Thursday, January 23, 2020
Keystone's proprietary trading algorithm, Keybot the Quant, flips to the short side this morning at SPX 3304. Copper and commodities are in the bear camp creating a pall on the stock market. The VIX pops above the key 13.58 level, identified by the quant, which creates more stock market sickness. As always, stay alert for a whipsaw. Bulls need lower volatility and stronger commodities and copper. Watch the VIX 13.58 bull-bear line in the sand today. The stock market beatings will continue until these three parameters move back into the bull camp.
More information is found at Keybot's site;
Keybot the Quant
More information is found at Keybot's site;
Keybot the Quant
One of Keystone's important intermediate and long-term forecasting tools is the 20/50-week MA cross for UPS. United Parcel Service is a key shipping company and directly reflects the health of the global economy. Parts, raw materials, business contracts, documents and consumer products are delivered by the brown trucks and the guys and gals in the brown short pants. The UPS 20/50 cross is positive currently reflecting the joyous stock market.
Humorously, three or four decades ago, it was exciting to see a delivery truck in a neighborhood. It meant that someone was receiving something special or important. Nowadays, the UPS truck is in neighborhoods two or three times per day as well as the FedEx trucks and others. Toddlers now utter "ups" as their first word spoken instead of "dada."
The 20/50 crosses are whipsaw-y over the last couple years. Curse the central bankers. Those sicko's have financial markets twisted into knots. The wheels of the world's financial system are grinding, screeching and smoking. The signal crosses typically happen at longer intervals but nowadays the Federal Reserve will goose markets at the first sign of trouble which creates the long-term choppy pattern. The central bankers are the market. Do you understand this or are you stupid?
The bears will need the 20-week MA to cross down through the 50-week MA to project doom and gloom ahead for the US economy and markets. By definition, the 20 can only curl over lower if price is lower and UPS is at 117.26 below the 20-week MA at 118.41. Bears need to sink UPS lower to move that 20 down to where it can stab the 50. Bulls need to move UPS back above 118.41 and they will not have any worries at all.
United Parcel and FedEx are getting beaten up by Amazon that wants to start using more of its own airplanes, trucks and so forth to delivery its packages; the Amazonification of the shipping industry if you will. Thus, to paraphrase Keynes, 'when the facts change, I change my mind, what do you do?', Keystone may need to use AMZN as a new tool here on out instead of, or to supplement, the UPS tool. Amazon is an important indicator of economic health due to the the products it sells and now as it diversifies into many industries, such as shipping, perhaps the 20/50 cross will be an important guideline and it is worthwhile to keep an eye on King Bezos and company.
Look at that; the Scamazon weekly chart. Very interesting; its intermediate and long-term 20-week MA is below its 50-week MA. Keep an eye on that going forward. Stock market bulls must move the AMZN 20-week MA back above the 50 as soon as possible. Price is up at 1887 pulling the moving averages higher. If AMZN goes sub 1800, there will be H*ll to pay 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.
The trannies (TRAN; DJT; Dow Jones Transportation Index; transports) are slapped -2.5% this week and not feeling any love.The novel coronavirus is causing traders and investors to hit the sell button in the travel, hotel and airline stocks. This is what happened during the SARS outbreak about 17 years ago. Commodities are also smacked silly due to the virus outbreak and waning global demand. With the airlines less busy (who wants to fly to a disease-infested destination?), the demand for jet fuel will drop off sharply. This sends oil prices lower since crude is the feedstock.
So transportation companies should be joyous with lower fuel prices, right? Nope. The drop in tourism and business travel is far more negative than the companies experiencing some minor fuel savings, hence, the trannies are dressed-down this week. The red channel lines show the sideways to sideways downward bias that price is experiencing for the last couple years.
The Dow Transports pop above the upper red trend line but now retreat back for a test. This area is also the 20-day MA support at 11010. Price is at 10999 losing the 11-handle. Very simply, if TRAN remains below the 11010 and trends lower, the stock market will become sick. Bulls need the trannies above 11010 as fast as possible to keep the stock market party alive.
Price came up attempting to make a run at the 11.6K+ record high but alas, the tranports may be rolling over again. The Dow Jones Industrials Index (INDU; DJI; DJIA; Dirty Thirty) are printing record highs like the other indexes. From a Dow Theory perspective, the trannies must come up to print a new record high to confirm the highs in the industrials to verify that the big bull market party is real. TRAN, however, is struggling now. A lot will depend on the coronavirus.
UPS and FDX are in the Transports and key bellwethers on the global economy. Shipping activity is a direct indication of the health, or sickness, of any economy. In recent years, the Amazonifification of the online shopping industry and now the shipping industry is in full swing. AMZN keeps expanding into the shipping of its own products which leaves United Parcel and FedEx out in the cold with their noses pressed against the glass window.
If all the upside joyous price targets of the Wall Street analysts are to be realized this year, the trannies must take out those September 2018 highs. Each day that TRAN does not regain the 2018 highs, is another day that the bull coffin is lowered one inch more into the grave. If TRAN moves above 11.6K, the trannies, and stock market will be resurrected and the celebration of more monetary glory will continue. The transports are Born to Be Wild but lately have blown a couple tires and are swerving all over the roadway. 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.
Wednesday, January 22, 2020
SPX S&P 500 Daily Chart; SPX Prints All-Time High at 3337.77; Overbot; Rising Wedge; Negative Divergence; Upper Band Violation; Price Extended
The S&P 500 print a new all-time record high at 3337.77 on Wedensday, 1/20/20. The four central banker horsemen of the Apocolypse, the Fed, BOJ, ECB and PBOC, ride across the sky dropping money from the clouds. The world is awash in liquidity. The central bankers are the market.
Stocks receive the neggie d spankdown described in the previous SPX 2-hour chart. If you bring up the 2-hour, you clearly see price printing the highest number in history at 3338 at 10:45 AM EST, and at the same time, all the chart indicators are negatively diverging, so you knew price was out of gas, and stocks begin to retreat receiving the neggie d spankdown.
The SPX daily chart above is set up negatively like the 2-hour with overbot conditions agreeable to a selloff ahead, the rising wedge pattern, the neggie d (more on the MACD in a second), price violating the upper standard deviation band and the SPX extended above its moving averages requiring a mean reversion. All this mumbo-jumbo is bearish. The middle band, also the 20-day MA, at 3265 is on the table as well as the lower band at 3195 down where the 50-day MA at 3187 is playing around.
You can bring up a short-duration daily chart to check out the MACD line. If you squint real hard, and hold one hand over the left eye, and blink a few times, you can see that the MACD line is the tiniest hair higher as compared to the days prior. This hints that price may want to try and hang on for another day or two, at these elevated levels, and then roll over and die (as opposed to already being dead right now; stock should continue lower from here).
So Keystone extended the chart one-year so the MACD line could be investigated further. Over that longer period, the MACD line is negatively diverged so the chart is cooked with neggie d just like the 2-hour chart. Sure, the MACD may try to poke out some upside tomorrow but stick a fork in this market, its cooked.
The only thing that can save the day is happy talk either on trade, or dovish Fed speak. Do not be surprised if King Trump forces Kudlow to run out onto the Whitehouse lawn tomorrow morning and start pimpin' those middle-class tax-cuts. Donny will tell Larry not to laugh out loud while you do it, tell the stupid little huddled masses anything, they'll believe it.
The ECB is on tap so they will probably flap dovish wings. Madame Lagarde is in charge of the European Central Bank now and she has announced a phase of gathering data and assessing the situation so she is off the hook as far as expecting a major policy announcement. President Trump is flying back from Davos. It is comical to see his trouble in dealing with women play out again.
King Donny met with EU Commission head Ursula von der Leyen, a couple times the first couple days of the Davos conference. Donny was charming, all smiles, it seemed like the future trade talks between the US and Europe would start down a more positive non-confrontational path. He smiles and nods at what von der Leyen says. Today is a different story. Soybean Donny is threatening tariffs on French ag products and German cars. He had all the time in the world to discuss this stuff with von der Leyen but he never mentioned word one. Soybean Donny always does things behind people's backs. That's how he fires everyone; via tweet or he has one of his henchmen do the dirty work. Donny avoids that type of confrontation despite his daily machismo proclamations.
The democrats should know that their only hope at defeating President Trump is with a female candidate at the top of the ticket. Trump will annihilate any of the men that want the job; none of them have a chance. It is difficult, however, for Trump to deal with powerful women. Democrat candidate Kamala Harris flamed out since she was too whiny with a negative vibe.
The other two female democrat candidates for president are Elizabeth Warren and Amy Klobuchar. Warren is a ball of fire and will be hit hard on her socialist ideas, like Bernie Sanders. Liz may be better suited for a school marm position rather than president although if the economy and markets tank, you will see her star rise quickly. So that leaves Klobuchar and she is palatable to the independents in the middle that will decide who wins. Amy may be the great white hope for the democrats; if she does not show well in the first few contests, she will be gone, and the democrats will likely have no chance to win in November unless Donny is not on the ticket due to scandal, health or other reasons.
The impeachment trial continues with the two corrupt political parties pointing a finger at each other with three fingers pointing back at themselves. The videotape the democrats are using showing witnesses provide damaging testimony against the president are effective.
So stocks are cooked in the hourly and daily time frames and should retreat for several days. The new moon peaks on Friday and stocks are typically weak through the new moon so there may be sogginess and sad news through the weekend. Covert raids will be carried out under the pitch-black darkness of the new moon perhaps in Iraq; the US has the superior night vision technology. Quake and volcano activity may pick up on the weekend since the Earth and Moon are at an inflection point.
The SPX weekly chart is in neggie d except for the MACD line, thus, stocks will likely retreat for several days, say a week or so, but then recover again due to the long and strong MACD on the weekly chart, coming back up to the record highs again, say, as February begins, and that should turn the MACD over so the stock market would be topping out on a multi-week basis starting early February.
The Keybot the Quant algorithm remains long and is tracking copper with interest. Bears need CPER to drop below 17.36 which is about a -0.2% drop in copper futures so watch that overnight. As copper goes, so goes the stock market. Keybot is also tracking VIX 13.58 as a key bull-bear line in the sand. Stock market trouble starts if the VIX moves above 13.58. Bulls are okay if the VIX stays below 13.58. The VIX begins trading at 3 AM EST. The bulls are living a Wild Wild Life.
The stage is set. It feels like Gettysburg before the big battle. If you listen real close you can hear a sad harmonica song in the distance. The bulls and bears know that history will likely be written in the stock market tomorrow, the coming days and the month or so ahead. The sad notes of the harp echo through the deserted and darkened streets of Wall and Broad. 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 Federal Reserve and other global central bankers maintain their jackboots on the throat of volatility to guarantee elevated stock markets in perpetuity. The two key lines in the sand for the VIX are the 200-day MA, now at 14.93, and the Keybot the Quant algorithm's current target value of 13.58. The red circles show when the bears had momentarily glory, however, the VIX is always smacked lower back below the 200 by the central bankers and voila, instant stock market recovery rally. Isn't the crony capitalism game fun?
Bulls are fine and not worried at all about a stock market selloff as long as the VIX does not move above 13.58. Stocks will begin to selloff and fall apart if the VIX moves above 13.58. The stock market will be accelerating lower if the VIX takes out 14.93 heading higher. The VIX begins trading at 3 AM EST so that wil provide an heads-up on the day ahead. S&P futures are down -5 on Wednesday evening, 1/22/20, on the East Coast so watching the VIX in the early morning hours will tell a lot about the stock market direction ahead. 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 BPSPX remains on the double-whammy buy signal. The bulls keep driving stocks higher on the Fed's easy money. Finally, a potential top occurs over the last couple days at 83. The six percentage-point reversals are key as well as the 70% level. Thus, bears will receive a market sell signal when the BPSPX falls below 77. A double-whammy sell signal will trigger if the BPSPX loses the 70% level; this is when stocks would be falling apart bigtime.
For now, the bulls are in control and will remain in control as long as the BPSPX remains above 77. 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 2-Hour Chart; S&P 500 Prints All-Time High at 3337.77; Overbot; Rising Wedge; Negative Divergence; Upper Band Violation; Price Extended
The top is in for the SPX 2-hour chart. The SPX daily chart, however, shows a sliver more of strength for the MACD line wanting price to perform a jog move, one down day (tomorrow), then another up day for that to be the top in this hourly and daily basis (Friday). Today will be interesting since price should roll over now and it will be a question if it can create enough negativity today to pull the price candlestick and MACD down on the daily chart to then confirm the top on the daily basis also today. If this does not occur, then the stock market top may be delayed until tomorrow or Friday when the MACD rolls over.
The SPX has needed to pullback for over a month, and the technicals have lined up for that drop, but the happy trade talk and happy Fed dovishness sends equities higher. You would think the stock market would simply collapse under its own weight now. A flash crash or other wild market event is on the table due to the rampant euphoric bullishness and complacency. Traders are absolutely fearless buying stocks with reckless abandon. One trader is buying stocks using a dart board and blindfold. Another is asking his infant daughter for ticker symbols and playing whatever letters he can decipher from her cute dribble. Ahhh, yes, it is great times for the stock market and America's elite class in this new Gilded Age. Every bankster in Manhattan is walking around with their chests puffed out and pockets full of Fed cash. The privileged class laughs and jokes about how they screw the huddled masses daily.
Investors may have been hesitant with buying stocks due to President Trump's impeachment trial but it looks like the Senators will be able to ramrod the thing through for for an acquittal as everyone expected. The buoyancy in stocks continues and the SPX prints a new all-time record high at 3337.77. The crony capitalism system and the two corrupt political parties, the demopublicans and republocrats, are on full display each day but caution is warranted because you may become nauseated at watching and understanding what they have done to the country.
Trumpster's hands are dirty because he could have easily called for an investigation into Ukraine at anytime and in the public eye. He did not and instead chose to do it covertly because he obviously wanted to find dirt on Biden. The dirty democrats are in the same corrupt boat since Joe Biden and his son are up to their ears in Ukraine corruption. It would be comical to see the two corrupt silver-haired white guys fight over the presidency come November. Humorously, people would have to choose one crook or the other.
A potential wildcard in the impeachment drama is former National Security Adviser Bolton who will likely release a book this summer at the height of the campaign season. King Trump and the republicans blocked Bolton from testifying. Will it be a smoking gun to show that Trump was dirty all along and this news hits right before the election, or, show that Trump was being Trumpian, as everyone has grown to accept, he bloviates, tells whoppers every day, makes things up on the fly, but, that's Our Donny, and maybe just let him go with a slap on the wrist. There is lots of drama ahead no doubt about that.
Trump oversees the sluggish +2% growth in the US when he had promised from +4% to the ridiculous +6%. Showman Donny said the large numbers because his hero, President Ronnie Raygun, achieved high GDP's at +5%. We are lucky to see +2% in this sluggish economy despite the Fed pumping the economy. Trump is blaming the Federal Reserve and Chairman Powell for holding back the economy and King Donny proclaims that growth would be well over +4% if they had followed his wisdom. Of course he does. This stuff is hilarious as we witness the final throes of the crony capitalism system.
So, first thing is first. See if the neggie d spankdown occurs today as per the 2-hour above, and, if so, as expected, check that SPX daily chart at the end of the day to see if the MACD is neggie d, or not. That will tell you if the top did occur today or if it will probably be Friday instead. The only thing that can stop the top is happy talk from the Fed or King Donny. 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 11:01 AM EST: There's a little movement off the top from the record high at 3338 down to 3331. Let's see if the bears got legs this time. The SPX printed the highest number in stock market history at 3337.77 at 10:45 AM EST on Wednesday, 1/22/20. That is an interesting number it top-ticked at, 3's and 7's. Remember, the SPX bottomed at the infamous 666 in March 2009 when the Fed began its obscene Keynesian financial experiment. Here we are at the Promised Land 11 years later looking at 333777.
Note Added 11:17 AM EST: SPX 3327. VIX 12.79. Bulls are not concerned about a selloff since the VIX remains sub 13. European indexes fade into the closing bell. Oil tanks -2.5%. That coronavirus has claimed 17 lives, there is one case in the US now and one in Hong Kong. The travel industry is hit. Airline companies have nose dived over the last day. Demand for jet fuel will drop and this impacts the demand for crude hence the red numbers on earl (oil). Dollar/yen is at 109.86. The pair has been lingering below 110 all day so you knew that was a hint that stocks may become soggy (lower USD/JPY is a stronger yen which means risk off and stocks are dropping). Copper slips -1%. The trade deals are so great that Dr Copper is unable to push himself up off the gurney. Silver gains a smidgeon +0.2% probably on news that Guggenheim's Scott Minerd, in Davos, touted silver as his fave play this year. The Davos crowd agrees with each other that the central banks will remain accomodative and stocks will go up forever. US Treasury yields are; 2-year 1.53%, 1.57%, 10-year 1.77%, 30-year 2.22%. The 2-10 spread is 24 bips.
Note Added 11:26 AM EST: The SPX is up 6.66 points, +0.2%, at 3328 now 10 points off the record intraday high. VIX 12.70. The bulls are laughing and pointing fingers at the hapless bears that cannot even get the VIX above 13. The bears got buptkis (nothing) until they see higher volatility. The bulls are at an advantage since the central bankers maintain their jackboots on the throat of volatility to keep the stock market elevated. Perhaps the Fed has placed enough downside bets that they will let it go beginning today?
Note Added 11:41 AM EST: SPX 3330. VIX 12.62. Bears got nothing without higher volatility.
Note Added 1:54 PM EST: SPX 3330. VIX 12.58. The bears are unable to move volatility higher, so far; it is difficult to move the Fed's jackboots out of the way. The MACD line on the SPX daily chart is flattening but remains sloping a hair higher. If the bears can crush the SPX price here, the top is in for the stock market near-term. If stocks stagger out sideways today, the top will be tomorrow or Friday (as soon as the MACD line goes neggie d if it does not go neggie d today). The Keybot the Quant algorithm is long but champing at the bit to go short right now but it (the bears) likely either needs to see the SPX drop below 3317, or, for the VIX to move above 13.58, to flip short. Copper is key right now, and whatever direction the red metal goes in right now, the stock market will follow. Copper futures have been hanging out at the -0.9% down level today so if you are bearish you want to see -1.0%, -1.2%, -1.5% and so forth. If a bull, you want to see copper recover to the flat line. This will be important for the rest of the week so remember, as copper goes, so goes the stock market. Copper -0.9%.
Note Added 2:05 PM EST: SPX 3330. VIX 12.60.
Note Added 2:13 PM EST: SPX 3331. VIX 12.56. Price has no reason to come back up again (in the 2-hour time frame) as per the SPX 2-hour chart above. The neggie d spankdown has begun. The stochastics are weak and bleak, ditto the MACD so there should be a lower low on tap for the SPX price in a couple hours in this 2-hour time frame. The LOD is 3325 so we may see some excitement as the day plays out. The 3325 is not too far from the 3317 Keybot is identifying and tracking. The sixth 65-minute trading segment begins at 2:55 PM EST so we shall see if the robots come loaded with sell programs on or about that pivot time, or not. Copper -0.9%.
Note Added 2:38 PM EST: SPX 3329. VIX 12.57. Copper -0.666%. The bulls are trying to jam copper higher to support the stock market. The market makers are likely enticing dip-buyers to jump back in setting them up to have their heads ripped off.
Note Added 6:41 PM EST: The SPX finishes up 1 point at 3322. There was some head rippage occurring during the last hour of trading. Dip sucker's run into a buzzsaw late day. VIX is at 12.91 so the bulls are not worried, yet.
Monday, January 20, 2020
CPC and CPCE Put/Call Ratios Daily Charts; Significant Stock Market Top At Hand; Novel Coronavirus Fear; Hong Kong Downgrade; Davos
The SPX (S&P 500; the US stock market) prints a new all-time record high at 3329.88 and new all-time record closing high at 3329.62 on Friday, 1/17/20. Market participants wait for the Godot Top to finally appear and roll over, but keep waiting. The happy trade deal news, the never-ending Fed backstop and the promise for middle class tax cuts keep stocks elevated. Everyday is another beautiful wonderful day at Itchycoo Park. We'll touch the sky there, oh my, the stock market, it's all too beautiful.
Traders Kneel and Worship at the feet of the Federal Reserve and other global central bankers since they are the modern-day Money God's in charge of the world's Financial Temple. All Hail the Power and Majesty of Pope Powell and his entourage of Doves!
The Fed had a religious experience in September when they thought a liquidity event was about to crash the markets and economy. Powell soiled his pants and immediately ran downstairs in the Eccles Building, while managing that pant load, and cranked up the Golden Printing Press announcing more QE for as far as the eye can see. What Glory, Praise Be.
The world's 20 important central banks are all easing in one form or another creating the massive melt-up in global stock markets. The screenprinter's cannot keep up with the record highs since new hats are required to commemorate market milestones, but they keep ticking off like crazy to the upside with no end in sight. The central bankers are the market. Do you understand this or are you stupid? The four central banker horsemen of the Apocalypse, the Fed, BOJ, ECB and PBOC, are the God's of Earth's Financial Kingdom. The PBOC cut triple R's out of the gate this year pumping stocks higher. The BOJ, ECB and BOE are all set to pump stocks over the coming days. Face it; these folks are sick pups.
Anyhoo, judgement day always comes, and the technicals have been champing at the bit to take the stock market down for over a month now. The low put/calls verify the rampant complacency in the stock market and a significant market top at hand. Traders and investors are buying stocks without a care in the world. No one does homework on the fundamentals anymore. That is old hat. The central bankers always pump nowadays so all you have to do is buy stocks (moral hazard).
Folks that never comment on stocks are now experts proclaiming that the rally will continue a long time. The IPO's failing are reminiscent of Webvan and Pets.com at the top of the dotcom bubble in 1999. The recent mess with SoftBank is reminiscent of all the side businesses that Enron got into before it imploded back then. So many things are rhyming. The current parabolic stock move in the indexes is similar to the January 2018 top that peaked out right during/after Davos; as the billionaires were trying to impress the millionaires. Will that behavior rhyme two years later? It was ugly.
The table is set. Dirt pie and mud brownies are on the menu. You should have protection in place as well as throwing some shorts on going forward. Single and 2x 'short ETF's' are all in play such as going long SH, SDS, DOG, DXD, PSQ, QID, you get the idea, or, shorting SPY, SSO, DIA, QQQ, and so forth. Remember, as Keystone always says, never play the 3x ETF's and ETN's. They are flawed instruments; you will only lose your money if you mess with that 3x garbage. If you have strong conviction for a particular sector or index, and seek a little leverage, then take a ride on the wild side with a 2x ETF, but never, ever, play a 3x instrument. We should see what the bears got this week. 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 Monday Evening 6:03 PM EST: S&P +2.
Note Added 6:30 PM EST: S&P -2.
Note Added 7:17 PM EST: S&P -2. Dollar/yen 110.17. The USD/JPY pair is flatter than a newlywed's souffle right now. There you go, 110.18, dead-flat. Thus, the dollar/yen is at a 110.18 pivot point. If the pair moves lower to a 109-handle, it is risk-off in markets and stocks will sink. If USD/JPY remains above 110, the stock market bulls are fine.
Note Added 8:03 PM EST: S&P -3. Dollar/yen 110.17.
Note Added 8:54 PM EST: Boom. Double-whammy. China says the novel coronavirus has killed four people and sickened hundreds and is now spreading human to human. A health worker falls seriously ill. The lunar holiday is coming which is a mass pilgrimage of folks to see family and friends so that virus may spread like wild fire across China and Asia. Like the SARS virus years ago, companies that sell masks and hygiene products will make out like bandits while travel and tourism companies, hotels and airlines will be punched in the face. Also, Hong Kong's credit rating is downgraded by Moody's due to the many months of social unrest. Perhaps global traders are worried about potential contagion. HSBC will trade soggy since it has a large footprint in Hong Kong. Asian stocks trade lower. Hong Kong's HSI collapses -2%. Japan's NIKK -1%. Topix -0.666%. South Korea's KOSPI -0.6%. Samsung -1.2%. China's CSI300 -1%. SSEC -0.7%. Airlines nose dive. S&P futures -13. Dow -101. Nasdaq -42. Dollar/yen slips below 110 to 109.94. Oil flat. Copper -0.9%.
Note Added Tuesday Morning, at 1:30 AM EST: S&P -15. Dow -110. Nazzy -48.
Note Added Tuesday Morning, at 2:31 AM EST: S&P -11. Dow -63. Nasdaq -35. Asian markets puke overnight. HSI -2.6%. NIKK -0.9%. Topix -0.5%. KOSPI -1.1%. CSI300 -1.7%. SSEC -1.4%. Straits Times -1.2%. India stocks are sold off. Oil -0.8%. Natty gas plummets -4% to 1.92. Gold 1562. Silver 18.03. Copper loses -1.3% to 2.808. Dr Copper should be joyous considering the hyped-up US-China trade deal. Dollar/yen is trying to sneak back above 110 at 110.01. Futures are off the lows. US Treasury yields are; 2-year 1.55%, 5-year 1.60%, 10-year 1.80%, 30-year 2.26%. The 2-10 spread is 25.5 bips.
Note Added Tuesday Morning, at 4:09 AM EST: S&P -12. Dow -85. Nasdaq -44. Russell -8. VIX is up to 13.15 a 13-handle when the 11-handle was in vogue last Friday. The VIX 200-day MA is at 14.93 which is where the wheels would fall off the market bus. The Keybot the Quant algo remains long since early December and is tracking VIX 13.68 as a key bull-bear line in the sand. At 13.15 right now, the bulls are okay, but the bears will shine if volatility moves a bit higher. US Treasury yields are; 2-year 1.54%, 5-year 1.60%, 10-year 1.80%, 30-year 2.25%. The 2-10 spread is 25.3 bips. WTIC oil -0.9%. Brent oil -1.2%. Copper tanks -1.8%. Gold 1556. Silver 18.02. Dollar/yen 109.97. Asia markets and US futures are ill this morning and Europe also catches the sickness. DAX -0.5%. CAC -1%. FTSE -1%.
Note Added Tuesday Morning, at 5:45 AM EST: S&P -14. Dow -86. Nazzy -48. Russell -9. VIX 13.23. Dollar/yen 109.98. Copper -1.666%.
Note Added Tuesday Morning, at 6:23 AM EST: President Trump provides a keynote speech at Davos. It was uneventful by Trump standards; he phoned it in. Trump looked tired, probably from the flight over, stopping in France first, then jumping to Davos. King Donny takes a swipe at Fed Chairman Powell saying the Fed raised rates too fast and has lowered them too slow. The president sets up Powell as the scapegoat if the markets and economy collapse this year. S&P -12. Dow -73. Nazzy -43. Russell -7. VIX 13.10. Dollar/yen 110.07. 10-year yield 1.81%. China says the coronavirus has killed six people. The SARS outbreak years ago killed about 8 hundred so this new outbreak is in its infancy. With the lunar holiday ahead, however, Chinese and Asian folks may be spreading the virus everywhere.
Note Added Tuesday Morning, at 9:20 AM EST: S&P -10. Dow -65. Nasdaq -27. Russell -5. VIX slips back below 13 to 12.92 so the bulls laugh at the bears. The bulls are out in force at Davos and elsewhere. Hedge fund manager Ray Dalio tells investors to remain long the stock market. Dalio proclaims, "Cash is trash." He suggests remaining long the stock market going forward and says a small amount of gold can be bot to diversify. Will lightning strike twice? It was two years ago almost to the exact day that Dalio proclaimed smooth sailing for the stock market ahead and that was actually, comically, the exact top in the stock market. It will be humorous to see what happens in the days ahead. Dalio is not the only bull. Everybody and his brother is bullish. There are no bears. Tudor Jones says the stock market has a "long way to go" despite its behavior being similar to 1999. He said back then during the dotcom bubble, huge gains in stocks were realized before stocks completely topped out, and he says we are not there yet. Tudor Jones stands on a soapbox and proclaims, "The (stock market) top is a long way from now." CS strategist Jonathan Golub jumps into the middle of the bull party filling everyone's glasses with more Fed wine, pumping the Credit Suisse SPX year-end target from 3425 up to 3600. The bomp-bomp-bomp of the techno music becomes louder and louder as the bulls keep buying stocks with both fists in a party-like atmosphere. Invesco strategist Brian Levitt is next to cheerlead the stock market. Levitt says that euphoric bullishness is not in the market as yet so stocks will continue higher. He pooh-pooh's any comparison of the stock market behavior now to the activity into the January 2018 top (that ended in a crash). The bears have all left town swearing to never short a stock again as long as they live. The bulls keep buying stocks and ignore the naysayers. The bulls are dancing and singing, swigging down Fed wine and buying any stock with a heartbeat. Making money in the stock market, on the long side, is effortless. Uncle Phil is at the financial manager's office in town, you know, the new place between the post office and Mario's Pizza. Phil took his entire life savings into town and is buying AAPL and AMZN stock like the nice young man in a suit and tie suggested on television.
Note Added Tuesday Morning, at 9:46 AM EST: The US trading week is underway after the MLK Day holiday yesterday. All 11 S&P 500 sectors are lower. The SPX slips 10 points, -0.3%, to 3119. VIX 12.74. The day is off to a quiet start. Bears got nothing unless the VIX moves above 13.58 (latest number from Keybot) which will send stocks steadily lower. The stock market will fall apart if the VIX moves above 14.93. Bulls are not worried about anything if the VIX remains below 13.58.
The SPX (S&P 500; the US stock market) prints a new all-time record high at 3329.88 and new all-time record closing high at 3329.62 on Friday, 1/17/20. Market participants wait for the Godot Top to finally appear and roll over; and keep waiting.
The SPXA150R, the percent of S&P 500 stocks above their respective 150-day MA's, is at an elevated 88 signaling time to short the stock market. Keystone calls it the bet-the-farm indicator, figuratively of course, when it tags 90. At that level, the stock market has nowhere to go but down. The SPXA150R is a whisker from 90 but it is close enough for government work, as we would always say in the 1970's.
The stock market is long overdue for a pullback as evidenced by the rampant complacency in the put/call ratios and these elevated SPXA150R and SPXA200R readings. The above is a daily chart so perhaps it can be used to find out where this market top is at. The only thing saving the stock market from the technical breakdown in recent days is the trade deal hype, Fed and central banker backstop and the new Kudlow tax-cut hype.
President Trump's impeachment trial begins tomorrow with lots of drama no doubt in store but it really does not seem to impact stocks as yet. Trump is flying to Davos to hang out with the world's elite. King Donny does not have many fans in Europe so every meeting room, tavern and piano bar at Davos will have the television on showing the impeachment proceedings. It will be interesting to see if this gamesmanship gets under Donny's orange skin, or not. The elite privileged class play these daily baby games while the huddled masses suffer. The positive news may all be priced-in to stocks while the markets may be susceptible to controversial Trump tweets.
The stochastics and Williams are overbot agreeable to a pullback. The red lines show neggie d across all the chart indicators so the top is in as far as they are concerned. The RSI, however, has managed to squeeze out the tiniest higher high. The RSI has not yet moved up into overbot territory. Price made a high Thursday, then a lower print on Friday. So did the RSI. Therefore, a jog move may occur down Tuesday, up Wednesday, and top-out on Thursday when the RSI rolls over. US markets are closed today, Monday, for MLK Day.
The stock market has needed to top-out for over a month now, technical-wise, so it may simply collapse under its own weight at anytime. The top is in for the stock market and it will occur any hour any day ahead. The only thing that can save it is some kind of happy news talk from the president, or Fed, or other central bank such as the PBOC, or Kudlow mouthing off about a tax-cut that will likely never occur. King Donny could have given a better tax-cut to the huddled masses over a year ago but he did not. The politicians are all the same. President Obama did the same thing. The president's come into office and the first thing they do is cut taxes for the wealthy so the elite class can then write checks to their election campaigns. This is the way crony capitalism works. Do you understand this, or are you stupid?
Price has pierced up through the upper standard deviation band. The bull party is so out of hand that someone just fired off a roman candle and it went up through the bedroom ceiling and out the attic exploding in a ball of flames. The drunkards are laughing with delight sipping more Fed wine and buying stocks with reckless abandon. The bull decadence and party euphoria continues. One bull proclaims that the party will never end. The middle band at 82 and lower band at 77 are on the table.
Price is extended above it moving averages and requires a mean reversion lower. The Aroon green line is overbot with nowhere to go but down while the red line is oversold with nowhere to go but up both indications point to future bearishness.
The 150-day MA in the 150-day MA chart above is sloping higher signaling that the bulls are joyous. Stop and think about things. 90% of the stocks in the S&P 500 are above their 150-day MA's which means their 150's are sloping higher (for the most part) signaling nothing but bullish joy continuing for as far as the eye can see. Think about all the companies and businesses you come into contact with each day; your company, other companies in the building or nearby, fast-food places, restaurants, copy places, rental car agencies, and on and on. The chart says 90% of these companies you see daily are in gangbusters fantastic growth mode, the future is so bright you have to wear shades, these companies will be hiring people, buying equipment and so forth, just think, 90% of the companies are in this great shape now and ready to perform fantastically going forward. Do you believe that? You shouldn't. Watch your wallet.
The stock market is all set to crack wide open like an egg for the morning omelet, however, as always, we will see if happy talk occurs, or a central banker money pump, that would send stocks higher for another week. A flash crash or some other wild market event is on the table this week due to the erratic and unstable price action. 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 Monday Evening 6:05 PM EST: S&P +2.
Note Added 6:33 PM EST: S&P -2.
Note Added 7:19 PM EST: S&P -2. Dollar/yen 110.17.
PALL Palladium Monthly and Weekly Charts; Palladium Continues Printing All-Time Record Highs; Overbot; Negative Divergence Developing; Upper Band Violation; Price Extended
Palladium is on fire to the upside. The screenprinter's are frantically working all weekend long producing "PALL 2.3K" hats. Spot palladium is $2500+. CME prints 2313. The palladium bulls are tripping over each other to buy this shiny silvery-white metal. Cousin Frank just buried a wheelbarrow full of palladium in his back yard last week.
Palladium has left platinum in the dust. Gold has left platinum in the dust. What will all the gal's do with their platinum rings? They will want palladium rings now. The precious metals (PM) are at the following prices. Palladium is at 2300. Platinum is at 1030. Gold 1560. Silver 18.06. Base metal copper, Dr Copper, is at 2.85. There is an ongoing battle between using palladium and platinum in car applications especially catalytic converters. However, that always seemed like a strange argument and set of talking points from the media and metal companies.
Let's think outside the box, perhaps outside the universe. Cue the Twilight Zone music. Most folks do not know that one of the top key metals that have potential space applications, think the US Space Force that was initiated by President Trump, is palladium. Tellurium and germanium also have potential for bigtime use in the manufacture of future spacecraft that will explore the cosmos. Pd, Te and Ge are the chemical symbols for the elements that will lead us to the metals and composites that will lead us to other universes. Perhaps space is the reason palladium receives more love than a honey on Valentine's Day. Note that US defense contractors LMT, NOC and RTN are at all-time record highs although Raytheon is running its factories full-tilt producing Tomahawks. A voice shouts, "Earth to Keystone, Earth to Keystone, come out of the clouds and return to Earth to discuss the palladium charts."
Palladium obviously had more juice in the tank for more new highs this year, and they occur. Price is parabolic; straight vertical. You know what happens with commodities, and any ticker for that matter, that goes parabolic, yes, the reverse gear is just as fast. The tricky part is finding out where the momentum peters out and dies. Parabolic behavior is occurring in the US stock market currently which is a very rare sight in that arena. Parabolic price moves are common in the commodities.
Both the monthly and weekly charts, although different time frames, display the similar characteristics. The chart indicators are a mixed bag of negative divergence (red lines) and long and strong behavior (green lines) that will want additional matching or higher highs in these respective timeframes.
Looking at the weekly chart, since it is shorter duration chart than the monthly, the overbot RSI, stochastics and money flow are all agreeable to a pullback. The stoch's and money flow are cooked with neggie d and cannot add anymore strength to price. Ditto the RSI but there is some near-term momo in play. The MACD line and histogram are experiencing an ongoing upside orgy of glory (that will want more highs in price in the weekly basis ahead).
PALL has violated the upper band on the weekly chart so the middle band at 1780, and rising sharply, and lower band at 1457, are on the table. Price is extended above the moving average ribbon so a mean reversion lower is needed. Thus, the weekly chart wants PALL to pullback now, however, after a week or so lull, price will come back up again for a week or so and print matching or higher highs again. At that time, you have to see if the MACD goes neggie d to identify the top on the weekly, or not. If the neggie d is universal across all indicators, the top is in and PALL will pull back for several weeks.
The monthly chart is overbot with neggie d showing for the stochastics and money flow. The RSI, MACD line and histogram are long and strong wanting more price highs on the monthly basis. The upper band is violated so the middle band at 1409 and lower band at 732 are on the table. The rising wedge patterns are bearish. So what does all this mumbo-jumbo mean?
PALL is going to pullback for a week or so, say to end January, but then rally again for a week or so and come right back up to 2300+ again in early February. Let's say the weekly tops out then with neggie d so that will begin a multi-week slide, say, during February maybe into early March, then a big recovery all the way back up again due to the strong MACD on the monthly chart. Palladium may print its bigtime top in March; it will occur when the MACD line goes neggie d on the monthly chart above.
Keystone is not trading palladium right now and probably will not unless that nice setup occurs on the weekly chart say early February. If that pending weekly drop is played during February do not marry the trade since PALL will come right back up again in the monthly time frame. Palladium can likely be shorted from, say, a March-May multi-month top through the remainder of the year. 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.