Gold bulls and bugs are happy at the chart above that moves from the bottom left to the top right. What a run. Alas, however, like all good things, there is an ending. Gold is about to receive a multi-week spankdown due to the neggie d. The GLD gold ETF is shown above; it can be shorted going forward, or simply play GLL long which is the inverse image of the GLD chart, as would be expected. The money flow is trying to sneak out more bull juice but the fuel tank is pretty much empty. The only thing that would change the negative outcome for gold on the weekly basis ahead is a news event. If something bad happens of course folks will run to gold but barring that, gold will begin rolling over at any time and likely remain soggy for the next month or two.
Are you ready for some mumbo-jumbo? Let's do it. The red lines show all the chart indicators negatively diverged so the top is in on this weekly basis, however, as mentioned, keep an eye on money flow since the gold bulls are trying to squeeze out another week or so of gold joy. If you enjoyed the rally, now would be a good time to scale out although read below about the monthly chart that is still bullish. The red rising wedges are bearish patterns and the drops from rising wedges can be quite dramatic. Price is extended above the moving averages requiring a mean reversion lower.
The doji candlestick sticks out like a sore thumb indicating a lot of indecision which many times results in a trend change. 10 weeks ago, a shooting start candlestick printed which is bearish and signals a trend change but that likely did not happen due to the non-stop news flow that encourages gold buyers.
The RSI, stochastics and money flow are coming off overbot levels during the last year and all three are agreeable to more downside. Price has violated the upper standard deviation band so the middle band at 157, and rising, which is also the 20-week MA, is on the table as well as the lower band at 143 and rising. The ADX shows gold in a strong uptrend since last summer so the gold bulls have nothing to complain about; it has been wine and roses over the last year except for the March hiccup. The ADX, however, is slinking lower. Note that for each high in gold, the strong upside trend peters away each time. The strong upside weekly trend will be gonzo once the ADX slips sub 30.
The Aroon positive cross remains in play since the end of 2018 except for the March 2020 stutter-step. So if you bot gold solely based on the Aroon positive cross, you would have ridden GLD from 115 to 165. The green line is pegged at one hundo so it has nowhere to go but down which is bearish. Look for a negative Aroon cross in July. The three tight standard deviation band squeezes were all up moves which is interesting. The tight bands (pink arrows) tell you a big move is coming but does not predict direction.
The gold naysayers will have their way during July. The GLD and gold monthly charts, however, display long and strong MACD lines so price does have the juice to come back up for another matching or higher high on the monthly basis. Thus, gold can be shorted now. Remain short for the next 3 to 8 weeks; it will likely depend on how fast or slow and how far she fails on the weekly basis. Then a multi-week recovery back up to the highs again; a double-top is definitely on the table. At that time, gold will likely top out on a long-term basis and not see new highs for several months and probably a few years.
Thus, to keep it simple, gold tops out over the coming days and begins falling on a weekly basis. Gold will sink lower, perhaps to the gap-fill at 153-ish, there is also strong price support at 148-ish, say a bottom at mid-July or so, then back up to satisfy the strength on the monthly chart for a matching or higher price high say mid-August. This high will be key because the monthly chart will likely go neggie d and the long-term top and fate of gold would be sealed. Plan accordingly.
GLL is traded at far lower volume. Keystone will either short GLD or long GLL going forward to play this weekly slump that will begin now. The gold miners, GDX, GDXJ, will likely roll over too but they will probably lag (top-out) gold by 1 to 3 weeks. The gold short can be flipped back to the long side in a few weeks after the selloff occurs and the weekly chart turns possie d. Then the big-time top in gold will occur in a couple-three months when the monthly chart negatively diverges across all its indicators (watch the MACD).
So gold will top out on a long-term basis (monthly chart) probably in August-September. No one expects that in these tumultuous days, that gold will hit a ceiling in 2 or 3 months and then underperform and trail lower for many months forward probably a year or few ahead, it seems ludicrous; that is why it will happen. As mentioned above, if a negative news event occurs, gold will be buoyed. Gold is now trading at 1757 on Tuesday, 6/23/20, at 6 AM EST. 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 2:46 PM EST: GLD is at 166.06. The gold bulls scoff at any consideration that gold will trend lower from here. The GLD weekly chart is neggie d across all indicators as explained above. The daily and hourly charts are a bunch of slop. GLD pops higher so the bulls will proclaim a breakout from the 164-ish resistance on the daily chart, however, you can clearly see the neggie d over the last few months. In the very short term, the indicators are stiffening higher as gold price prints the orgy high, so this does hint at a day or few of buoyancy remaining (bumping sideways). Ditto the 2-hour. Oh, that is interesting. Bring up a GLD 2-hour chart, you see the orgy high today, price making higher highs for the last 10 candlesticks more or less, the RSI is flat which is neggie d, ditto stoch's that are also overbot, RSI also overbot, money flow is neggie d. MACD line is neggie d over the last month but is trying to eek out juice. This is the top here for GLD so you do not have anymore time to make a decision. GLD price will likely top out today or tomorrow morning. If you want to keep your gold, hedge it. Otherwise, the short side is best going forward the next few weeks as explained above. GLD may flush lower into the close today or tomorrow morning. Watch the MACD on the GLD 2-hour; the top is in for the hourly time frame when the MACD rolls over.
US Trade Representative Peter Navarro, known as a China hawk, he even wrote a book warning the West about the communists, said in a Fox News interview last evening that the China trade deal is "over." Boom. S&P futures flushed nearly 60 handles as the mess was sorted out. Navarro walks back the comment saying he was referencing the future trade negotiations and not the phase one deal. He says the comments are taken out of context. Navarro says US-China relations are strained because of the coronavirus (COVID-19) that originated in China. The business media and international traders and investors took it to mean the phase one deal has fallen apart creating the mini flash crash.
President Trump had to pull back the satin sheets, place his blindfold on the nightstand and slip his orange feet into his fluffy real-fur slippers to tweet that all is well with the trade deal. Futures recover. As seen on the righthand side of the chart, S&P futures now pop to +15 at 3:30 AM EST. VIX 31.45. The central banks are maintaining their jackboots on the throat of volatility to keep stocks elevated.
So the Navarro Tantrum results in a drop of 60 S&P points, then a recovery of 60 points, a flash crash profile. Dip-buyers are tripping over each other to buy, buy, buy, in this overly complacent and euphorically bullish stock market. Just think, the US stock market may experience another trillion-dollar flash crash event like 5/6/10 but the recovery side of the flash crash profile will not occur. That will be a sight.
The financial markets are a joke nowadays with any little news bite moving stocks, bonds and currencies wildly to and fro. Crony capitalism is breaking down in America and the ongoing social unrest and developing class war (rich versus poor) will continue for many years forward. In a nutshell, the wealthy elite class in America destroyed the middle class over the last five decades so there is no longer any fabric or glue to hold the country together. It is humorous, although tragic, that the privileged class, and its upper middle class sycophants, that control the media and appear on television and radio shows daily, do not understand the problem as yet.
For now, the stock market hangs in there with the Federal Reserve and other global central banks printing money like madmen to maintain a world awash in liquidity. It is fascinating to watch develop in real-time. 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: Chart is provided by CNBC and annotated by Keystone.
The SPX keeps lining out sideways. It has been an indeterminate chart lately since you cannot find positive, or negative, divergence with price moving sideways. The sideways symmetrical triangle is in play with price respecting the triangle for a couple weeks. Price prints 2 candlesticks thus far today. Stockcharts is a pseudo-2-hour chart since it prints a candlestick at the opening bell and then 10 AM EST, 12 PM noon, and then 2 PM EST. So you can check at those times to see if the chart shows which direction it favors.
Price is nudging up against the upper triangle trend line at 3101 so it will either burst up through or receive a spankdown. A successful back kiss for the bears would then send price down towards 3055. The bulls need the breakout higher.
The indicators are lining out sideways so as stated, you cannot assess divergences with price not making any new highs or lows. The vertical sides of the triangle are, say 240 points and 190 points. These are eye-balled so you can go in and look at it in more detail. Thus, if the bulls win and breakout higher, the 3291-3341 area would be the upside target which will be record high stuff. If the bears win, and price weakens from here, the SPX will test support at 3055-ish and if that fails, the 2815-2865 landing zone is targeted.
The bulls are winning with trading just getting underway here in the States on a Monday morning pushing up through the upper trend line to 3103 and now 3105, no check that, 3106. The bears have to put a stop to this right now since a smack down from here would still be a successful back test but if price keeps sneaking higher, the bears will fold like a cheap suit and the bulls will ride to victory ahead.
Sideways triangles are interesting patterns in that many times they will show a fake-out move from one-half to two-thirds of the way through the triangle pattern. Interestingly, note the breakout from last week, which turned out to be a fake-out, and price collapsed back inside the triangle. Usually, price will return inside and then seek the lower trend line support and fail there giving up the ghost. Same the other way. Price may show a failure halfway through but then many times you will see price jump back up inside the triangle and shoot out the top of the pattern. Thus, keep a close eye on things since that fake-out move may hint that price will drop out the bottom of the triangle in the hours and day or few ahead.
Right now, however, the bulls are winning and if the bears do not step up to the plate fast, they will strike out. 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 10:22 AM EST: SPX 3104.
Note Added 10:23 AM EST: SPX 3103. UTIL 780. Bulls are pumping utilities, banks and commodities to provide upside support for the stock market. GTX is at 1666 and bulls will receive serious firepower higher if price crosses above 1685.
Note Added 10:31 AM EST: SPX 3102. Look at that. Price back-tested the trend line and failed by the looks of it so the back test is successful for bears and should open the door to downside. Bulls are keeping utes elevated, however, so bears will have trouble making headway lower unless utes and banks start puking and if volatility starts trending higher.
Note Added 10:36 AM EST: SPX 3100, no, check that, 3099.
Note Added Tuesday Morning, 6/23/20, at 3:57 AM EST: The SPX finishes yesterday up 30 points, +0.7%, to 3118 using the 20-day MA at 3099 as support. The bears tried to push stocks lower but the utes, banks and volatility remained in the bull camp; therefore, the bears had nothing and stocks recovered. S&P futures flash crash overnight by 60 points and quickly recover after comments by President Trump. US Trade Representative Peter Navarro said the China trade deal was over and it was misinterpreted to mean the phase one deal rather than future negotiations. The bulls are breaking out of the triangle to the upside so keep watching. Bears would have to return price inside the triangle today or tomorrow, otherwise, the rally should continue. Sometimes triangles will broaden out by poking out some more highs, then coming down to poke out some more lows below the triangle, which serves to extend the triangle out sideways and push the ultimate decision time to a few weeks down the road. For now, the song remains the same. the rally continues but stocks are way overextended with rampant complacency in play.
UTIL took the pipe last week and begins this week soggy. UTIL starts at 771, dips to 766 then recovers back to 771. The 763 level, which is the closing weekly low from 15 weeks ago, and determines whether utes are in a weekly uptrend, and thus if the stock market is in a weekly uptrend, may get tested this week. Minutes ago, UTIL is 3 points away from this trap-door for the stock market so it is being tested now.
If UTIL 763 fails, it is over for the stock market. As soon as it would fail, if it does, the SPX will likely ditch 30 points within a half-hour of the failure. There may be some fun ahead. Bulls must keep UTIL above 763 so they can continue stumbling along trying to keep the bloated stock market elevated. 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 9:41 AM EST: UTIL 771. The SPX is down 16 points, -0.5%, to 3081.
Note Added 9:46 AM EST: Bulls and bears are now in hand-to-hand combat. Bulls took UTIL to 773 but the bears drag it back to 770 then whammo, blat, boof, like the old Batman television series, the bulls pump utilities back to 772. Bulls know the seriousness of the situation. All joking aside, if UTIL loses 763, you are going to see some ugly things happen. Keybot the Quant is long and tracking UTIL 763 as well as XLF 23.38 (now at 23.69). The stock market is in trouble if XLF loses 23.38. Bulls and bears are battling hard to begin the week. Each side already has bloody noses and lips. Which side will be left standing at closing time? Interestingly, sogginess in stocks occurs through the new moon which peaked on the weekend, which typically happens each month. It's another metaphysical thing us dumb humans do not yet understand.
Note Added 9:52 AM EST: UTIL 774. XLF 23.73. The SPX is down 9 points at 3089. The bulls are puffing their chests out saying they have things under control. Besides, Chief Sitting Bull, head of the Ute nation, says the Fed will always keep the party going providing plenty of easy money firewater.
Note Added 9:57 AM EST: UTIL 776. Bulls are celebrating while they pump the utilities higher which sends the stock indexes back to the flat line. Bulls say there is nothing to worry about so time for an early lunch with plenty of Fed wine on the menu today. The bears linger in the background and mumble to themselves that they are only 13 points from creating market mayhem and carnage; the bears hide in the shadows waiting for another opportunity to take utes lower and open the stock market trap-door.
Note Added 10:02 AM EST: UTIL tags 777, trip 7's. The bulls say this proves that they will always take stocks higher forever. Bulls are not taking any chances, however, and keep jamming utes higher. UTIL 778. UTIL 779.
Note Added 10:25 AM EST: UTIL 782. The bears hang their heads in sorrow while the bulls throw confetti.
Note Added Tuesday Morning, 6/23/20, at 3:57 AM EST: UTIL finishes the Monday session at 780. The battle continues with the bulls building a healthy separation from 763. This fight continues all week long so keep watching.
Note Added Tuesday Afternoon, 6/23/20, at 2:40 PM EST: UTIL slips back down to 772 only 9 points from the stock market trap-door. LOD 770. The plot thickens. The SPX is up a 3150 after President Trump and Economic Adviser Kudlow pump equities with promises of more stimulus.
Note Added Wednesday Morning at 11:46 AM EST: UTIL failed at 763 shortly after 11 AM EST. The trap-door is open. See if it holds. The SPX is crashing 91 points, -2.9%, to 3040.
The 30-plus year note and bond rally is remarkable (higher bond prices lower yields). A Gary Shilling was the only one that called the bond rally. He was laughed at and ridiculed about the call the first few years. About 15 years into the bond rally and folks were not laughing anymore; instead, they were asking Shilling for guidance. Keystone proclaimed last Fall that the end of the three-decade-plus bond rally would occur over the coming months. In September/October 2019, the Fed stepped in with enormous support to prevent a stealth market collapse that few are aware of to this day. Markets have been erratic ever since.
Yields take the big dip lower. During March, the 30-year yield was down to a 0.8% handle now sitting at 1.45% as a new week of trading is underway. The activity sinks the chart indicators slightly but overall the same scenario is in play. The falling green wedge pattern is bullish (for this chart it means lower prices higher yield should occur going forward). Ditto the oversold RSI and stochastics and the positive divergence with the stoch's. These factors create the bounce in yields over the last couple months. The stoch's have even placed a higher high hinting that the yields will continue higher on the monthly basis.
The red lines show weak and bleak indicators as yield prints a matching or lower low. The yield is in the same ballpark March-May so you can be generous and say that the RSI and ROC had displayed a smidgeon of possie d to help bounce yields. However, the MACD line remains weak and bleak. There may be one or two jog moves needed to set the TYX up for the long-term up move in yields. Interestingly, however, the up in yields is likely coming far faster than anyone realizes.
It is funny. Keystone has been writing about disinflation and deflation the last few years and he was scoffed at by many but as of a couple years ago everyone is now in the non-inflation camp even Fed members. The shoeshine boy said that yields will not move higher for several years. Years back, many said inflation is around the corner. It was not. Now all those folks have capitulated so you know what will happen next. Yes, the long-term bottom in yields will occur and yields will begin to move higher over time confounding the television talking heads again. The markets like to make fools of the maximum amount of people at any point in time.
Yields will come back down again to matching lows to allow time for the MACD to go possie d and that will be the bottom in yields probably for many years forward. Maybe yields go up for 30 years now? So TYX would be expected to sink again, probably in sync with stocks dropping like rocks, and perhaps the negative rates will be tested on the short durations, but the bottom is in once the MACD goes possie d. The German 30-year yield slips negative a couple hours ago.
The pink arrows show the tight standard deviation lines that squeeze out big moves. The tight bands only predict a big move but not direction. In 2013 the move was up in yields. In 2018, a couple month fake-out occurred just enough to get everyone proclaiming that yields were about to explode higher with inflation, but then these folks had their faces ripped off. Yields started to drop like stones all the way into the spring bottom.
The TYX would be expected to move lower for a month or two, then that will be the bottom in yields (one jog move), or, TYX will come down for a month, back up for month or so, then down for a month or so again for the bottom, then up and away (two jog moves). Thus, the long-term bottom in yields would be expected to occur during July-November with the August-September period most likely. The bottom is in when the MACD positively diverges. This hints that global investors and traders may lose faith and confidence in the Federal Reserve and the other corrupt global central bankers this year. That will be a sight.
The TBT ETF mimics the 30-year yield chart above and is a buy on the long-term basis (for many months ahead not short-term). Conversely, TLT, that moves inverse to TBT, would be a short going forward on the long-term basis. Drilling down to take a more near-term look, TBT has a bit more upside juice on the weekly chart and TLT has a bit more downside juice (MACD is weak and bleak). Daily charts are sideways sputter. Simply do not play either ETF now due to the choppy action but keep an eye on these plays. Give it a month or two and TBT will likely be a long trade then and going forward for many months (and TLT will be a short). It is not worth it to chase TLT higher now. The shorter term actions looks like a lot of garbage you have to deal with so there are far better trades out there. If you are in TLT now and made money, you probably want to scale out on the rallies going forward. 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.
It has been a while since Keystone posted the eclipse indicator. It on the esoteric side so you have to detach pre-conceived notions and have an open mind. Many human behaviors are rooted in metaphysical phenomena that we do not yet understand. The Keystone Speculator Eclipse Indicator takes eclipse dates, if they are near each other, and averages a date between. If there is an eclipse taking place, and no other, a few months before or after, that eclipse date is the average date. Then take one month before and month after as the key dates for a potential stock market top give or take 2 weeks. Is that clear as mud? The entire eclipse period (blue box) is in play for a top but the tops will tend to occur either near the beginning of the box or the end of the box (blue circles) which correspond to the target dates +/- 2 weeks.
When a selloff begins for the first date in the box, it usually takes all the energy so the second target date does not result in a top or if it does it is a minor pullback. If a selloff does not begin in the first date's circle, there is high likelihood it will begin in the second window of the box.
The SPX chart above shows the last five boxes where potential stock market tops may occur, based on the eclipses, as per The Keystone Speculator Eclipse Indicator. The indicator caught the December 2018 top in the market. Also, a minor pullback in March 2019. That big selloff took all the energy. Last summer, the first window resulted in nothing, stocks were rallying not selling off, but the second window caught the August swoon. Last Fall, the eclipse indicator delivers buptkis. Remember, the financial system was in a stealth shutdown and about to go over Niagara Falls in September/October when Federal Reserve Chairman Powell panicked and started goosing the economy and markets like a madman to save the day. That obscene Fed Keynesian money-printing sent the stock market to the stratosphere (green line). Isn't it comical that there are idiots that think capitalism exists? The average person has no idea what happened last Fall.
There were more eclipses than usual at the tail end of last year into this year which created that odd double box stuff. Both boxes overlapped in that December 2019 time frame but that was when the Fed was pumping like mad to save the markets. Interestingly, the second window of the box that runs from last year into this year nailed the February top. The Fed delays the tops in the market with their out of control Keynesianism but the tops eventually appear. It is always fun to monitor the eclipse indicator and how it oddly gets things exactly right now and then. The indicator forecasted both big tops on that chart the December 2018 drop and the February 2020 crash.
That's all well and good but as the saying goes, "What have you done for me lately?" This month is very interesting since two eclipses are in the bag and a third occurs on July 4th, America's Independence Day. The average of this triple eclipse cluster is 6/20/20 so one month before is 5/20/20 and one month after is 7/20/20. As the chart shows, the 5/20/20 window did not result in a pullback in stocks. Instead, the rally continues, and like late last year, the Fed and other global central banks, are printing money endlessly which sends stocks vertical. Moral hazard be damned.
7/20/20 is the next target date give or take 2 weeks. Thus, 7/6/20, Monday, when stocks begin trading again after the holiday, through the first few days of August, is a window where a significant stock market selloff can begin. Of course the entire box is in play so we are in position now where a selloff may begin but the July time frame is especially vulnerable as per the eclipse indicator. Time will tell.
Other upcoming dates for potential tops based on the eclipse indicator are 11/7/20 +/- 2 weeks, 1/7/21 +/- 2 weeks, 5/2/21 +/- 2 weeks and 7/2/21 +/- 2 weeks. It is interesting that next year at this time will be a window for a big selloff to begin just like now. If a selloff does start perhaps a year from now it would repeat on its anniversary. That is too far out in the weeds to think about and it hurts Keystone's head. He will be glad to still fog a mirror and be able to yell at the neighbor kids at that time.
Stay alert going forward. We are likely going to experience something big especially with the rampant complacency that has been ongoing for a month. After a month, even the most die-hard partiers like Ozzy and Sabbath would have to take a rest.
The Bradley Siderograph is another esoteric indicator and it calls for turn dates (which can be up or down) on 3/17/20, 5/11/20, 8/19/20 and 12/2/20. The Bradley nailed the March bottom this year and also the May stutter-step. Thus, keep an eye out for 8/19/20 give or take a week based on the Bradley and this could be a turn up or down. Keystone's eclipse indicator and the Bradley almost, barely, touch during the first few days of August. 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.
It is surprising that the VIX has remained above the 200-day MA during the entire recovery rally; extremely surprising. The March bottom was identified by the panic and fear verified by the VIX up at 85. Traders threw out the bathwater, the baby, the kitchen sink and whatever else they could find. Timmy Trader could no longer handle the carnage in late March and jumped out of the trading floor window. Everyone was aghast. Fortunately, he was on the ground floor.
As the S&P 500 (SPX; the US stock market) rallies through April into May, higher highs in stocks are met with lower lows in volatility. All is right with the world (the VIX and SPX move inversely to one another over 90% of the time). However, the SPX overtakes its 200-day MA in late May. The VIX comes down to stab through the 200 and verify the stock market bullish joy, but it does not. The VIX comes down in late May and balks at the 200. Then in late June the bulls (central banks) try to jam volatility lower again but they cannot keep the VIX beachball underwater; it pops up again.
The VIX needs to drop below the 200-day MA, otherwise the rally is over. Note that even though the VIX did not lose the 200 when the SPX gained the 200, the VIX did come down for a lower low in early June which reinforces the higher high that printed on the SPX (bulls are okay). The jury remains out. Stocks are staggering sideways like Uncle Pete at the family reunion last year.
The red bar at 36.45 shows the bull-bear line in the sand identified by the Keybot the Quant algorithm that is currently long the market. Market carnage will begin above 36.45. It is amazing that the VIX has not lost the 200-day MA. This fact alone verifies how the central bankers control stock market direction and keep the game going. The VIX ended the week at the highs. Utilities ended the week at the lows. The NYA went sub 12K. The SPX is only 90 points away from the wheels completely falling off the stock market bus.
The new moon peaked for the month about 4 hours ago the darkest overnight time of the month. Armed forces with superior night vision technology will be carrying out covert raids over the coming days; it's like shooting ducks in a barrel. Equities are usually soggy (about two-thirds of the time) moving through the new moon. Keep an eye on that potential two-leg bull flag pattern shown in light blue. The first leg was about 20 points, then the textbook sideways to sideways lower consolidation flag forms, then the second leg begins which would target 50+ so keep watching that.
Traders are waiting for more triple R cuts from the PBOC and are hoping for an announcement before futures begin trading at 6 PM EST and Asia markets begin opening. Traders and investors need central banks to keep pumping every few days to keep the party going. It's all too beautiful for over 11 years running. Bulls are hoping for a triple R cut from the filthy communists in the hours ahead that will keep the stock market elevated. US bank stress test information is released on Thursday. If the PBOC does not announce a triple R cut, the stock market will likely begin the week soggy. The PBOC cut the triple R's at the July 4 US holiday two years ago.
Utilities fell out of bed last week and this is a very serious matter. If UTIL loses 763 this week, the stock market may crash. At the least, the SPX will probably ditch 30 points within one-half hour of the UTIL 763 rupture, if it occurs. Bulls are okay at UTIL 771 where the week begins.
Summing up the VIX discussion, the 200-day MA at 25.26 and Keybot's 36.45 rule the roost. The VIX has been bouncing around in between which explains the sideways indecision in the stock market. If the VIX pops above 36.45 and trends higher, it is over for the stock market with big losses on tap. If the VIX continues moving through 25.26 and 36.45, the stock market will continue chopping sideways with a slight positive bias. If the VIX falls below 25.26, it is game-on for bulls with stocks catapulting to new highs. The table is set. The VIX begins trading at 3 AM EST. 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.
Tesla is a hot stock nowadays. CEO Elon Musk struts around like a peacock proclaiming that the glorified golf carts (EV; electric vehicles) he builds are better than all the others. Most analysts agree although competitors are catching up quickly. As any market expands, the buyers coming aboard are looking for cheaper alternatives. It is comical that the electricity to run the vehicles is generated by coal and other carbon fuels.
The stock market appears to have a lot of novice investors involved these days buying the FAANG's (FB, AAPL, AMZN, NFLX, GOOGL) and hype stocks such as TSLA, or PTON, or chasing biotechs in a vaccine race, or even chasing bankrupt companies like Hertz where the dolt investors are told they will lose their money and they buy it anyway. That's hilarious. Stuff like this always ends in tears. The FAANG's are such a huge portion of the stock market that they catapult the indexes higher but remember, that gear shift works the same way in reverse. It will likely be quite a sight in the days ahead when all the euphoric bulls start running for the exit at the same time. Anyhoo, back to Tesla.
So TSLA is caught up in the hype and Musk fuels the party proclaiming that his electric golf cart company is the largest auto manufacturer in the world but, it's not true. Musk pulled it from a Reddit post but they did not properly allow for Toyota's size. Nonetheless, the valuation of TSLA is astronomical. Investors believe that everyone will run towards electric vehicles and Tesla will make them all. Perhaps that is overly optimistic since there are few charging stations available in the US but there is a gas station on every corner.
At the same time, Tesla is counting on huge China sales. Musk lays in bed with the communists and is either too naive or unintelligent to know that they will screw him in the end, after they finish building a couple duplicate factories with the same technology (behind Musk's back), or Musk is smart enough to know this will occur and he simply does not care; perhaps Elon plans to exit Tesla over the next year so he will not be around when all the Chinese chit goes down.
Although all that information, or some may say gossip, above is interesting, all that matters is the charts. Tesla is in a significant long-term topping pattern right now and will likely peak out in 2 to 4 months and trend lower for months, and perhaps a few years, going forward. If you enjoyed the Tesla orgy, plan accordingly for your exit during June-August.
The green ascending triangle pattern foretold of a breakout higher, which occurs. Price goes parabolic into 2014. TSLA trends flat from 2014 to 2019 through the key 190, 270 and 370 sideways channel levels. Late last year, the breakout above 370 occurs and the shorts begin running for their lives. The short covering creates more upside fuel that encourages traders to jump in and buy further fueling more short covering rallies. Price, however, moves up into the apex of the red rising wedge a bearish pattern. The collapses from rising wedges can be quite dramatic.
Price is extended above its moving averages requiring a mean reversion lower. The upper band is violated (not shown) so the middle band, the 20 MA, at 424, and rising, is on the table. Yes, 424, may as well call it "420." That was the infamous price level Musk proclaimed in a tweet that got him into trouble with the SEC and resulted in him losing the chairman of the board role (the 420 number and 4:20 on the clock references marijuana).
The higher highs in price come with glaring negative divergence (red lines) over the last 7 years except for the MACD and histogram. The stochastics are in negative divergence and cooked as far as the monthly basis for Tesla goes. The stoch's, RSI and money flow are all overbot agreeable to a pullback. The RSI, on this month-to-month basis is trying to sneak out a higher high. The MACD and histo are at higher highs as price makes new highs so that provides a bit more bull juice. The MACD, however, is in the stratosphere with nowhere to go but down. Price needs 1 or 2 jog moves (down July, up August for the top or down July, up August, down September, up October for the top) to allow time for the MACD and histo to set up with neggie d and that will identify the long-term top and seal the fate for Tesla that will then run into a ditch into the end of the year and beyond.
Price has lots of momentum so it may need the double-jog to allow enough time to burn off the remaining MACD and histo energy, and perhaps a bit more RSI energy. Watch to see if the RSI sneaks out a higher high as compated to the start of the year because if it does not, the top will come faster. if the RSI pokes a wee bit higher than the start of the year, that likely places the double-jog in play and Tesla will top out in the Aug-Oct time frame.
During the fun times in 2013, the ADX pink box shows that the rally higher was a strong trend higher but that petered out in late 2015. Thus began the sideways pattern for a few years. TSLA is now above 1000 but the ADX does not consider the move a strong trend; it is only now trying to poke high enough, above 27, to be declared a strong trend. Isn't that something. Central banker money, inexperienced investors, EV hype believers and short-covering, and, let's be fair, happy production news, from Tesla drives the parabolic move higher this year. The Aroon red line is pegged into the ceiling with nowhere to go but down which is bearish. Watch for a potential negative red cross in the future.
Summing up all that mumbo-jumbo, TSLA will top out on the monthly basis (long-term) during July-September and these current highs may not be seen for many years. Keystone's 80/20 Rule says 8's lead to 2's so the breach of 800 hints that 1200 will come. The TSLA weekly chart is in negative divergence now with a tiny hair of bull juice remaining so the projection is that Tesla will top out onf the weekly basis anytime over the coming couple weeks. TSLA will then tumble lower for a few weeks, then, miraculously, will catch a bid higher again and in July or August come back up to current highs. If the MACD and histo on the monthly goes neggie d at that time, it is over for Tesla. Keystone is not playing it but TSLA can be shorted now, hold that short for a month or so, see how it goes, then flip it long and ride it back up, then short TSLA strongly once the monthly chart is in full negative divergence. 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, 6/20/20: Musk delays bonuses for employees; so much for the moral. Musk also postpones the annual shareholder meeting on 7/7/20 blaming the coronavirus. He says he is "not sure" when it will be rescheduled perhaps in a month or so. Sounds like he has a great handle on things. TSLA dips -0.3% in the Friday trade. The daily chart is in negative divergence so TSLA price will drop for a few days forward. The weekly chart is in neggie d although it exhibits some additional short-term momo, so down for a few days or week or so, then back up for another matching and higher high for price say 2 or 3 weeks out such as mid-July, then a multi-week slide south, then a recovery say from August into September to come all the way back up to 1000-1200 where it peaks out long-term on the monthly chart. Put a different way, down for a few days ahead, then choppy for a couple weeks wanting to come back up but a roll over occurs for a few weeks, then back up for THE top during July-October after which it is lights-out for Musk and his glorified electric golf carts. After that top, in the weeks ahead, TSLA stock will likely not see the highs again for several years if it ever does. 2020 is Tesla's heyday.
The bulls run the SPX and tech stocks higher albeit on light volume. Television pundits shout down anyone that says a pullback or worse is on tap for the stock market. They scoff at the thought of a large pullback like February and March, and ideas of crashes, mini-crashes and/or flash crashes are preposterous. That's great. That is what you would expect to hear when traders, investors, analysts and strategists are euphorically bullish. Freddy, the shoeshine boy, said he took his entire paycheck last week and bot AAPL stock. Captain Jack, the doorman, says he took an entire paycheck and bot AMZN stock because he does not want to miss out on the easiest gains in history.
The BPSPX was on a buy signal in May during the recovery rally. The BPSPX crossed above the important 70% level which issued a double-whammy buy signal for stocks. Everyone was singing "Happy Days." The BPSPX tops out at 93 and reverses six percentage points to 87 issuing a market sell signal. Keystone's BPSPX Indicator issues signals based on the six percentage-point reversals and also the 70% level.
The BPSPX collapses to the 70% level ready to fall through which will issue a double-whammy sell signal and the stock market will fall apart but alas, the central banks step in as usual and the Fed promises unlimited easy money candy. In addition, King Donnie promises a $1 trillion infrastructure package and spending on other issues. Trump says, "Money is no object, no object." Trump likes to spend other people's money like all the other politicians.
So the BPSPX launches higher as the printing presses in the Eccles Building are humming 24/7 again. Price reverses six percentage-points to the upside so the bulls are back on the double-whammy buy signal and that is where it sits. A six-point reversal from 77.40, the high for the week thus far, is 71.40, darn close to the 70 level. So, there it is.
If the bears push the BPSPX below 70-71, a double-whammy sell signal will occur and the stock market will begin falling apart. The bulls only have to keep BPSPX above 71.40, and they can continue walking around with their chests puffed out all proud of themselves as stocks rally. Keep a close eye on this over the coming days. If 70, is lost, it's over, especially since the BPSPX balked at that level days before. When it ruptures this time, it will probably break through to the downside with authority.
The bulls are keeping stocks elevated because of more central banker easy money. Traders are sniffing out a triple R cut from the PBOC perhaps this weekend. Do not be surprised if the filthy communists announce the easier reserve requirement ratios for banks about 5 PM EST Sunday evening right before US futures open and Asia stocks begin trading. The bulls may be able to keep stocks elevated hoping that China announces the triple R cut this weekend. The four central banker horseman of the financial Apocalypse, the Fed, PBOC, BOJ and ECB, are always riding in to save the day. Interestingly, the new moon peaks on Sunday morning, the darkest time of the month, and stocks are usually soggy moving through the new moon. Instead of happy days next week, traders may be opining to Chopin. 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, 6/20/20: The BPSPX finishes the week at 75.40 four points from stock market trouble and five points and change from carnage. Bulls are happy but looking over their shoulders all weekend long.
The NYMO remains elevated hinting that a tradeable bottom for the stock market is not yet in play. The McClellan Oscillator is signaling the same thing as the low put/call ratios. Traders and investors remain complacent and worry-free. They opine optimistically about the future. President Trump says the virus will fade away. And even if stocks pullback it does not matter since the Federal Reserve will simply print more money. It's sick, the Fed and other global central bankers (Fed, BOJ, ECB, PBOC; the four horseman of the financial Apocalypse) are si-hi-hi-kies, as Alice sings.
The red circles show tops in the stock market while the green circles show bottoms. What do you think will happen? Can stocks rally from here? Of course they can. However, that would only set up the drop again. Typically, you do not want to nibble on, and go long, with positions, until the NYMO drops below -60. That and lower will give you a tradeable bottom.
The uber low CPC and CPCE put/calls continue to signal complacency and fearlessness in the stock market. Look at the idiots buying Hertz a bankrupt company. It is sad that they would even let that new share offering go as far as it did before the SEC steps in. It is testimony to the corrupt crony capitalism system. Greedy bastards everywhere. Everyone is going to get what they deserve over the next couple years. The complacency continues signaling a top at hand. You would rather be short now than long and you want to short the rallies going forward for short-term trading.
The S&P futures are bouncing around like a ping-pong ball down -22 then they brought them back to flat now down -7. The SPX may be in trouble today if it loses yesterday's low at 3108. That is only -5 points from the 3113 palindrome starting point. Today may be a historic day in the stock market. We will likely have several epic days going forward. The bulls are trying to bring futures back so they are not worse than down -5 at the opening bell for the regular US trading session.
Keybot the Quant algorithm is long tracking utilities, commodities, banks and volatility as the key drivers of stock market direction currently. Watch the banks pre-market. If they are weak, the bears may growl today. If the banks are flat or moving higher, it is likely another day of sideways chop.
Tomorrow is OpEx Quadruple Witching so it would be expected that stocks would be buoyant Tuesday to Wednesday. The new moon peaks on Sunday morning at 2:41 AM EST. Stocks are typically weak moving through the new moon. There may be interesting days ahead. Do not be surprised if stocks take another dip like last Thursday, even worse. A flash crash remains on the table. This is fun. 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, 6/20/20: The NYMO ends the week at -25. The fun continues next week.
