The Treasury and global yields have been falling like stones as investors worry about an economic slowdown and seek perceived safety. As traders gobble-up notes and bonds, the prices rise and yields drop as the 2-hour chart for the 10-year shows above. The tight bands (pink arrows) squeeze out a big move and this one is lower creating the collapse in yields over the last week.
Yield gapped-down through the blue lines so the 10-year is currently on an island below 2.47%. If yield comes up to 2.47%, then immediately gaps-up jumping to 2.50% and higher, that would be an island reversal pattern. Otherwise, yield may simply meander higher and fill the gap at 2.47%-2.50%.
The purple lines show the falling wedge, oversold conditions and positive divergence all conspiring to bounce the yield higher (remember prices move opposite so lower prices and higher yields are expected). And voila, the orange dot shows the 10-year yield at 2.453% as this is typed at 8:24 AM EST Tuesday, 3/26/19. Whoops. Check that. The screen shows 2.444% now.
So yield will likely run up to the 2.70% and then pause and decide whether it wants to jump the gap higher, fill the gap, or receive a smackdown. Yield will want to seek that middle band, also the 20 MA, at 2.52% and dropping. The middle band may come down to form a confluence at 2.70% just as yield comes up to the same number; and then yield decides to bounce, or die. 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 8:31 AM EST: The 10-year yield is at 2.44% after the Housing Starts data and Permits lay an egg. Starts collapse more than -8.7%; and this is springtime! S&P +13. VIX 15.65. USD 96.58. Euro 1.1296. Treasury yields are; 3-month 2.47%, 2-year 2.28%, 5-year 2.22%, 10-year 2.44%, 30-year 2.90%. The 2-10 spread is 16.1 basis points. The 3-month-10 spread is inverted at negative -2 bips. The 3-mth-2 spread is inverted at -19 bips. The 3-mth-5 is inverted at -25 bips. The 2-5 spread is inverted at -6 bips. The 5-30 spread is 68 bips. All yields are under 3% and nearly under 2.90%. Lower yields and lower stock prices are a deflationary and disinflationary vibe. Higher yields and higher stock prices are an inflationary vibe.
Netflix is a darling of investors. NFLX is traveling from the bottom left to the top right of the chart which is what a Netflix bull wants to see. Netflix, however, is printing its swan song. Perhaps Netflix can film a pay-per-view series of their coming demise as it unfolds. Last summer, the NFLX euphoria was at a peak. Their movies and shows, the original content, is popular, so investors trip over each other to buy the stock expecting the joy to continue forever.
A Tweezer Top prints last summer during the bull party phase (blue circle). The matching price high comes with negative divergence on the chart indicators (red lines) except for the MACD line that remains long and strong wanting another price high after any pull back in this monthly time frame. The red rising wedge pattern is bearish and the RSI, stochastics and money flow were overbot agreeable to a pull back.
Since the upper band was violated, the middle band (now at 292) was the initial downside target which was achieved. The 20-mnth MA has held as support the last few years. When it breaks, look out Nellie. Price then bounces off the 20 MA to begin the year with traders buying with both fists afraid of missing out on the Netflix upside bandwagon. Price recovers higher due to the remaining strength in the MACD.
Thus, price should want to keep floating higher to that brown line reflecting the prior highs; let's just call it 4 hundo. When that matching high in price occurs, the chart indicators will be in full-on neggie d wanting to see a serious spankdown. In fact, look at all the indicators. Even if price rockets higher it is hard to see the indicators taking out the prior highs so the neggie d should remain. Price needs to bump higher for the matching high and as long as the indicators then remain below those thin red lines in the margin, it is over for Netflix, or ovah, as they say in Brooklyn.
The purple box shows that NFLX finally moved above 50 to be in a STRONG trend higher late 2017, all of last year and into early this year. The ADX is dropping, however, and about to go sub 50 which would verify that the strong trend higher is over.
What does it all mean? It means you should walk to the exits at the Netflix movie house. NFLX can likely be shorted above 380 and simply build shorts from there forward. Price may run to 400 and higher as the last of the MACD bull juice is used-up; that would be great for confirming the universal negative divergence with the chart and locking in the doom scenario for the future. NFLX may also seek that upper standard deviation band at 432. It would likely depend if there is any positive news with Netflix. That is the only thing that could derail its fate and breathe more life into the aging beauty.
So NFLX is an all-out short play at 380 and higher going forward. NFLX will likely peak this week or in April and then it's over. Netflix would be expected to then travel sideways to sideways lower for the weeks, months, perhaps a few years forward. If you made a lot of money in NFLX, start implementing your exit strategy. Do not go long NFLX even though it may yet have life to 380-432 (red circle; this is where entering short is wiser). You would be picking up nickels in front of a bulldozer.
Keystone has NFLX on the short watch list but does not own a position now. At 380, it will be tempting to initiate a short position. With the above chart playing out as described, the 400 level and higher will be guaranteed short city. After Netflix tops-out in April, it will trail lower for the foreseeable future (unless a news event extends its life). 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.
NKE takes the pipe on Friday down -6.61%. In the final minutes of trading, the market makers made sure the ominous -6.66% did not print. NKE lost -5.3% last week. Europe is fining the shoe king and at-leisure sportswear provider and its earnings report was not inspiring. Nike's monthly chart is in full negative divergence across all indicators on the last price peak. There is no more gas in the tank. NKE is making a long-term multi-month, that could easily stretch into a multi-year, top right now.
Price is extended above the moving average lines needing a mean reversion. The RSI and stochastics are overbot agreeable to a LT pullback. It is an ugly chart. Neggie d on a long-term monthly basis is an ugly prognosis. If long, sell it. As Nike's slogan says, "Just do it." That's right, sell it, just do it. There is no future in Nike going forward. Keytone deoes not have a position in NKE right now but will look for short plays in Nike as the year plays out. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.
Keystone continues watching WTW with interest. Weight Watchers is losing value rather than pounds. It experienced the big -30% crash to begin the month. Oprah is a major shareholder. She is losing weight from worrying about the drop in the stock price rather than from the actual Weight Watchers program.
WTW catapulted higher when Oprah initially got involved with the stock. She appeared on commercials and the stock caught a buzz and of course most of the ladies worship at Oprah's altar. If she told them to jump off a bridge they would leap from the rail like lemmings. Therefore, it is logical to assume that Oprah will rally the troops again. Keystone previously mentioned this play but has not entered any trade as yet. A sub 19 entry is wanted and it did not materialize.
However, those jumping in quick a couple weeks ago at that time made a quick +8% as price jumped from 19 to 20.5. Then price retraces lower now at 19.38 remaining a hair above 19. You can see these matching lows occurring and the green lines show universal positive divergence. A bounce would be expected, however, that blue descending triangle is ugly. Also the money flow has lost a bit of mojo. This is a tricky call.
On the weekly chart, the money flow slips to a new low. All the other indicators are positively diverged wanting to see price rally for several weeks. The low in the money flow will want to see a jog move occur, up for a week or so, then back down for another matching or lower low for a week or so and that is likely a firm multi-week bottom.
Price needs to show respect to the middle band at 21.06 so a near-term pop may bounce price there. However, that weekly chart wants to chop for a couple weeks or so. Keystone is going to keep watching with interest. WTW is likely a great buy at 17-19. Oprah is probably filming new commercials right now that will appear on television soon to pump the stock higher. It is fun to watch. Keystone wants to buy in the 17-19 range but may wait two weeks regardless when that money flow on the weekly chart will be set up with possie d. 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 Baltic Dry Index, BDI, is navigating choppy waters. It is amazing to see the BDI languish at 695. The BDI is an excellent measure of the health of the global economy. The Baltic is a conglomeration of prices to ship dry goods such as iron ore, steel, cement, coal, powders, tires, recycling materials, grains, etc..., compiled daily.
Raw materials are the key building blocks of a strong global economy. If steel, platinum and palladium demand weaken, the auto sector is likely weakening. Ditto if the rubber and tire industries are slowing. This means less autos and machinery are being sold. Less resins and powders indicates low demand for plastics. Less lumber indicates a slowing housing industry. Less cement means construction projects are slow.
In a healthy economy, the raw materials shipments are increasing and prices climbing higher. Look at that big-time peak in the data, a double-top, or M top, exactly peaking at the October 2007 stock market high and then the second peak is the summer of 2008 just before the stock market began crashing in earnest.
Baltic Dry Index prices remain soft in a multi-decade lower trend indicating that the global economy is not as strong as many tout. Global economies are contracting. The slow demand in raw materials hints that the world muddles through a slow, stagnant, lackluster economy. The shame of it all is that this is what we have after one-decade of obscene Keynesian spending by global central bankers that only served to make the wealthy elite class more filthy rich. Sadly, the faux free markets and crony capitalism financial system are on full display daily. 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.
One of Keystone's important short-term trading signals is the 200 EMA cross on the SPX 60-minute chart now at 2781 with price above at 2800 currently indicating a near-term bull market. The bears tried to create negativity earlier in the month with a failure of the 200 EMA but the bulls quickly recovered.
The SPX collapses to 2800 which is exactly where price gapped-up to a couple weeks ago. The gap is at 2795-2800. Thus, price may simply drop to fill the gap, or, price may collapse back down through the gap creating an island reversal pattern. The SPX sits on an island above 2800 after that gap-up move. S&P futures are down -13 five hours before the opening bell for the US regular Monday trading session. VIX 17.57. European trading is soggy.
President Trump is exonerated on the Russia collusion investigation as was expected. Everyone knew Trump was not colluding with the Ruskies or Putin during the 2016 election; it was simply a political game the Democrat and Republican Tribes play the last two years. The ongoing headache for Trump is that FBI Special Counsel Mueller could not reach a conclusion on the Obstruction of Justice matters.
The DOJ decides on the weekend, after looking at the materials for a day, that Obstruction cases will not be pursued. Congress and the American people will want to know the details of the Obstruction matters but the DOJ will not yet release further information. The president creates further confusion proclaiming he is completely and totally exonerated which is not correct (Trump is completely exonerated from wrongdoing with Russia collusion but not from the Obstruction of Justice issues). Thus, the drama with America's rigged crony capitalism and political systems continues.
Last evening in the States, when US futures opened after the Mueller announcement, futures popped +5 then were up +8 and more. 15 minutes into the open, however, S&P futures were back down to the flat line and slipping. From there, the futures eroded lower and remain lower overnight. Obviously, global traders are not impressed with the Mueller outcome. The Russia collusion conclusion was expected. The confusing Obstruction of Justice matters, however, create ongoing angst. Watch the 200 EMA on the SPX 60-minute at 2781 since it tells you if the bulls or bears will win for the hours and days ahead; currently the bulls are driving the bus. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.
Note Added 9:38 AM EST: A few minutes into trading in the regular Monday session, beginning the new week of trading, the SPX is up 6 points at 2807. Price came down to fill that gap and print a LOD thus far at 2794, still remaining 13 points above the critical 2781. For now, the bulls are relieved, but they know the bears are likely plotting another push lower. The 20-day MA is 2799-2800 so obviously bulls win above 2800 and bears win below 2800.
Note Added 9:49 AM EST: Whoopsies, daisies. The SPX drops 10 points, -0.4%, to 2791 only 10 points from the critical 2781. Markets are nervous assessing the Mueller investigation results and thinking about the ongoing trade wars. Copper is a hair positive supporting equities.
The Keystone Speculator blog logs its 3 millionth view so about 1% of the United States has enjoyed the charts, technical analysis and market commentary thus far. This total does not even include the Keybot the Quant and Keystone the Scribe blog sites. The blogs only continue as per the support received. Thanks to all of you that want the information to continue; you others need to get with the program; any support is welcome. Novice and professional traders, and market followers and enthusiasts, must realize that these are epic and historic times for the global economy and world markets. Stay tuned.
BA has lost -19% of its value off the price top after the two airplane tragedies; Indonesia and Ethiopia, on the verge of a bear market. Apparently, faulty Boeing software during takeoffs and landings and/or lack of pilot training, are causing the mishaps. The tragedies should not be occurring for a brand new 737 airplane that was supposed to basically fly itself. Well, twice it flew itself into the ground.
Off the top, BA drops from 446 to 362, nosediving 84 points, -19%. Using a multiplier of 7 as a rule of thumb for points in the Dow Jones Industrials Index, Boeing has created about 600 down points in the Dirty Thirty this month. BA created about -2.5% of the drop in the Dow Jones Industrials this month all by itself. The Ides of March are not kind to Boeing.
As typically happens in these scandals and problems, emails will likely surface showing that the company executives were aware of the problems but swept the trouble under the rug. Whistleblowers will likely come out of the woodwork humming negative tunes. No one should be surprised. This is standard practice for a crony capitalism system where profits always take precedence over human lives.
Price is in the neighborhood of the 200-day MA at 356 so a kiss would be in order. BA will probably test the 200 and bounce for a few days. However, the weakness for weeks ahead, through the intermediate term, will likely continue. Keystone has no position in BA and will probably not play it. There is likely an opportunity this week for a quickie long say buy mid-week and hold BA for only a few days say into the following week, the first week of April, but you would have to remain nimble. 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.
Last week, the regional banks, KRE, are bludgeoned -10% and now down -23.4% off the top last summer firmly in bear market territory. The XLF, reflective of larger banks, insurance companies and other financial companies, crashes -5%, and is down -14% off its top now in correction territory. Comically, the Wall Street pundits have been hyping the banks for over a year's time; all they did was lose money for anyone that jumped on their rickety bandwagon.
The candlesticks show three down weeks out of the last four with a bigtime collapse to the 200-week MA at 49.24. Price will bounce or die from this level and as the banks go, so goes the stock market. The brown line also shows that this level is strong price support. Bounce or die. ZION is kneeling saying prayers.
The selling volume last week is huge. Many investors said they are done waiting for banks to rally and are cutting bait. The blue lines show downward-sloping channels in play. Price is testing support at the confluence of the blue trend line, the brown price support line and the 200-week. Bounce, or die.
ZION loses -11.2% last week. RF -14%. PNC -8.2%. STI -10%. STT -7.3%. That is carnage. The banksters are wearing bandages around their heads to stop the bleeding from the severe beatings.
The weakness in the banks created much of the weakness in the broad stock market late last week. Keystone does not own any bank trades long or short right now. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.
The banks are puking their guts out blowing two chunks over the last three weeks. Last week, XLF, reflective of large banks, insurance companies and other financial companies, crashes -5% and is now down -14% off its peak in correction territory. KRE, the regional banks, crashes -10% and is down -23.4% off its top now in bear market territory! Comically, the Wall Street pundits have been hyping the banks for over a year's time; all they did was lose money for anyone that jumped on their broken bandwagon.
That red candlestick from last week is an outside reversal. Price made a higher high than the prior week and then ended up closing below the low of that prior week. This portends weakness for the weeks and months ahead, however, sometimes another near-term spurt occurs to log a higher high, say a few weeks out, and then roll over again for the intermediate term (IT). The red lines show how price made a higher high last week but all the indicators negatively diverged showing that the move higher was out of gas, and a smackdown occurs.
The 50-week MA ceiling at 26.46 spanked price lower to the 20-week MA at 25.47. Thus, the 25.47 pivot tells you a lot going forward. The selling volume for the two sell weeks over the last three weeks is large. Many investors said they are done waiting for banks to rally and are cutting bait.
The purple lines show the expansion pattern occurring this year and the blue lines show the expansion pattern, or megaphone pattern, over the last 14 months. If you extrapolate out for later this year into next year, the lower rail of that megaphone is at 17-19. This will likely occur as the US drops into and wallows in economic recession. XLF likely has a lot of sideways chop ahead with an overall slow downward bias. The 22 level is key long-term support. If that fails, look out below. Keystone's 80/20 rule says 8's lead to 2's and 2's lead to 8's, so a failure at 22 will open the door to 18 which jives with the lower target of that IT and LT megaphone.
JPM loses -6.4% last week. CEO Jamie Dimon is crying in his cafe latte. GS -4.7%. BAC is down -7.8% last week so they are keeping the kitchen knives away from Warren Buffett. The Oracle of Omaha sure is great at losing money. C -6.5%. WFC -4.6%. The Wells Fargo stagecoach just ran over Buffett's wingtip. Thump, thump. USB -7.3%. BK -2.7%.
The weakness in the banks created much of the weakness in the broad stock market late last week. Keystone does not own any bank trades long or short right now. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.
