulls are happy. You should review the 150-day MA slopes for all of your stock positions to see if you are trading with the wind or against the wind. 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.
Oil displays the yellow inverted head and shoulders (H&S) pattern. The neckline is at 50 and head at 25-30 so a breakout above 50 would place 75-ish in play. It may be a formidable task, however, to rise above 50. The ADX pink box shows the strong trend to the downside during late 2014 all of 2015 and into early this year. That strong downtrend has petered out. Keystone highlighted the universal possie d (green lines) across all indicators early this year and the easy oil rally call plays out as predicted.
Price staggers sideways and the indicators are not tipping their hand just like the US dollar index chart. The sideways neon channel is in play at 38-50 with oil at 44-ish in the middle. Oil bears win big under 37-38. Oil bulls win big above 50. The expectation is for sideways choppiness to continue without a breakout or breakdown in the near future. Oil may stagger through 37-50 for the remainder of the year.
The central bankers continue to control the markets with their multiple years of non-stop intervention. The announcements from global central banks, along with the Federal Reserve, sends the dollar to and fro, and commodities and oil move inverse to the dollar so they are moving in a sideways choppy pattern. The central bankers are the market.
The choppy sideways behavior may indicate that markets are simply waiting for a shoe to drop. For now, traders remain confident in the central banks to keep stock markets elevated. The crack in the game likely occurs when credibility and confidence is lost in the central banker intervention. The FOMC's credibility takes a hit this year calling for four rate hikes and there may end up being zero hikes. How is that for forecasting from the Fed heads? Chair Yellen is busy wiping egg off her face this year but as long as traders believe in her obscene Keynesian policies, the party continues. 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.
The US dollar stumbles along sideways. The ADX shows that the parabolic move up in late 2014 early 2015 was a strong move higher but that petered out in May-June 2015 and sure enough, price staggers sideways trendless in a choppy pattern. The firm negative divergence across all indicators as price made a matching high in late 2015 guaranteed the smack lower as Keystone pointed out at the time, and which occurs.
The blue sideways channel at 93-100 is running the show for the last 1-1/2 years. Themove from this channel will be very important. In fact, lowering the upper trend line to the 98 level is a better upper range so the breakdown from 93, or breakout from 98, will determine the winner going forward. The dollar is in the middle at 95-96. The indicators are simply telling a story of a sideways stock pattern without any forecasting hints available.
Note the tight standard deviation band squeeze in the summer of 2014 which ignited the rocket launch parabolic move higher. Tight bands predict huge moves but not direction. Keep this in mind with the SPX daily chart that has tight bands right now.
The blue two-leg bull flag pattern is in play. For the first leg, price jumps from 80 to 100 for a 20 difference. Price is currently consolidating in the flag portion with a downward bias, this is textbook two-leg bull flag behavior. If price begins the second leg higher from 92-93, this targets 112-113. A breakout above 97-98 may tell you that a strongly higher dollar is on the way. If this occurs and price breaks above 100 it will be at 102-103 in a heartbeat and beginning the run to the bull flag target at 112-113.
The dollar story will be written at either 97-98 for the dollar bulls or at 92-93 for the dollar bears. 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.
NVDA is all the rage on Wall Street these days. NVIDIA provides chips and components for the latest technology such as virtual reality and autonomous cars. Traders are tripping over each other to buy the stock at any price. It is in the parabolic, greater fool, stage right now.
The green lines show the sideways triangle breakout from 14. The vertical sides of the triangle forecast a move from 18 to 30 handles, thus, a target at 32 to 44, but price blew through these levels like they were standing still. The brown channel is a long-term sideways range. Price broke out and has not yet back kissed this key trend line at 22-24. Once the hype began on the stock and it became Wall Street's latest favorite flavor, price went parabolic. Note the large volume selling candlestick for that big move higher four months ago. Price will need to come back down to test this area again and see if the volume can remain strong to prove that up is the path ahead, or not.
The stochastics are cooked with negative divergence and overbot conditions. Money flow is neggie d (red line). Thus, price needs to pull back now in the monthly time frame to take a rest, however, the other indicators are long and strong so new highs will come afterward. There will be a jog pattern ahead, likely 3 jogs, to set up the MACD line with neggie d. Thus, for the sake of discussion, NVDA will likely move down in Aug-Sept, then up in September to new highs, then down again in say, late September and October, then up one more time in October or November, then that should be a multi-month and likely multi-year top. Since NVIDIA is tied into the new technology joy and is a momentum play, it will maintain upside juice over coming weeks. It should all be priced in before the end of the year, however.
The stock will likely move into choppy sideways behavior through 56-68 for the coming months topping out at 64-68 in October-December. The chart's progress will have to be monitored along the way and adjustments can be made to the forecast if needed. NVDA may develop in to a nice trading stock as it moves into a sideways choppy pattern. Those buying as a long term buy and hold hoping to see lots more upside will likely be disappointed.
Being long is not attractive even though the hype may push it higher in spurts. NVDA should pull back over the next month (say to 60-ish) and that is more attractive as a potential long; traders will be lunging at it on the long side and send it back up. A rally will kick in again to satisfy the monthly chart as described, say back up to 63-67. Then probably down to 56-62 due ot more negative divergence. Then back up for the top at 63-68 when all indicators on the monthly chart are negatively diverged.
NVDA may be a better trading stock rather than buy and hold going forward. Keystone has no position in NVDA and will likely not play it. You always want to avoid shorting stocks that are parabolic and have momentum. A quickie long play in the very short term after it pulls back to 59-62 may be an attractive approach. 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.
Well over 80% of the stocks in the S&P 500 are above their 150-day moving average (MA). This is very bullish. The peak at 86-87 in late July is very elevated. When the SPXA150R moves above 90, you can figuratively bet the farm on the short side since stocks will sell off hard going forward. The 86-87 is close enough for government work. Conversely, when the index prints under 35, that is a good time to go long since there is blood in the streets. What do you think will happen?
If price comes up for more new highs as the stock market rallies, that would be an excellent shorting opportunity against the market. However, the index may not print higher than the current 84-ish. The SPX daily chart hints that a pull back is needed in the daily time frame now. 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.
Here is an update of the daily chart which was popular a couple days ago. Those funky tight standard deviation bands (pink) are comical looking. Something very, very big is about to happen. Tight bands do not forecast direction; they only dictate that a large magnitude move will occur. Price is trying to break out higher but the red lines show firm neggie d across the near term few-day time frame and across the one-month and multi-month time frames as well. There is no more oomph available to move price higher. Price is elevated above the moving average lines requiring a mean reversion lower.
The RSI did not make it into overbot territory and the money flow may try to eke out one more day of joy but the conclusion is that the S&P 500 needs to sell off from here now. The only thing that can save it is good news, such as a central banker announcement of more stimulus. The important Retail Sales number is imminent as well as other economic data so this may play a role. But barring anything earth-shattering, the expectation would be for a down move and considering the tight band squeeze, it may be quite a sight. Perhaps there will be a major news event on the weekend; good or bad. If the ECB, politicians, and investment banks announce a bailout deal for Italian banks that could catapult stocks higher.
If the technicals and negative divergence wins out as would be expected, the downside gap level at 2168 is support, also the 20-day MA at 2171, the bottom of the gap at 2164, then down to that key support and gap at 2158-ish. The tight bands are ready to squeeze out big excitement either today or Monday. Down is the expectation but the central bankers are always lurking in the bushes ready to step in to save the day. 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 Saturday Morning, 8/13/16: The SPX dips 2 points in the Friday session. The bulls are strong. Traders are likely giving the stock market the benefit of the doubt through the weekend. The Italian bank bailout negotiations have been ongoing for many weeks and months so perhaps an announcement will occur which would send stocks higher. The central bankers are the market. Traders may also be willing to hold tight through the weekend since the bad Chinese economic data Friday may push the PBOC to provide stimulus which will pump stocks higher. Barring these two events or other central banker joy, the technicals should take over and send stocks south.
The green circles show attractive market bottoms occurring as the fear and panic spiked higher. There was blood in the streets, several traders were taken out head first and others jumped from windows; fortunately the windows were on the first floor. The panic is a good time to step up to the plate and go long.
The red circles show notable market tops occurring as the VIX was at low levels signaling a lack of fear and rampant complacency. What do you think will happen? Stocks will likely sell off on the weekly basis for several weeks ahead. The long side in stocks would not be attractive until the VIX moves above the 21-22 area.
A key short term market signal is the 200-day MA now at 17.03. If the stock market sells off in the days ahead but the VIX remains under 17, the bears got nothing, stocks will recover. If the VIX moves above 17, stocks will be tumbling lower in earnest. Overall, stocks are long overdue for a pullback. 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.
The European banks have been beaten over the last couple years. The central bankers and politicians are preparing bailouts so the sector has recovered over the last six weeks. Price bounces after it tests the bottom rail of the blue channel, violates the lower standard deviation band (pink) and forms positive divergence across all indicators (green lines). Voila. Price jumps off the bottom with the middle band a target which is achieved at 16.80-16.85.
The chart also serves as a proxy for the troubled Deutsche Bank, DB, which may bring down the entire global financial system if it falters. The pink box shows a strong trend in place which was a downtrend during late 2015 and early this year. That strong downtrend has ended.
Price will pivot from this center band area which is also the 20-week MA at 16.85. If price breaks out higher it will seek that cluster at 18.00-18.80. If price breaks down from here it will seek the lower support levels at 15.00-16.00.
The green possie d lines are across all indicators so there is no reason for price to come back down again to test the lows in this weekly time frame. This is encouraging for Europe since the downside in banks will likely receive a reprieve in this weekly time frame. Price may venture lower but the path ahead may be best represented by the sideways brown channel. That may be the range forward for the remainder of the year. The ETF may develop into a nice trading stock if it begins oscillating through the brown channel. The jury is out as to the longer term direction. Price wants to stumble sideways for a few weeks or months. Any move out of the brown channel will be very telling. 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.
Amazon slithers higher the stock appears unstoppable. Price is forming rising wedges and RSI and stochastics are overbot. The red lines show neggie d sans the near-term MACD line. So a spankdown is needed. Price may have one tiny bit of juice remaining to come back to a higher high say after a one or two-week selloff but this would simply serve as the top instead of now. The direction should be lower with several weeks of downside ahead for the huge retailer.
Price is extended above the moving averages desperately needing a mean reversion. Keystone does not hold a position in AMZN but if tempted, it would be on the short side for the near term. The AMZN monthly chart is negatively diverged across its indicators except for the MACD line. Thus, AMZN should roll over from a peak at anytime in the days ahead. Price will likely travel lower into the end of August and early September. At that time, price will likely recover and come back up for another higher high, say, in October, where the MACD line on the monthly chart should go neggie d and that woudl identify a significant top.
Keystone has posted the Amazon chart this year monitoring the topping process and it is getting closer. So a top in the days ahead, then lower for a few weeks, then back up for a likely multi-year top to print in October-November. 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 on Saturday, 8/13/16: AMZN ends the week at a record closing high at 772.56 and Thursday was a record intraday high near 774. Traders are throwing money at Jeff Bezos with reckless abandon. Aunt Edna took her entire life savings and invested it into AMZN since the nice fellow on television said it was a sure bet.
Markets are behaving erratically after eight years of central banker intervention. Economic textbooks are thrown into the dumpster as global economies and markets negotiate uncharted waters. The put/call information is very erratic over the last couple months. A stock market top is identified in July but the pull back in equities was paltry since the BOE stepped in last Thursday to save the day and then the Jobs Report joy last Friday extended the party.
The CPCE only climbed to a paltry 0.75-ish to identify the bottom in the stock market and now stocks are at and near new all-time highs with the CPCE collapsing lower again. The low put/call verifies the ongoing complacency. Ditto the low VIX. Traders are not worried about stocks ever selling off and if so, they proclaim it to be a buying opportunity since the Fed and other central bankers plan to remain accomodative forever. Every day is a party without fear or worry. You know what happens when this is the case.
The stock market needs to pull back and introduce some fear into the equation again especially since there has been no fear for a couple months. An attractive tradeable bottom does not occur until the CPCE moves above 0.80. Stocks should sell off until the CPCE prints inside the green circle in the right margin. S&P futures are +6 two hours before the opening bell on Thursday, 8/11/16. The joy continues. Traders are sipping Fed wine and staggering around buying stocks without a care in the world. It is prudent to not drink the Fed wine and instead take a sober stance on stocks in the near-term. 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.
