Friday, November 15, 2019
CPCE Put/Call Ratio Daily Chart; CPCE Prints 1-Year Low; Rampant Complacency and Euphoria Signals Stock Market Top
The wheels fall off the CPCE collapsing to 0.47 a low not seen since the end of last year. The complacency has reached record levels. Frankie is already drunk as a skunk off Fed wine buying stocks without a care in the world. Timmy Trader throws darts at the stock pages to pick tickers since everything goes up forever with central banker largess and daily happy trade talk.
The S&P 500 prints a new all-time record high at 3110.21. The day is young. Traders are singing and dancing. The money is flowing like water.
The softness in stocks yesterday was due to the Senate putting together a bill addressing the Hong Kong situation. China says they do not want foreign intervention in the problem. Of course they don't; they are filthy communists. The Senate bill could jeopardize a trade deal. Stocks sold off. But fear not. America's faux free market crony capitalism system has cheerleaders and National Economic Adviser Larry Kudlow runs to a microphone proclaiming that the US-China trade deal is in its final stages. Stocks rally. Today it will be in the final final stage and next week will be the double-final final final stage. Soybean Donny said trade deals are easy two years ago.
The Impeachment Hearings against President Trump continue. The corrupt democrats build a case against the orange-headed bloviating carnival clown while shielding old man Biden. The corrupt republicans say there is no quid pro quo and Donny is completely innocent in fact look at the gold halo above his orange head.
The stock market is at a significant top that may prove epic. Traders and investors are afraid of missing out on the rally so they are buying and holding long positions while at the same time buying call options like maniacs. No one is buying puts since markets only go up. If any selloff occurs, the Fed and other central bankers will quickly come to the rescue so investors are no longer worried that stocks will ever sell off again.
You know what happens when traders are fearless. Yes, they are taught a lesson. Keystone continues to describe this topping process over the last few days. The low put/call ratios have yet to show their wrath, however, the sideways move in price at elevated record highs keeps burning off that available downside energy. The bears better get busy fast if they want to take advantage of the negative power of the put/calls.
The CPCE last printed this low at the end of December last year. Remember the big flush lower in stocks on Christmas Eve, then a recovery. The SPX peaked at 2515 on that low reading one year ago and dropped to 2445 in only a couple days; 70 quick handles. The stock market was toast on 1/3/19 and that is when the global central banker cabal stepped in to save the day and create this year's upside stock market glory. Perhaps this time the central bankers will not be able to save the day? At any rate, the 70-point downside should be matched at a minimum.
It is interesting that pundits continue parading across television screens saying markets are not at a top since there is no sign of euphoria as yet. They need to open their eyes. The CPCE verifies the euphoria and complacency with physical numbers. They are blind. Others say they are still looking for a blow-off top and since that is not in play, the stock market will continue higher for the months ahead. Look at charts! Some of the price moves are parabolic! There are gap-up days and gap-up weeks occurring left and right. This is a blow-off top.
A Bloomberg guest calls for SPX 3500 next year. On top of all this euphoric bullishness, folks close to retirement have over 70% of their money in stocks. Good luck to these souls. They will likely lose their shirts over the next couple years probably over one-half their wealth. Lastly, you know you are at a top when everyone tells you that there is no top in sight.
Same ole story the last few days since late last week. We are at a significant stock market top now. Perhaps the bears will growl today; stocks can begin the selloff at any time, any minute, any hour ahead. Perhaps a Black Monday is on tap? Get ready for a selloff if you have not already. If you have been contemplating selling your longs but remain on the fence, "Sell, Mortimer, Sell!" Ditch those stocks now and place shorts and buy puts. Today's goose higher on the happy trade talk may extend the top for a couple days to give times for charts to adjust. Humorously, if the trade deal falls apart this weekend, the charts will adjust very quickly.
The bulls have jammed stocks higher in the final half-hour of trading on the last two Friday's to paint a happy weekend tape. Also, the robots are buying big blocks starting 3:20 PM EST each day so it will be interesting to see if this occurs today. These are epic stock market times. If you are a young person, you do not realize this. Do not get caught up in the hype. Stay away from the stock 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.
Note Added 11:02 AM EST: The bulls are running. The SPX prints another new all-time record high at 3112.98; the 3113 palindrome. VIX drops to 12.33. The handful of remaining short-sellers in the market give up all hope and cover their positions creating a mini short-covering rally. All the bears have left town vowing never to return again.
Note Added 11:10 AM EST: Whoopie! Wheee! More new record highs for the S&P 500, Dow Industrials, Nasdaq Composite, Nazzy 100 and the SOX semiconductor index. The SPX prints 3114.56 the highest number in history.
Note Added 11:17 AM EST: The SPX prints 3114.56 a new all-time record high. VIX 12.35. Stocks print more euphoric new highs but the VIX is not moving any lower. The VIX lows today are at 12.31-12.35 so this level is key going forward. Note how the SPX nailed the 3114 breakout target of the sideways triangle on the SPX 2-hour chart. The happy trade deal news slightly delays the top.
Note Added 12:07 PM EST: The upside orgy continues with the SPX printing a new all-time record high at 3116.02. VIX is at 12.30 but did dip to 12.25 for the LOD.
Note Added 3:10 PM EST: The SPX prints a new all-time record high at 3117.11. VIX is at 12.14 dropping sub 12.30 so stocks receive another spurt higher. The bulls are running the show all day long. All Hail Larry Kudlow! Everyone, let's sing, "For he's a jolly good fellow......" Copper rallies +0.6% today creating market strength. The stock market rally is dubbed, "The Kudlow Rally." Will it result in the "Kudlow Top?"
Note Added 3:30 PM EST: At exactly 3:20 PM EST, the largest trading volume of the day on the one-minute basis prints. Interestingly, instead of more up, the strong volume spanks the SPX lower from the new all-time high at 3117 to the 3113 palindrome. VIX 12.20. No, check that, there is a 3112 print.
Note Added 3:49 PM EST: Wheeee. Here they come, three weeks in a row. The S&P 500 catapults higher from 3112 to 3116 in a heartbeat. Larry Kudlow says, "Happy Days Are Here Again."
Note Added 3:51 PM EST: The bulls want another record print jamming price higher. The SPX is at 3116.62 pennies from the record 3117.11 with minutes remaining in the day. Wow, look at that. Floor traders are carrying Larry Kudlow around on their shoulders singing, "For he's a jolly good fellow....." Whoa, price is at 3117.02. The bulls want that new record.
Note Added 3:54 PM EST: Spankdown. The SPX is slapped back, then a push higher. Bingo. The SPX prints a new all-time record high at 3117.60. A trader falls to his knees kissing a photograph of President Xi saying the communist leader is going to agree to a trade deal. Another trader drops to his knees kissing a photo of President Trump saying that King Donny will never let stocks go down again, ever. The confetti cannons are firing off shredded currency into the air. The band begins playing the Star Spangled Banner.
Note Added 3:58 PM EST: The SPX is going out at the record highs with price at 3118.61 a new all-time record high. It is a pure melt-up the same action now occurring three Friday's in a row.
Note Added 4:01 PM EST: The SPX finishes at 3120.46 a new all-time record closing high and 3120.46 a new all-time record high on Friday, 11/15/19. The SPX closes at the highs. Remember, Keystone's 80/20 Rule says 8's lead to 2's so the breach of 3080 opened the door to 3120 which just printed. A breach of 3118 leads to 3122 perhaps on tap for Monday. The bulls are salivating that 2800 may lead to 3200. It is amazing that price is only 80 points away from 3200. The final put/calls will be interesting today. Obviously, the market euphoria is out of control. Do you think the US and China will announce a final phase one trade deal this weekend? There are only 30 days remaining until the two sides can reach a deal (12/15/19). What do you think? Is a historic Black Monday on tap?
Thursday, November 14, 2019
One of Keystone's fave VST (very short-term) indicators is the 8/34 MA cross on the SPX 30-minute. The 8 MA is above the 34 MA forecasting bullish joy ahead, however, the chart shows how this is a knock-down, drag-out, tug-o-war, bull-bear struggle.
The 8 MA keeps coming down to stab through the 34 MA to start bearish price action but the bulls have hardened the 34 MA making it impenetrable to the 8's intentions. Bulls win if the 8 remains above the 34. Bears win if the 8 stabs down through the 34.
Price is at the apex of the blue sideways symmetrical triangle so an up or down decision is needed. The vertical side of the triangle is from 3082 to 3102 so that is 20 points. Thus, a breakout higher from 3094 will take price to 3114. A breakdown from 3090 targets 3070.
Keybot the Quant algorithm remains long but is in position to flip short. If the SPX drops below 3079, Keybot will likely flip short. The bears have their work cut out for them since the SPX price is in the 3090's.
The 8/34 MA cross will tell you the path ahead. By definition, the S&P 500 price would have to move below the 8 MA to curl it downwards to create a negative 8/34 cross. The SPX, 8 MA and 34 MA are all at 3093-3094 so it is about time that price makes an important decision. It is time for the S&P 500 to take a dump or get off the pot. 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 10:16 AM EST: Chairman Powell is tap-dancing, er, speaking, before the House so the stock market receives a slight rise in its Levi's. The SPX is up 2 points to 3096 so the bulls are trying to push price higher up and out of the triangle. Whoa. Copper is down -0.5%. The sogginess in the red metal is why price is having trouble moving higher. CSCO crashes -7.7% hurting the Nazzy indexes; that is ugly. Copper has performed an intraday reversal of over -1%. The bears are gaining strength despite the slight positivity in stocks. VIX 13.02. Both the VIX and stocks are higher so one of them is wrong.
Note Added 10:34 AM EST: There you go. The SPX is at 3093.00 and the 8 MA is 3093.16. If price remains below the 8 it will curl it downwards for a potential negative cross and it does not have to go far since the 34 is at 3092.93. The plot thickens. We are watching the conception of a market top and stock market drop; humorously, it has a voyeuristic quality to it. The S&P 500 recovers to 3094 so the first weakness lower results in a bounce. The bears will try again. The SPX 3093.16-ish level is key since if price drops below here, it likely indicates that the bears will begin growling going forward. Bulls will keep flexing their muscles if they keep the SPX above 3093. Chairman Powell's name plaque says Chair Powell. That is what Yellen was called, by her choosing, during her tenure as the Fed head; a non-specific gender title. Humorously, Powell is a chairman when he sits with a wide stance but chair when he sits with his legs crossed.
Note Added 10:48 AM EST: Whoopsies daisies. The major indexes slip a hair red with the VIX climbing to 13.12. Volatility may be correct and stocks wrong. The SPX is down a point sporting a 3092 handle. Epic stock market history may be in the making. Copper -0.6%. 10-year yield 1.83%.
Note Added 11:00 AM EST: Boom. The 8 MA on the SPX 30-minute chart at 3092.77 has stabbed down through the 34 MA at 3092.91 so the stock market just slipped into a negative bear market pattern for the minutes and few hours ahead. Is this the real deal to the downside or is it simply another fake-out move like the others? The bears are growling. Let's see what they got. The SPX, 8 MA and 34 MA numbers will continue comingling and tickling each other at 3092-3093 until a firm winner is established.
Note Added 4:42 PM EST: The bears were joyous today with the 8/34 MA negative cross on the SPX 30-minute chart but at the end of the day the bulls send the 8 MA back above the 34 MA crushing the bear's hopes into dust. This bull-bear drama continues for tomorrow and into Monday with the bulls maintaining control. Comically, we will now call this projected stock market top the Godot Top since we are still waiting for it. The SPX finishes today up 3 points, +0.1%, to 3096.75 a new all-time record closing high. Today's candlestick on the SPX daily chart is a hanging man another candle that typically signals a trend change in price. The market action is fascinating. The SPX is dancing along the edge of the stock market plateau like Fred Astaire but the rocks remain loose and are giving way. At 3:20 PM EST each session, there are robot/s entering the market buying large blocks of stocks to paint the tape green into the closing bell. This keeps Joe Sixpack, Marie Bagholder and Sally Sucka hyped-up on the stock market buying stocks allowing distribution to take place. For this stock market top, now dubbed the Godot Top, 'the song remains the same' to steal a Zep lyric. The stock market is poised to roll over and die but it keeps dancing around the hospital room having a good time pinching the nurse's bottoms.
Note Added on Friday Morning, 11/15/19, at 11:23 AM EST: The SPX prints 3114.56 a new all-time record high. VIX 12.35. The VIX lows today are at 12.31-12.35 so this level is key going forward. The SPX nailed the 3114 target of the sideways triangle on the upside breakout. The happy trade deal news slightly delays the top.
Wednesday, November 13, 2019
SPX S&P 500 Daily Chart; S&P 500 Prints New All-Time Closing High at 3094.04; Overbot; Rising Wedge; Negative Divergence; Price Extended; Stock Market Significant Top At Hand
The S&P 500 prints a new all-time closing high at 3094.04 on Wednesday, 11/13/19, after Federal Reserve Chairman Powell's testimony before Congress. The SPX all-time high at 3102.61 from Tuesday, 11/12/19, remains in place. The new record closing high prints on more putrid volume.
The sellout crowd was ready for a big show but instead of fizzle there was sizzle. The bears are in position to start whipping stocks lower and this occurs at the opening bell but the dip-buying bulls bot with both fists. Fed Chairman Powell rides in on a white horse releasing white doves from his dinner jacket. He tosses freshly-printed money to the adoring crowd like a fireman tossing candy to children during a parade. The central banks are the market. Powell holds his own today in the Congressional hearings and avoids the political quagmire. Stocks rally on his words.
The US and China may be further from a phase one trade deal than thought, so markets retreat off the intraday high. Then stocks recover into the closing bell. Where's this big selloff? That was a dud. The crowd was ready for a big bloody selloff. Now the natives are growing restless demanding to see a spectacle. Keystone dons a top hat and tails and begins tap dancing. He tells the crowd to calm down because the selling is still on tap.
Nothing's changed. We are simply 24 hours past last evening's dire market warnings. The SPX daily and 2-hour charts have not changed. They remain in negative divergence signaling a stock market top at hand. Since you can go back and check out the stochastics and other chart indicators in the prior post, let's look at a few different ones. The RSI remains in neggie d as per the prior chart so the top is in.
The green Aroon line is pegged at 96 with nowhere to go but down and the red line is jammed down to zero with nowhere to go but up; both are bearish signals that typically lead to a negative cross. The Chalkin Money Flow is in neggie d. On Balance Volume peaks with each price peak (purple stars) and it is in the stratosphere now. The CCI is in neggie d and coming off overbot levels. All these indications are bearish.
Price is extended above the moving average ribbon (blue stars). The SPX is above the 20-day MA above the 50 above the 100 above the 150 above the 200 so a mean reversion lower is on the table. You can see what happens after price is extended by looking at the early August price action.
So nothing has changed. We are at the same place as we were 24 hours ago. If you listen hard, you can hear a harmonica playing in the distance much like the sounds emulating from the hollows of Gettysburg the night before the epic Civil War battle. Something very big is going to happen and it will not be pretty. These are special market times that will be written about in history books for decades to come. Watch the overnight futures. Tonight is a repeat of the analysis from 24 hours ago. The stock market should fall apart at any time. Blow on it and you will probably knock it over. 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 8:02 PM EST: S&P futures are down -1. Dow -16. Nasdaq -2. VIX 13.00 (currently not trading). WTIC oil 57.33. Brent oil 62.55. Gold 1463. Silver 16.89. Copper trades flat. US Treasury yields are; 2-year 1.64%, 5-year 1.69%, 10-year 1.88%, 30-year 2.36%. The 2-10 spread is 24 bips.
Note Added 8:04 PM EST: S&P futures -2. Dow -20. Nasdaq -3.
Note Added Thursday Morning, 11/14/19, at 2:26 AM EST: S&P futures -5. Dow -42. Nasdaq -11. Gold 1467. Silver 16.97. US Treasury yields are; 2-year 1.62%, 5-year 1.66%, 10-year 1.86%, 30-year 2.33%.
Note Added Thursday Morning, 11/14/19, at 3:23 AM EST: S&P futures -4. Dow -33. Nasdaq -9. Russell -5. VIX 13.19. DAX -0.3%. CAC flat. FTSE -0.2%. Copper flat.
Note Added Thursday Morning, 11/14/19, at 3:32 AM EST: S&P futures -6. Dow -46. Nasdaq -14. Russell -5. VIX 13.25. 10-year yield 1.84%.
Note Added Thursday Morning, 11/14/19, at 4:30 AM EST: S&P futures -5. Dow -43. Nasdaq -13. Russell -5. VIX 13.21. DAX -0.4%. CAC -0.1%. FTSE -0.4%. MIB -0.2%. Gold 1469. Silver is above 17 at 17.06. Copper gains +0.6%.
Note Added Thursday Morning, 11/14/19, 5:06 AM EST: S&P futures -1. Dow -5. Nasdaq +1. Russell -2. VIX 13.10. Minutes ago, Bloomberg reports that China removes the curbs on poultry imports for America. Of course they do. The Chinese love their pork but prices have sky-rocketed.
Note Added Thursday Morning, 11/14/19, 6:05 AM EST: S&P futures -4. Dow -37. Nasdaq -13. Russell -4. VIX 13.26. Futures are not biting on the happy trade talk news. The bears are keeping volatility elevated and trying to move it higher while the bulls are pumping copper higher with all their might. Copper +0.5%. Soybean Donny is likely preparing some morning tweets right now that will attempt to create stock market joy. The trade talk hype is getting old as evidenced by the futures unimpressed with the China news on removing pork curbs.
Note Added Thursday Morning, 11/14/19, 8:33 AM EST: S&P futures -6. Dow -46. Nasdaq -20. Russell -5. VIX 13.29. WTIC oil 57.48. Brent 62.87. Gold 1469. Silver 16.99 slipping under 17. Whoa, Nellie, whoa, look at copper. Copper turns negative down -0.2%. Dr Copper performs a swan dive off Kahekili's Leap in Hawaii. The Keybot the Quant algo is long but champing at the bit to go short. If the SPX drops below 3079, Keybot will likely flip short. There is lots of drama going on in markets right now since this may be a dramatic and epic top forming.
Note Added Thursday Morning, 11/14/19, 8:43 AM EST: S&P futures -8. Dow -60. Nasdaq -26. Russell -6.66. Futures are at the lows of the overnight session. VIX 13.37. Copper -0.1%. 10-year yield 1.83%. Unemployment Claims are up sharply. Is the recession misery beginning? Fed Chairman Powell speaks before the House Budget Committee in two hours. Jerome is at the free buffet right now wiping a jelly stain off his necktie. CSCO laid an egg with earnings last evening and is down -6% in the pre-market creating sogginess in the tech sector and Nazzy futures. It is a big deal that behemoth Cisco opines about a slow economy ahead.
Tuesday, November 12, 2019
SPX S&P 500 Daily Chart; S&P 500 Prints New All-Time Record High at 3102.61; Overbot; Rising Wedge; Negative Divergence; Upper Band Violation; Price Extended; Stock Market Significant Top At Hand
In honor of the stock market that has now topped-out, it is fitting that Keystone retrieves his trumpet from its leather case. A mute is removed from the horn end and a somber rendition of Taps is played for the stock market. Equities must now take their medicine. We are at the top of the stock market mountain. As Dr Martin Luther King would say, "I've been to the mountaintop." The SPX prints a new all-time record high today, Tuesday, 11/12/19, at 3102.61. Well, the party has to end sometime. As King said, "There are difficult days ahead."
For a week or so, it has been fun to watch the stock market top play out. The uber low CPC and CPCE put/call ratios tell you that the market complacency and fearlessness is out of hand which means a stock market top is about to occur. The low put/calls should shave off from 40 to 150 handles off the SPX perhaps a lot more. Traders and investors are drunk as skunks off Fed whiskey, BOJ sake, PBOC rice wine and ECB champagne buying stocks with reckless abandon. The Federal Reserve and other global central bankers act in collusion to keep the easy money punch bowl full. Traders are buying calls to play more upside while completely ignoring puts and protection. Investors are not selling stock and in fact are more concerned that they will miss out on big year-end gains. That's funny. When the bullish euphoria rules the market and the bears have all left town, that is when stocks are slapped lower.
Thus, knowing a stock market top is at hand in the short-term time frame, think hours and days, any day ahead, the SPX daily and hourly charts are useful in identifying where the top is at. Of course any news hitting the tape will push stocks either way and the happy trade talk sent stocks higher to the current record highs. Humorously, that was all bull sh*t, as was explained at the time, and President Trump says today that tariffs remain on the table indefinitely. Note how the stock market did not give back the gains over the last week or so which tells you that a lot of happiness is likely priced-in to equities.
The previous post shows the SPX 2-hour chart and technical analysis. The 2-hour is in neggie d so the top is in. On the daily chart above, remember Keystone has been commenting on the oddity with the multi-month time frame all in negative divergence (red lines) but the shorter term RSI and MACD still had some upside juice for price. Well, look at that. The VST is now in neggie d as well as the multi-month period. The S&P 500 is toast. Enjoy the view from the mountaintop because it is now crumbling under your feet.
The rising wedge pattern is ominous since the downfall can be quite serious, dramatic and fast. The RSI and stochastics are overbot agreeable to a pullback. Price tapped the upper band so the middle band at 3041, also the 20-day MA, will be a first target of support. The lower band at 2967, and rising is also on the table. Price is extended above the moving average ribbon and needs a mean reversion lower.
The candlestick today is an inverted hammer which, like the hanging man and doji's over the last few days, all indicate a trend change likely. The recent trend is all up so a trend change would be down. All the indicators mentioned above are negative and bearish. Nothing in the daily chart is bullish. Perhaps price has one more high into the apex of the wedge if Federal Reserve Chairman Powell opines dovishly at 11 AM EST tomorrow morning. Powell appears before a Congressional panel tomorrow and before the House Budget Committee on Thursday morning. The essence of Powell's comments for this week will be known tomorrow morning with Thursday only serving as another regurgitation.
The President Trump Impeachment Hearings begin tomorrow so the idiot Democrat Tribe will be batting the foolish Republican Tribe for all of America to see on television. Both parties are simply two sides of the same corrupt coin. The first witness that will dispute Trump's account of the Ukraine quid pro quo saga, now called a bribery case by the democrats, may have cried during her closed-door testimony. Therefore, democrats are likely placing her as the first witness hoping she cries for the tv cameras which would make big ole orange-headed Trump look bad. This is the way the baby games are played in crony America, folks.
The impeachment stuff is a moot point like most other political drama nowadays. America's crony capitalism system is on its last legs with the final months and years now clearly playing out. After a couple decades of unrest ahead, the United States will likely resurface as a socialism-light-type government. The rich got too greedy over the last five decades and outright annihilated America's middle class by shipping jobs overseas.
America's jobs were sent overseas so stock prices would catapult higher (lower labor costs create huge company profits) greatly rewarding the wealthy that own large equity portfolios. It's a rigged game. The damage is structural. The wealthy class make the rules that benefit themselves.
Once the recession begins in the weeks ahead, a class war will quickly be triggered in the US that will linger for many years forward. If you are rich, it is best to be low key, not flaunt your wealth and perhaps increase your charity endeavors in the local community, otherwise, you will have a target on your back in the coming years.
It is comical to see the two corrupt political parties pointing fingers at one another. The Democrat Tribe is dirty because of the Joe and Hunter Biden alleged nefarious dealings in Ukraine and the Republican Tribe is filthy because of the alleged withholding of military aid to Ukraine until the government said bad things about Biden, who is currently Trump's main political rival. Republican Trump may face democrat Biden in the presidential election 51 weeks from now.
Humorously, the deep state, which is not solely only a liberal/democrat cabal, but instead a joint democrat/republican union, may be orchestrating a brilliant chess maneuver to checkmate both men simultaneously with one move. Biden's reputation is sullied and he is dropping in the polls (the democrats may be pushing him out of the race) while the impeachment hearings may damage Trump's hopes for re-election (the republicans may be okay with the Tweeter-in-Chief disappearing).
Politics is a dirty game and Washington, DC, is a cesspool of filth. You never know the whole story of any situation so there is no point to hitch your wagon to either of the corrupt tribes. Be an independent thinker instead. Another possible outcome is that the two corrupt parties may come to an agreement in a cigar-filled back room and sweep the whole Ukraine matter under the rug, agreeing instead to fight it out in the November 2020 election. All these folks are sicko's. This is America's crony capitalism system on full display.
The CPI (Consumer Price Index) inflation data hits at 8:30 AM EST as well so there are lots of sidebars to monitor. The daily chart above, the 2-hour chart and the uber low put/call ratios all conspire to call the top right here right now, today, tonight. It will be interesting to see what the futures do overnight. Keystone has talked about potential 'black' market days recently and we are smack-dab exactly in the window of one now. In other words, for example, it would not be surprising to see the S&P futures or SPX cash index tomorrow drop 50 or 60 points. Powell holds the keys to the car.
For the all-time record high today, look at the putrid volume. The only investors buying the stock market at the highs today are Joe Retail, Jane Bagholder, Frank Fool and Amy Sucka; the usual bagholding dolts. Keystone is giving Last Rights to the S&P 500 this evening. The SPX is on life support and only has a few more hours to live. Good bye my friend, we hardly knew ye.
The bulls are touting more stock market highs ahead. Evercore ISI Chairman Ed Hyman is on Bloomberg telling everyone to buy stocks through year end. Animated Wharton economics professor Jeremy Siegel appears on CNBC proclaiming that stocks will pop +10% on the phase one US-China trade deal; he is looking for a "global bull market." President Trump speaks at the Economic Club in New York and boasts about the economy for 45 minutes. Of course he should, its the best economy that central banker easy money and tax cuts for the wealthy can buy. Comically, after stocks drop, all the same money managers will then proclaim that they were exiting the market for several months. Wall Street is a parade of liars and thieves. That's what makes the world go 'round.
Obviously, Keystone expects a stock market top right now, which may prove to be a historic and very significant top, and he has climbed completely out on the end of a long limb. Do you think Keystone is correct in calling for a stock market top here and big drop going forward or is the universal consensus on Wall Street correct that expects a rally through year-end correct? Who's side are you on?
Keybot the Quant, Keystone's proprietary trading algorithm, remains long but note how copper is slip-sliding away; watch the red metal closely. This price action may place the quant in position to go short. There is likely lots of drama ahead to finish the week. Tomorrow may be an epic day in stock market history. Let the festivities begin. The overnight futures markets and Asian and European trading may be very interesting in the coming hours. Chairman Powell is likely the only thing that can 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 6:35 PM EST: S&P futures -4. Dow -25. Nazzy -11. Russell -2. There is no big drop as yet but the bears are walking around stretching their jaws and snapping getting ready for some slashing ahead.
Note Added 7:17 PM EST: S&P futures -5. Dow -40. Nazzy -16. The markets begin to stir. Powell is pacing the floors this evening unable to sleep. He knows the entire future of the world's so-called free market system rests on his thin shoulders.
Note Added 7:48 PM EST: S&P futures -6. Dow -49. Nazzy -21. The bears slowly turn, step by step, inch by inch.......
Note Added 7:59 PM EST: S&P futures -7. Dow -50. Nazzy -21. The 10-year yield is at 1.92%.
Note Added 9:09 PM EST: S&P futures -9. Dow futures are down an ominous -66.60. Nazzy -28. NIKK (Japan) drops -1.0%. Topix (Japan) loses -0.5%. HSI (Hong Kong) drops -1.9%. Copper +0.1%. US Treasury yields are; 2-year 1.66%, 5-year 1.73%, 10-year 1.92%, 30-year 2.40%. The 2-10 spread is an ominous 25.666 basis points.
Note Added 9:22 PM EST: S&P futures -9. Dow -69. Nazzy -28. NIKK -1.0%. Topix -0.5%. HSI -1.9%. WTIC oil is at the 56.65 palindrome. Brent oil 61.86. Gold 1458. Silver 16.79. Copper turns negative down -0.1%.
Note Added Wednesday Morning, 11/13/19, at 3:12 AM EST: S&P futures -5. Dow -37. Nazzy -14. Russell -3. VIX 12.92. DAX (Germany) -0.2%. CAC (France) -0.1%. FTSE -0.4%. NIKK -0.9%. HSI -1.8%. SSEC (China) -0.3%. Gold 1460. Silver 16.86. Copper -0.3%. US Treasury yields are; 2-year 1.66%, 5-year 1.72%, 10-year 1.92%, 30-year 2.39%. The 2-10 spread is 26 bips.
Note Added Wednesday Morning, 11/13/19, at 4:00 AM EST: S&P futures -8. Dow futures are down an ominous -66.60. Nazzy -25. Russell -6. The VIX climbs above 13 to 13.02. Euro 1.101. Dollar/yen 109.12. DAX is down an ominous -0.666%. CAC -0.3%. FTSE -0.5%.
Note Added Wednesday Morning, 11/13/19, at 4:27 AM EST: S&P futures -12. Dow -104. Nazzy -37. Russell -10. VIX 13.22. DAX -0.9%. CAC -0.6%. FTSE -0.5%. Euro 1.1012. Dollar/yen 109.05. Gold is up +0.5% to 1464. Silver gains +1.3% to 16.91. Copper slips -0.2%. The fate of world markets are in the shaky hands of Emperor Powell preparing for his speech and Q&A before Congress in six hours. Powell strokes his purple cape and places his crown, encrusted with Fed jewels, on his skinny head. He stands in front of the mirror and stealing an affirmation from Stuart Smalley (SNL; Saturday Night Live comedy show), Powell repeats, "I'm going to do a terrific show today, and I'm going to help people, because I'm good enough, I'm smart enough, and doggone it, people like me."
Note Added 4:49 AM EST: S&P futures -16. Dow -130. Nazzy -51. Russell -12. Futures are at the overnight lows. VIX 13.48.
SPX S&P 500 2-Hour Chart; SPX Prints New All-Time Record High at 3102.61; Overbot; Negative Divergence; Upper Band Violation; Price Extended; Stock Market Top At Hand
It has been an interesting and fun exercise in recent days looking for the stock market top since the CPC and CPCE put/call ratios are at uber lows signaling rampant complacency and a top at hand. The hourly and daily charts provide guidance as to where this top may be at as the S&P 500 prints a new all-time record high at 3102.61. Time will tell if a new all-time closing high will print, or not. Of course news bites are sending stocks to and fro mostly to the upside and charts need a little bit of time to price in any sudden news tidbit that hits the tape in real-time.
The SPX 2-hour chart above shows the stock market topping-out right now. Price has come up for a matching or higher high and a look at the chart indicators shows universal negative divergence (red lines). Price is out of upside gas. Even the fumes are gone now. The upper standard deviation band was violated so the middle band at 3086 and lower band at 3069 are on the table.
Price is extended above the moving averages requiring a mean reversion lower. The stochastics are overbot agreeable to a pullback. The bears have it on a silver platter. The uber low put/calls signal a market top at hand and this jives with the 2-hour above. Also of interest, the SPX daily chart is setting up with neggie d in that VST (very short-term) time frame for the RSI and MACD so it looks like the stars are all aligned now to see what the bears got.
During OpEx week, a Tuesday low typically leads to a Wednesday high. Stocks were bullish through the peak in the full moon early this morning as expected. The professional traders were buying the dip in the morning since it was OpEx week; that is why stocks were strong. Traders are expecting buoyancy into tomorrow. However, as shown above, the stock market top is in. Let's see how loud the bears can growl.
Pope Powell brings the tablets down from on high tomorrow morning at 11 AM EST to speak before Congress. This is partially the reason why stocks remain buoyant today. Many traders are willing to wait until tomorrow to see what the Federal Reserve chairman says. Powell speaks before the House Budget Committee at 10 AM EST the following day, Thursday, but the essence of what he plans to espouse will be known tomorrow at the 11 AM EST speech. The central bankers are the market so his words will move stocks, bonds and currencies. 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 2:13 PM: The SPX is up 5 points, +0.2%, to 3092. The luster is coming off the rose. The HOD today which is the highest number ever printed in history is 3102.61. If you bring up the SPX daily chart, you can see today's candlestick starting to print an inverted hammer pattern which typically signals a trend change. The sixth and final 65-minute trading segment of the day begins at 2:55 PM and runs into the closing bell at 4:00 PM EST. Thus, watch to see if their is a potential whoosh in stocks in that 2:50 PM to 3:00 PM timing.
Note Added 2:30 PM: SPX 3091. VIX 12.87. Both volatility and stocks are positive so one of them is wrong. We are in the fifth trading segment so it will be interesting to see if any wild action occurs between 2:45 PM EST and 3:00 PM EST as the sixth daily trading segment begins. Time for a cup of coffee and to see if there is any excitement on tap.
Note Added 3:15 PM EST: At 2:55 PM EST, exactly at the shift from the fifth segment to the final sixth trading segment of the day, the SPX prints the LOD at 3084.73 but the robots did not bite. Stocks recover. Obviously, bears will only growl if they can take out the 3085 to the downside. SPX is at 3088. Investors and traders may want to wait until Oracle Powell tells global market participants how to trade tomorrow morning. VIX 12.91. Copper futures are down -0.8%.
Note Added 3:23 PM EST: SPX 3089. VIX 12.86. The bulls are trying to jam volatility lower to guarantee the happy finish for stocks today. All that matters is that LOD at 3085. The bears will need to breach this low before the closing bell to prove they have the beans to take the stock market lower. The stage is set. The bears have 37 minutes to prove their manhood. Is the neggie d on the 2-hour chart providing enough downside juice and power to push the SPX below 3085? It should. Time will tell. Note how price came down to tap on that middle band mentioned above at 3086. Now we see if the lower band is on tap which is currently at 3069.
Note Added 3:30 PM EST: The one-minute trading volumes are all buys. The bulls are buying and jamming price higher since 3:20 PM EST believing that Chairman Powell will be flapping dovish wings tomorrow. The central bankers are the market. SPX 3090. VIX 12.78. Volatility drops so stocks pop.
Note Added 3:35 PM EST: The bears are surprised they cannot jam the stock market lower. They have all the tools in place; neggie d on the hourly and daily charts, overbot conditions, upper band violations, price extensions, rising wedges, uber low put/calls, it is all in place. The bears cannot understand why stocks will not go down but they look across the trading floor. There's Chairman Powell, standing in the shadows, behind the drapes, petting a white dove he cradles in his arms much like Dr Evil petting his white cat Mr Bigglesworth. The bears know it is always an uphill struggle against the powerful central banks.
Note Added 3:46 PM EST: SPX 3090. VIX 12.74. The bulls are smiling from ear to ear because rich Uncle Fed is coming to town tomorrow. The bulls bot big blocks of stock from 3:20 PM EST through 3:32 PM EST to prop the stock market up into the closing bell. It is succeeding so far with only a few minutes remaining in the day. Chairman Powell will perform the role of Julius Caesar at the Colosseum tomorrow; Jerome will stand at the podium above the adoring crowd, outstretch his arm and provide a thumbs up, or thumbs down, to the stock market. So it shall be said, so it shall be written (right fist taps heart). Just think, there are many stupid people that actually think America is a free market capitalism system.
Note Added 3:53 PM EST: SPX 3091. VIX 12.70. Bulls cheer as the VIX trails lower and lower into the closing bell.
Note Added 4:01 PM EST: SPX 3091. VIX 12.70. The SPX does not print a new all-time closing high. The bears have it on a silver platter. The daily and hourly charts are neggie d which should coordinate with the uber low put/calls and send stocks lower. Stocks are ready to drop like rocks but Chairman Powell is set to speak tomorrow morning. Also, the Impeachment Hearings against President Trump begin; it will be high-drama for television. These are epic times. Keystone mentioned the last couple Monday's and Tuesday's were set up to be potentially history-printing 'black' days. That would go for tomorrow (Wednesday, 11/13/19) in spades since the short-term charts are lined up with neggie d now. The charts are ready to spank price strongly lower. The overnight futures markets will be very interesting. CPI (inflation) data drops tomorrow morning at 8:30 AM EST. Tomorrow may be a historic day in stock market history.
Monday, November 11, 2019
HYG High Yield Bond ETF Monthly Chart; Overbot; Rising Wedge; Negative Divergence; Upper Band Violation; Price Extended; Significant Top At Hand
Credit risk is being mis-priced greatly in markets. In recent years, you have watched how Keystone calls the tops in HYG and JNK but the pullbacks were short-lived due to central banker largess. The Federal Reserve and other partners in crime such as the BOJ, ECB and PBOC, stepped-in to save the global stock markets at the start of this year and the chart shows the orgy spike higher on the central banker rocket fuel.
Note the tight standard deviation bands to begin this year. That move was headed down into Hades and was only saved by the global central banks acting in collusion. Well, they held the bears off at the door this year but HYG has violated the upper band. The middle band at 82, and rising is on the table, also the lower band at 76, and rising.
Price is extended above its moving averages requiring a mean reversion lower. The red lines show negative divergence in play wanting to spank price lower in the long-term monthly basis. The RSI is trying to squeze out one more month of buoyancy but the tape is getting very heavy. HYG may want to come down into that high trading volume area at 76-82 to see which side wins going forward.
The red rising wedge is ominous since the collapses from rising wedges can be quite dramatic. If you are sticking around in HYG and JNK going forward, you sir, or madam, are a fool. The ADX is down at 14 showing that the rally higher is NOT a strong trend higher. The Aroon green line is pegged at one hundo with nowhere to go but down which is bearish.
The high-yield space is about to have a religious experience. HYG and JNK will drop on a monthly basis going forward so if you are long you had better sell and git while the gittin' is good. LQD is in the same negative boat going forward but may take an extra few weeks to top out. MUB is also setting up bearishly and will be last to roll over lower. Keystone is not playing these tickers now but will look for short entries. HYG and JNK are topping out right now and great shorts from today 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.
The banks are trending higher as the yield curve steepens. Lending is the life-blood of regional banks and the parabolic price move in recent weeks verifies this sentiment. KRE gaps higher for three consecutive weeks. The 3-month to 10-year spread as well as the 2-10 spread, and other spreads, are no longer inverted indicating a steepening yield curve.
The US bond market is closed today in honor of Veterans Day. Thanks to all the vets. Yields are; 2-year 1.67%, 5-year 1.75%, 10-year 1.94%, 30-year 2.42%. The 2-10 spread is 26.1 basis points a far cry from zero and negative. The 10-year should move above 2% which will ring alarm bells and give television broadcasters something to crow about.
What is good for the banks, however, may not be good for the rest of the economy. If rates are on the rise, many American individuals and businesses that have spent money like drunken sailors in recent years, since money is free, may begin experiencing pain with higher and higher rates (monthly payments). This would curtail overall economic spending. Television pundits say the retail consumer is carrying the economy right now. Just think, humorously, Wall Street and the entire US economy is supported on the thin frail shoulders of Aunt Jane who wears a babushka, walks around in worn-out orthopedic shoes and shops at JCP.
The chart shows a textbook two-leg bull flag pattern. You see the first leg from 44 to 56, a 12 point advance. From March to September, a sideways to sideways lower consolidation flag is printed which is textbook behavior. If the 47.7 to 48.3 low in early September, call it 48, is the low, than 60 is the upside target to complete the 2-leg bull flag pattern.
There is price resistance at 58-ish. Keystone's 80/20 Rule says 8's lead to 2's so a print above 58 would open the door to 62-ish, which happens to be strong price resistance from 2018. The chart indicators are long and strong. Stochastics are overbot so a stutter-step would be in order right now on the weekly basis. This pullback, however, could be bot since KRE should tag 58, perhaps 60, perhaps 62.
Interestingly, considering the shaky nature of the stock market currently (since the uber low put/call ratios signal a top), that would be in conjunction with the overbot stoch's above, and banks would drop with the broad market. But it may be worthwhile to buy that coming dip in KRE. Also, due to the worrisome nature of the stock market going forward, KRE may only have that 58-ish print on the agenda (rather than 60 and 62) and then roll over again for the long-term from there.
The Aroon green line crosses above the red line, a positive bullish cross, verifying the upside banker joy. The ADX, however, shows that this current parabolic price move and rally higher is NOT a strong trend higher. This hints that KRE may only have the 58-ish in it say a month-out and that would be its swan song.
For the month, KRE is up +5.4%. XLF is up +4% and prints a new all-time record high. Here are the moves thus far this month for the banking plays. VFH +3.9%. KBE +5.3%. IYF +1.9%. UYG +3.6%. FAS +5.3%. FAZ -5%. (Do not ever trade 3x ETF offerings since they are price-corrupt instruments.) SKF -3.5%. GS +4.5%. JPM +4.4%. BAC +6.4%. C +6.7%. WFC +5.8%. MS +6.7%. RF +4.8%. PNC +3.8%. ZION +5.4%. STT +10.6%. STI +4.8%. KEY +7.7%.
Keystone does not own the banks either way currently but may buy KRE long, say, in a couple of weeks, after a downdraft with the broad market occurs, and only for a short 2 or 3 week trade which may take it back up to the 58-ish as discussed above; then perhaps flip the trade short from there 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.
SPX S&P 500 Daily Chart; SPX Prints New All-Time Closing High at 3093.08; Overbot; Rising Wedge; Negative Divergence; Upper Band Violation; Price Extended
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.