SPX S&P 500 2-Hour Chart

The market drama continues with S&P futures down -15 to begin the week. Futures are 10 handles off the overnight lows. The green lines show where we were fishing for the bottom last week, which occurred with the positive divergence. Price leaps higher and during the final hour of trading on Friday prints matching and higher highs than 4 and 5 candlesticks ago. With the new price high, the stochastics are overbot and in negative divergence. The RSI is neggie d, ditto the histogram and money flow although they are only slightly below the highs a few candlesticks ago. This set up will create a spank down hence the negative futures.

The MACD line is long and strong wanting to see another higher high after any pullback. So 2 or 3 candlesticks (4 to 6 hours say between lunchtime and the closing bell) may need to print before uniform negative divergence prints to guarantee a move lower. If price comes back up to satisfy the long and strong MACD line, say going into lunchtime, and the RSI starts poking higher, then stocks have room to run on the upside. Once neggie d occurs for all the indicators price will receive a firm slap down so focus on the MACD line to see if it rolls over for the bears or if it continues higher forcing the RSI higher sending stocks higher.

The strongest S/R is 2040, 2032, 2019, 2011, 2002, 1998, 1993, 1985-1988, 1978, 1973, 1964-1965, 1951 and 1942. It appears that the SPX may tease around the 1978 and 1973 levels after the opening bell deciding 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.

SPX S&P 500 Support, Resistance (S/R), Moving Averages and Other Important Levels for Trading the Week of 8/31/15

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SPX (S&P 500) support, resistance (S/R), moving averages and other important levels are provided for trading the week of 8/31/15. Levels shown in bold are strong resistance and support. Bold and underlined levels are very strong and important S/R. The SPX all-time intraday high is 2134.72 on 5/20/15 and the SPX all-time closing high is 2130.82 on 5/21/15. The intraday low for this year is 1867.01 on 8/24/15. The closing low for this year is 1867.61 on 8/25/15.

For Monday with the SPX starting at 1989, the bulls need to push above 1993 to send price to 2000+ in quick order. The bears need to push under 1975 to accelerate the downside. A move through 1976-1993 is sideways action to begin the week. S&P futures are donw over -20 points as this is typed on Sunday evening in the States so the bears want to make a run at the lower band.

An elevated VIX, and elevated CPC and CPCE put/call ratio’s forecasted the tradeable market bottom mid-week last week which occurred and stocks may want to head higher (despite the lower futures) until complacency occurs again with the CPC and CPCE printing lower.

Stocks fell like a stone last week then staged a strong recovery. For the bulls, the 1993 needs to be taken out and 1998 will occur quickly then 2002. The SPX parked itself for the weekend just above the 1985-1988 gauntlet of support. If the S&P futures remains weak overnight, 1978 is the first support test, then 1973-1975 then 1964-1965. Price will bounce or die from these levels if they are tested.

August ends today and began at 2104 so the month will print negative. Wall Street analysts have been calling for the SPX to print above 2200 and many say over 2300 this year which is now a 300-handle and more gain needed in only four months. The analysts will likely begin marking their predictions lower but some may let the bullish forecast ride since Fed Chair Yellen may delay the first rate hike into 2016 which would likely rally the stock market. The Fed rate decision is Thursday, 9/17/15 approaching quickly.

Looking at the big picture the strongest S/R is 2061, 2056, 2046, 2040, 2032, 2019, 2011, 2002, 1998, 1993, 1985-1988, 1978, 1973, 1964-1965, 1951, 1942 and 1924-1928.

2135 (5/20/15 All-Time Intraday High: 2134.72)

2133 (7/20/15 Intraday High 2132.82)

2131 (5/21/15 All-Time Closing High: 2130.82)

2130 (6/22/15 Intraday High 2129.87)

2129

2128 (7/20/15 Closing High 2128.28)

2126 (4/27/15 Intraday High: 2125.92)

2124 (6/23/15 closing High: 2124.20)

2123

2121 (4/24/15 Intraday High: 2120.92)

2120 (2/25/15 Intraday High: 2119.59)

2118 (4/24/15 Closing High: 2117.69)

2117 (3/2/15 Closing High: 2117.39)

2114

2110

2109

2108

2107

2105

2104

2103.84 August Begins Here

2103

2102

2100

2099

2097

2094 (12/29/14 Intraday High: 2093.55)

2093

2091 (12/29/14 Closing High: 2090.57)

2089.86 (100-day MA)

2089

2088.51 (20-week MA)

2086

2084.81 (150-day MA; the Slope is a Keystone Cyclical Signal)

2084

2081

2080

2079 (12/5/14 Intraday High: 2079.47)

2076 (11/28/14 Intraday High: 2075.76)

2075.41 (200-day MA)

2075 (12/5/14 Closing High: 2075.37)

2074.53 (50-day MA)

2073 (11/26/14 Closing High: 2072.83)

2072

2071 (11/21/14 Intraday High: 2071.46)

2069

2067

2065

2064.26 (10-month MA; a major market warning signal)

2063

2061

2058.92 (50-week MA)

2058.90 Trading for 2015 Begins Here

2057

2056 (11/18/14 Intraday High: 2056.08)

2053

2052.74 (12-month MA; a Keystone Cyclical Signal) (the cliff)

2050

2049

2046 (11/13/14 Intraday High: 2046.18)

2043.25 (20-day MA)

2042.33 (200 EMA on 60-Minute Chart a Keystone Market Turn Signal)

2041

2040

2038

2034

2032

2030

2024

2023

2021

2019 (9/19/14 Intraday High: 2019.26)

2018

2011 (9/18/14 Closing High: 2011.36) (9/4/14 Intraday High: 2011.17)

2007 (9/5/14 Closing High: 2007.71)

2005 (8/26/14 Intraday High: 2005.04)

2003 (8/29/14 Closing High: 2003.37)

2002

2001

1999

1998

1997

1995

1993.48 Previous Week’s High

1993.48 Friday HOD

1993 (1/15/15 Closing Low: 1992.67)

1992.45 (20-month MA)

1991 (7/24/14 Intraday Top: 1991.39)

1988.87 Friday Close – Monday Starts Here

1988 (7/24/14 Closing High: 1987.98)

1986 (7/3/14 Intraday Top: 1985.59)

1985 (7/3/14 Closing High: 1985.44)

1983

1982

1981 (2/2/15 Intraday Low: 1980.90)

1979

1978

1976

1975.19 Friday LOD

1974

1973

1971

1970

1968 (6/24/14 Intraday Top: 1968.17)

1965

1964

1963 (6/20/14 Closing High: 1962.87)

1962.72 (100-week MA)

1962

1961

1960

1958

1956 (6/9/14 Intraday Top: 1955.55)

1951 (6/9/14 Closing High: 1951.27)

1949

1947

1946

1942

1940

1937

1936

1931

1928

1924 (5/30/14 Intraday Top: 1924.03) (5/13/14 Closing High: 1923.57)

1920

1917

1912

1910

1906

1902 (5/13/14 Intraday Top: 1902.17)

1901

1897 (5/13/14 Closing High: 1897.45) (4/4/14 Intraday Top: 1897.28)

1896

1891 (4/2/14 Closing High: 1890.90)

1889

1886

1885

1884 (3/21/14 Intraday Top: 1883.97) (3/7/14 Intraday Top: 1883.57)

1882

1880

1879

1878 (3/7/14 Closing High: 1878.04)

1877

1874

1873

1872

1871

1868 (8/25/15 Closing Low for 2015: 1867.61)

1867.01 Previous Week’s Low

1867 (8/24/15 Intraday Low for 2015: 1867.01)

1865

1862

1859

1855

1853

INDU Dow Industrials 30-Minute Chart Price Travels Record-Setting Range

Last week is record-setting with the Dow traveling the most points in history. Starting late-day on 8/19/15, the Dow travels about 8000 points referencing the large point move highs and lows. This move represents the Dow moving about one-half of its entire value in only 7 days. We live in interesting times.

During the last week, in five days, the Dow moves about 6000 points, about 40% of its entire value. The Dow Industrials finish higher on the week after the turmoil but remain well under the prior week's higher prices. 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.

AAPL Apple Daily Chart Death Cross

Apple prints a death cross chart pattern with the 50-day MA stabbing down through the 200-day MA. Moving averages are simply a smoothing mechanism for eliminating the daily up and down gyrations in price. The 50-day MA is the average price over the last 50 days and 200 over the last 200 days. Usually, stock prices recover when the death cross occurs since there has already been multi-week weakness as is the case above with a four-day rally off the bottom. However, the death cross does forecast weaker prices in the weeks and months ahead which will occur as long as the death cross remains in place. 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.

UPS Weekly Chart 20/50-Week MA Cross Cyclical Bear Market H&S

Keystone's UPS 20/50-Week MA Cross signal remains in a cyclical bear market pattern. As you recall, Keystone highlighted the top in UPS late last year and as this year began. UPS receives the negative divergence smack down in January (red lines and arrow). The 20/50 MA negative cross was highlighted in May a very negative market warning signal which has come to pass with the mini-crash in the stock market. If the 20-week MA is under the 50-week MA for UPS (since it is a key global shipping bellwether), the broad stock market is in a cyclical bear pattern. If the 20-week MA is above the 50-week MA, then stocks are in a cyclical bull market pattern as had been the case for a very long multi-year period.

Price begins today at 96.63 and as long as price is under the 20 MA at 98.67 the 20 MA will be dragged lower making for happier bears. The bulls want UPS to recover as fast as possible and push the 20 MA back above the 50 MA to prove the long bull market rally can be sustained. For now, and for the last four months, the stock market remains in a cyclical bear market as per Keystone's UPS Indicator above. 

The pink lines show an H&S (head and shoulders) pattern in play with head at 109 and neckline at 93. Note how price bounced from the neck yesterday and did not fail. If 93 fails, then the downside target to satisfy the H&S would be 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.

RUT Russell 2000 Small Caps Daily Chart 150-Day MA Negative Slope Signals Cyclical Bear Market

Keystone has highlighted the 150-day MA slope several times over the last few months as the top for the markets was being sorted out. The red circles show the teases where this critical moving average was about to flatten and roll over to the downside but each time was stick-saved; until now. The blue circle shows a firm negative slope in play now which signals a cyclical bear market ahead. The question is if the bulls can stage a huge rally strong enough to turn the 150-day MA upward again, or not.

Since the 150-day MA is sloping negatively, the Russelll 2000 small caps have slipped into a cyclical bear market. The bulls must push the 150-day MA higher immediately, otherwise, the bears will gain more and more strength day after day. Since the 150 is sloping downward, the cyclical bear should show its face with lower prices for the weeks and months ahead. The long rally is over. Keep an eye on it. 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.

COMPQ Nasdaq Composite Daily Chart 150-Day MA Slope Flattening

Keystone has highlighted the 150-day MA slope several times over the last few months as the top for the markets was being sorted out. The red circles show the teases where this critical moving average was about to flatten and roll over to the downside but each time was stick-saved. Here we are again and the jury is out. If you are bearish the market, you want the slope of the 150-day MA to rollover to the downside and signal a cyclical bear market ahead. If you are bullish, you want a quick rally that will push the 150-day MA higher and maintain the ongoing cyclical bull market. The question is if the bulls can stage a huge rally strong enough to turn the 150-day MA upward again, or not. Keep an eye on it. The SPX, INDU and RUT are all in a cyclical bear market with their respective 150-day MA's currently sloping negatively. 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.

INDU Dow Industrials Daily Chart 150-Day MA Negative Slope Signals Cyclical Bear Market

Keystone has highlighted the 150-day MA slope several times over the last few months as the top for the markets was being sorted out. The red circles show the teases where this critical moving average was about to flatten and roll over to the downside but each time was stick-saved; until now. The blue circle shows a firm negative slope in play now which signals a cyclical bear market ahead. The question is if the bulls can stage a huge rally strong enough to turn the 150-day MA upward again, or not.

Since the 150-day MA is sloping negatively, the Dow Industrials have slipped into a cyclical bear market. The bulls must push the 150-day MA higher immediately, otherwise, the bears will gain more and more strength day after day. Since the 150 is sloping downward, the cyclical bear should show its face with lower prices for the weeks and months ahead. The long rally is over. Keep an eye on it. 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 150-Day MA Negative Slope Signals Cyclical Bear Market

Keystone has highlighted the 150-day MA slope several times over the last few months as the top for the markets was being sorted out. The red circles show the teases where this critical moving average was about to flatten and roll over to the downside but each time was stick-saved; until now. The blue circle shows a firm negative slope in play now which signals a cyclical bear market ahead. The question is if the bulls can stage a huge rally strong enough to turn the 150-day MA upward again, or not.

Since the 150-day MA is sloping negatively, the S&P 500 has slipped into a cyclical bear market. The bulls must push the 150-day MA higher immediately, otherwise, the bears will gain more and more strength day after day. Since the 150 is sloping downward, the cyclical bear should show its face with lower prices for the weeks and months ahead. The long rally is over. Keep an eye on it. 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.

BPSPX S&P 500 Bullish Percent Index Daily Chart

It has been a long time since we had to explore the lower end of this chart. Long-time readers will remember that the 70% level is key as well as the six percentage-point reversals for the BPSPX. The chart has been in a double-whammy sell signal mode for the last three months since the BPSPX reversed six percentage-points off the top and fell under the 70 level. The double-whammy sell signal remains in place through the waterfall drop this week.

The 30% level is important at the bottom of the chart just as the 70% is at the top of the chart. With BPSPX dropping under 30, that indicates steady bearishness in markets and the selling should continue. The BPSPX bottoms in this near term at 22. A six percentage-point reversal would be 28. Thus, the bulls will receive verification that the stock market rally is strong and sustainable if BPSPX rises above 28. If price then rises above 30, a double-whammy buy signal will be in play and the stock market will be marching steadily higher. Market bears simply need to keep the BPSPX under 28 and the selling in equities will continue. The BPSPX is a slightly lagging signal and serves more as a verification of the current trend. For now, the bears remain in control. 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 10:32 AM:  Whoa! The BPSPX explodes higher to 27.40. The bulls are a hair away from receiving a market buy signal. Bears must hold the line here and stop any further gains in the BPSPX. Watch the BPSPX closely today and tomorrow.

Note Added on Friday, 8/28/15, at 10:20 AM EST: Yesterday the BPSPX exploded higher to 30.80 so the bears are told to sit down and the bulls receive a double-whammy buy signal for the stock market going forward. Bears will need to push the BPSPX under 30 to stall the upside. The bulls are driving the bus now with the BPSPX indicator.

SPX S&P 500 Daily Chart

The stock market prints a strong recovery rally yesterday. The central bankers are powerful. Fed's Dudley says "there is no compelling reason to raise rates in September" so stocks catch a bid. A dead cat bounce was needed and the previous 2-hour charts show the bottoming process over the last couple days. The daily chart shows two low price prints the first on Monday the intraday low shown by the long candlestick shadow and Tuesday where price closed at the low shown by the thick red candle (since price moved down all day). The white candle shows the big recovery yesterday up to 1941.

As price prints a matching or lower low (green bar), the only indicator that is positively diverged is stochastics, as well as oversold, so this helps create the bounce in stocks. The other indicators, however, are weak and bleak preferring to see lower lows in price in the days ahead or week or two ahead. Price gapped down daily during the mini-crash event (purple circles) and those gaps may need revisited.

1921 is the -10% correction level off the May all-time top at 2135 so the S&P 500 is no longer in correction territory. Keystone highlighted the high CPC and CPCE put/call ratios that called for a bottom which occurred. The elevated VIX above 50 also showed fear and panic and is always a good time to nibble on longs. Now what?

The central bankers save the day as usual with Dudley sent out to  pump the stock market and he succeeded with his dovish words. Fed Chair Yellen will bring the tablets down from on high on 9/17/15 with the rate decision only three weeks away. That day is a pivot point where stocks are going to move violently higher or violently lower. A full moon occurs tomorrow and stocks are typically bullish, about 65% of the time, moving through the full moon.

New money is typically put to work at the start of a month and September begins on Tuesday. Stocks tend to be buoyant from the last day of the month through the first three or four days of the new month which is next week. August is a down month and when a month is weak like this month it tends to finish up for the last couple days. So the dominoes are lining up for the bulls.

The Labor Day holiday is Monday, 9/7/15, when markets will be closed, and stocks are typically up the two days in front of a three-day holiday weekend (Thursday and Friday next week); more bull-friendly stuff. The Jobs Report is on Friday, 9/4/15, which may influence market direction. It appears that the bulls have the wind at their backs now into Labor Day. Bears would be well served to try and create weakness today if they can since stocks may begin lifting again into the weekend and next week. The bears may growl from 9/8/15, as traders return from holiday, into the Fed decision on 9.17/15. Of course this is all seasonality and historical market mumbo-jumbo, and with high volatility, each day can only be taken one step at a time.

The gaps serve as upside targets. Last week's low is 1971 which is a resistance target where a bounce or die decision would occur. There is strong price resistance and support at 1985-1991, 1978, 1973, 1964, 1951, 1942, 1928 and 1924. Price begins at 1940.51. The expectation is for some further buoyancy in stock prices but in the days ahead at some point price should come back down to the lows again. 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 9:52 AM: The SPX launches higher and tags the 1971 level (last week's low) out of the gate and fills the first gap. Watch the 1971-1973 resistance, if the bulls push up through, then 1978 is next. Bears need to hold the 1971-1973 resistance. Price is at 1966 using the 1964 as support.

Keystone's SPXA150R Indicator

Keystone's SPXA150R Indicator: The neutral range is from 25 to 80.  When the bulls are rallying over time, the indicator moves upwards over 80 indicating that markets are getting into more and more lofty territory, thus, the bearishness increases the higher the indicator moves.  Bearish at 80-85, Strongly Bearish at 85-90 and Uber Bearish at 90+. The 90+ area is typically a fantastic place to short from; you will typically notice euphoric market sentiment. If SPXA150R is over 90 you had better be buying puts, seeking other protection, ditching longs and going short. 

Conversely, when the broad market selling is overdone, and the indicator moves down towards and below 25, the selling is becoming out of hand and a reversal back up is in order.  Bullish at 25-20, Strongly Bullish at 20-15 and Uber Bullish sub 15. The SPX dropped to 12 which is uber bullish so you knew a relief rally was about to occur, and it did. Stocks will receive more oomph with the SPXA150R moving above 25 and higher. 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 Gap Potential Inverted H&S

Since the 2-hour chart has been a focus the last few days as a bottom was developing, we may as well continue that theme. The initial bounce from the positive divergence occurs from the prior chart but remember that the MACD line was looking shaky not exactly convinced the bottom was in. That was Tuesday afternoon then boom, the bottom falls out in price into the closing bell (long red candlestick five candlesticks ago).

When price came down clearly making lower lows as compared to the prior day, the indicators are all possie d, including the MACD line that flatlines and whammo, stocks recover receiving the positive divergence launch fuel (green arrow). The indicators are long and strong pointing to higher highs after any pull back in this 2-hour time frame.The MACD line cross occurs which is bullish.

The brown lines show a potential inverted H&S (head and shoulders pattern) needing a right shoulder at that 1900-ish area. If that occurs, then if price punches up through 1943, with head at 1867, that is 76 handles, so the target for the inverted H&S would be 2019 call it 2020.

The lower standard deviation band was violated so a move back to the middle band, at a minimum, is in play, and look at how fast that line is dropping now at 1958. So price will want to at least touch this line in the 1945-1958 area tomorrow. That juicy gap is at 1964-1971 so that will likely want filled. The 2-hour chart is constructive for further upside. If price pulls back down it may be a move to simply print a right shoulder as the brown bar shows in the right margin. 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.

INDU Dow Industrials Daily Chart Two Years of Gains Disappear in a Few Days

Keystone has described the topping process over the last year for the stock market and the nasty negative divergence and rising wedge pattern that forecasted serious trouble ahead. The collapses from rising wedge patterns can be quite dramatic as the chart above illustrates. The Dow is back to the early 2014 and late 2013 prices from 19 to 22 months ago, may as well call it two years ago. All the gains and euphoric party on the way up since late 2013 are erased. Traders drinking Fed booze each day, smoking BOJ crack and injecting ECB heroin has resulted in the addict lying on the dirty linoleum floor going through withdrawal.

The Dow low this week is 15370. The Dow prints 18351.36 on 5/19/15 when the wine was flowing like water. The loss off the May top to this week's low is 2981 points, almost 3000 points a collapse of -16.2%. This behavior shakes confidence and will chase the retail investor away from the stock market. The wealthy (with large stock portfolio's) raped the system for all it is worth over the last six years making themselves filthy rich courtesy of the Fed's easy money policies. Fed members do the bidding of the large investment banks and elite class in America since once they retire they are rewarded with lucrative speaking gigs for their loyalties to the wealthy class.

Stochastics are oversold and positively diverging. Money flow is positively diverged. So a dead cat bounce should occur but the weak and bleak RSI and MACD point to further lows in the days and weeks 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.

SSEC Shanghai Index Daily Chart Fibonacci Retracements Two-Leg Bear Flag

The SSEC has been falling apart but that may change this evening as the Shanghai is minutes away from beginning trading after the shock and awe stimulus announcement (rate cut and triple R cut).  The blue lines show the Fibonacci retracements and they frame the price pivot points nicely. A base at 2360-ish was chosen as the starting point fo rthe parabolic rise in price and this is the target if the two-leg bear flag pattern plays out; a drop down to 2360 would also represent a 100% Fibonacci retracement (the entire rally move higher from October through June is reversed). For the bear flag, leg one is from 5180 to 3420, 1760 points, then sideways consolidation with a slight lift upward, textbook movement, then leg two begins at 4020 so the downside target for leg two is 2260-ish (pink lines).

Once price lost the 200-day MA now at 3666 and the 62% Fib at 3370-ish, price collapsed. In addition to the 0%, 38%, 50%, 62% and 100% Fibonacci levels, lesser known levels are 23.6% and 76.4%. The 76.4% Fib retracement is 2947 and lo and behold price closes yesterday at 2965 exactly at the 76.4% Fib. Price will bounce or die from here.

The MACD line, histogram and ROC are positively diverged wanting a bounce but the RSI and stochastics want to see price come down once more after a bounce occurs. If price bounces, the upside targets are the 62% Fib at 3370-ish and 200-day MA at 3666. Global traders are anxious to see how the Chinese stocks react to the PBOC money bazooka overnight. 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.

CPC Put/Call Ratio

The CPC up at 1.70 shows rampant panic and fear in the stock market identifying the time for a rally. Right when everyone is wringing their hands and jumping from windows, hopefully first-floor windows, is when markets reverse to the upside. And stocks reversed to the upside this morning rocket launching at the opening bell, however, during the last hour of trading everything fell apart and US equities end the day negative.

The prior market bottoms are shown by the green circles. When the CPC  moves above 1.20 that is when you can nibble on longs and get ready for a rally. The 1.70 is very high panic and fear so a rally would be expected. The selloff late in the day is odd and difficult to explain. Perhaps traders want to see how the Shanghai Index, SSEC, trades tonight.

Stocks should rally until the CPC drops to the red circle area where complacency and lack of fear will rear its head and market topping behavior. Thus, current thinking is that the selloff late day today is a fluke and markets should rally perhaps a repeat of this morning's rally. If the stock market continues to flush lower, the CPC will only spike higher again and continue to set up for a relief rally so there would be no need to exit new longs and instead more longs could be added for the pending rally. Equities should rally until the CPC at least drops under 0.90-1.00 and probably lower. 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 Positive Divergence

The 2-hour chart shows price coming down for another matching low with the indicators positively diverging. The MACD line is flat and at uber low levels where there is really not much further it could drop if it wanted. The chart is constructive for upside ahead, however the next candlestick or two need to print (2 or 3 hours) for a firm verification.

There is a juicy gap at 1965-1972. The 1964 level is very strong resistance. The 1971 was last week's low. The 1951 and 1942 levels are strong resistance. The 1928 level is strong resistance and price is at 1927 right now trying to pierce up through. The 1924, 1920, 1912, 1910 and 1897 levels serve as support. The expectation is for stocks to float higher. Equities are receiving a rally from the uber high readings in the CPC and CPCE put/call ratios and the elevated VIX. 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.

SSYS Stratasys Weekly and Daily Charts Falling Wedges Oversold Positive Divergence

SSYS is a knife-catch long play. The green lines show universal positive divergence across all indicators on both charts. In addition, the indicators are coming off the oversold levels and the falling wedge patterns are also bullish. Comically, the death cross occurs (50-day MA stabbing down through the 200-day MA). Typically, stocks and indexes do bounce when a death cross occurs although for the weeks and months ahead the death cross does forecast weakness which will occur.

Price is extended below the moving averages requiring a mean reversion higher. SSYS may be seeing the light at the end of the tunnel but sometimes that is the oncoming train. Keystone bot it during the opening flush move in markets yesterday morning. SSYS ran higher so the profits were taken as a day trade. Then Keystone reentered in the afternoon and has a long position in place and may take profits or let it ride today.

SSYS is viewed as the best in breed in the 3-D printer space. DDD, VJET and XONE are the other players. DDD is set up the same way as SSYS above. VJET and XONE charts are also similar but SSYS and DDD appear better. Do your own due diligence and look at the fundamentals. Perhaps the 3-D printing space will feel some love going forward after a two-year drubbing. That may be a place to look for long opportunities. 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.

INDU Dow Industrials 5-Minute Chart 1090-Point Drop at 8/24/15 Opening Bell

The Dow Industrials collapse at the opening bell on Monday, 8/24/15, losing 1090 points a record loss. Stocks quickly recover but then languish in the afternoon. In the first 90 minutes of trading, the Dow traveled an astounding 3000 points. 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 in -10% Correction Territory

The S&P 500 joins the Dow (INDU), Nasdaq Composite (COMPQ) and Russell 2000 small caps (RUT) with a -10% or more correction off its peak top. The SPX topped out at 2135 on 5/20/15. There are two other tops that were unable to overcome the May high forming a triple top. A -10% correction is 214 points sending price to the 1921 level. At the 1893 level, the SPX is down -11.3% firmly in correction territory.

As this is typed on Tuesday morning, a huge recovery rally is on tap. The PBOC fired the money bazooka a couple hours ago which will create a recovery. Stocks were already recovering before China's stimulus announcement. The SPX may gain as much as +4% to ditch the correction moniker so traders will be singing "happy days are here again." 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 2-Hour Chart

Intraday stocks are selling off again. On the 2-hour chart above, note that the low this morning came with the indicators at lows although stochastics were oversold and positively diverged creating the bounce to price. Even considering the horizontal green price bar as equal lows for the candlesticks, the chart indicators are positively diverged but not the MACD line. This hints that price wants to come back down and that is what is currently  happening this afternoon. If price prints inside the purple circle a matching or lower low in price see if the indicators are all positively diverged (staying above the green lines in the margin), if so, a more firm bottom will be placed. The high CPC and CPCE put/call ratios and high VIX should kick in where a recovery rally begins. It will be interesting to watch into the close.

Some index longs may be in order if price comes down into the circle. Keystone played the bounce from this mornings low with index ETF's and exited the quickie long trades with profits due to the chart above. Now will consider reentry on the long plays as price comes into the circle. Bought SSYS this morning and cashed in after it popped. It is one to consider as a long trade either short or long term. The charts show possie d and are attractive for a recovery but you have to do your own homework on Stratasys.  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 3:00 PM: The SPX comes down for a lower low in the chart above at 1890 with indicators positively diverged except for the MACD line. The bears still want to squeeze out more weakness. So stocks may rally again due to the possie d indicators but price should come back down until the MACD line can positively diverge. Keystone bot some SSYS for a long position. From 1 to 3 candlesticks are likely needed to place the bottom for the SPX since the MACD line is weak so that is 2 to 6 hours trading time which is the remainder of today and well into Tuesday's session where the bottom should occur for the SPX. The near-term bottom for stocks is likely at the doorstep very very close.

Note Added 3:24 PM: TICK plummets to an uber low at -1100. Keystone bot some long index positions. The 2-hour chart is positively diverged except for the MACD line ditto the 1-hour chart. Stocks may repeat the path from earlier today rallying higher but then retreating lower again say in tomorrow's trade. The TICK machine hit -1340 at 3:22 PM EST. This represents uber negativity (typically when stocks will recover), however, equities remain at the lows languishing with 30 minutes of trading remaining.

Note Added 3:32 PM: The SPX LOD is 1867 so the bears took price below Friday's low at 1871. The SPX is currently at 1881, slapped -4.6%, down 90 points. Price is in the purple circle above with RSI, histogram and stochastics positively diverged wanting a bounce higher in the SPX but the MACD line is weak and bleak and the ROC is flat leaking a hair lower so price may want to come back down after any bounce occurs. The bounce this morning was from 50 to 70 SPX handles off the lows.

Note Added 3:37 PM: Remember, the put/call ratios are at uber highs; Keystone posted the CPC chart on the weekend. Those high put/call ratio's and the high VIX are signaling a near-term bottom in stocks and potentially substantive relief rally.

Note Added 3:47 PM: Big move off the low at 1880 14 minutes ago. SPX pops from 1880 to 1922 a quick 42-handle bounce. Phenomenal trading action. This is why trader's love high volatility; it opens doors to a lot of trading activity and action.

Note Added 3:49 PM:  The SPX is at 1921 exactly at the -10% correction level. The peak top was 2135 so subtracting -10% (214 points) is 1921. Will the S&P 500 close with a -10% correction printing, or, recover and print above 1921 refusing to yield to a -10% market correction? The TICK machine hit +1000 at 3:38 PM which is uber bullish so a quickie retracement in stocks is needed for a few minutes to dissipate the bullishness.

Note Added 4 PM:  Stocks retreat into the closing bell and SPX ends at 1893, down -3.9%, losing 78 points, and in -10% correction territory joining the Dow, Nasdaq and Russell 2000. Rumors that the PBOC will step into Chinese markets tonight helped create the bounce during the last hour. All eyes will begin focusing on Asia and the Asian and Aussie traders are likely receiving less sleep in dealing with the markets like the US traders.

United States Remains Mired in Deflation; A Graphical Representation of Keystone's Inflation-Deflation Indicator

Global commodities have fallen out of bed and the deflation that Keystone has talked about for the last two years worsens week after week. The chart above drops to 1.92 lower than the deflation in 2009 that caused former Fed Chairman Bernanke to begin pumping markets with QE 1. The deflation line has fallen off the bottom of the chart under 2.00!! Many analysts and Wall Street pundits are finally catching up to Keystone and are rethinking the possibility of deflation. America has been solidly in deflation since last Fall.

A look at Keystone's Inflation-Deflation Indicator is informative. Despite the universal consensus touting inflation, the deflation cloud lingers. Europe remains mired in deflation and the question is whether that deflation will be exported to the US this year and this is occurring. According to Keystone's indicator, the US has been in deflation since August 2014 The lower commodity prices create the deflationary affects with the CRB plummeting to five-year lows not seen since 2009. The 10-year yield is down to 2.04%. In early 2009, the Fed saved the stock market with QE1; the beginning of the Keynesian money-printing scheme. This central banker intervention continues globally along with low rate polices and the ongoing Fed ZIRP (zero interest rates) Forever policy.

The inflation versus deflation debate rages on between traders, investors, economists, analysts and all market enthusiasts. Each side highlights anecdotal evidence to prove their case. Inflationists tout high food, energy, oil (energy and oil now lower), insurance and college tuition costs, as well as increasing home prices, while deflationists highlight long-term weakness in commodities (oil and commodities are weaker in recent weeks), lack of wage growth, falling Treasury yields and stagnant house prices to bolster their case. The flat to lower wages is very important. Inflation will not exist without rising wages; this is why you want to watch the wage component in the monthly jobs report the first Friday of each month.  The wage data for the Monthly Jobs Report on 1/9/15 is arguably more important than the actual job number and unemployment rate. Wages are generally remaining flat so inflation remains on a milk carton (missing). Disinflationary and deflationary pressures are developing or occurring around the globe.

In the States, the US economy slipped back into Deflation in August 2014 according to The Keystone Speculator Inflation-Deflation Indicator. During spring and summer time 2014, the inflationists were on a roll. Oil prices were rocketing higher as well as energy costs and everyone took notice of the rising food prices at the super market choosing to eat spam instead of steak. The indicator was above 3.00 in the middle neutral zone where inflationists and deflationists fight it out but the indicator never moved anywhere near inflation at 3.60 and higher.

During July and August 2014, the indicator drops into disinflation playing around between 2.90 and 3.00 due to the falling 10-year Treasury yields down towards 2.30% and lower and the dropping CRB Commodity Index under 290 and lower. Keystone's indicator falls into deflation in August 2014 which always creates a huge gasp of shock and surprise from the 95% or more of investors and traders that universally agree that deflation will never exist and inflation should be arriving any minute (due to the obscene Fed money printing).

Money managers parade across television and computer screens daily 100% guaranteeing that note and bond yields will move higher--and some have been promising that since late 2009. The consensus continues to have the Treasury yield direction wrong and stubbornly remains on the soap box for higher rates since, well, more time has passed and rates have to go up, don't they? That at least is the thinking but remember, there is no one alive now that traded through the Great Depression that can provide insight into this current epic and historic market period that perhaps only occurs at an 80-year-ish cycle period or multi-decades stock cycle period a la a Kondratiev Winter.

The Treasury yields typically move in the same direction as the equity markets since money usually moves from stocks into bonds and from bonds to stocks depending on risk-off, or risk-on, respectively. Higher yields (lower Treasury prices due to low demand) = higher stocks = a move towards inflation. Lower yields (higher Treasury prices due to high demand) = lower stocks = a move towards deflation.

In normal markets, copper and commodities will push and pull markets in the same direction but the central banker money overrules all market fundamentals. Price discovery is lost across all asset classes due to the six years of central banker intervention. No one truly knows what any asset is actually worth anymore. As long as global QE and the Fed's ZIRP Forever policy continues flooding the markets with cash, the stock market floats higher. The big upward move in commodities during spring 2014 is what created the inflation buzz. The CRB Commodity Index went from 275 at the start of the year to nearly 315 at the June peak so this move pushed Keystone's indicator above 3.00. Now the CRB collapses from near 315 to under 200!!! The CRB is at 191.34!! An epic bear market failure.

The economy was in disinflation and deflation for much of 2013 but this did not have a negative effect on the stock market. The Fed's easy money funds dividend and buyback programs to pump stock prices higher nullifying regular expected negative market affects. In addition, the easy money is used to help fund M&A and tax inversion strategies. The free money is making the wealthy super wealthy since they own stocks at the expense of the middle class and poor that are knocking on doors unable to find a job. The Fed has created an elite society in America; the rich are richer and the poor poorer. President Obama is in full agreement with this direction since he appointed Fed Chair Yellen, Queen of the Doves, to the FOMC because she is a Keynesian that prints money to send the stock market higher. The president and republicans and democrats in Congress are all part of the elite class.

The 10-year Treasury note price is used for the denominator of The Keystone Speculator Inflation-Deflation Indicator. The 10-year Treasury price is 99.6 with a yield at 2.04%. The 10-year yield was over 3.00% to begin 2014, almost 100 basis points higher. The CRB Commodity Index is 191.34. Taking a look at the numbers;

CRB/10-Year Price = 191.34/99.6 = 1.92

Over 4.40 = Hyperinflation
Between 3.60 and 4.40 = Inflation
Between 3.00 and 3.60 = Neutral; Inflationists and Deflationists Battle
Between 2.9 and 3.00 = Disinflation
Under 2.90 = Deflation

The last time that rampant inflation existed in the US was from 2006 into 2008 as the stock market peaked out (see chart). During the Fall 2008 market crash into early 2009, commodities collapsed and investors ran to the perceived safety of US Treasuries driving yields lower. The pundits pound the table currently that low oil and commodity prices lead to great things ahead but it did not work out that way in 2008-2009. Instead, lower commodity prices was a harbinger of deflation and a stock market crash.

Keystone's Inflation-Deflation Indicator collapsed into deflation in early 2009. Former Fed Chairman Ben Bernanke is labeled as a 'student of the Great Depression' and his main takeaway is that the Fed did not provide enough stimulus quickly enough to prevent the depressionary malaise that developed through the 1930's. Therefore, Bernanke fired the huge QE1 money bazooka in March 2009 to save the country (in his opinion) from a deflationary spiral. As the chart shows, the quantitative easing programs did work sending the indicator up into the neutral zone headed towards inflation. Bernanke must have been proud with his chest puffed as he signed autographs. However, the US budget crisis and other economic softness created more concern in 2011 which led to the August 2011 stock market waterfall crash. 

In May 2011, the indicator was above 3.60-3.70 signaling the existence of inflation but it was very brief. If you blinked you missed it. The indicator peaked out in 2011 and quickly retreated (inflation was very noticeable but it did not have staying power) as the stock market collapsed. The Fed has received a lot of heat over the last few years for remaining worried about disinflation and deflation but the chart clearly shows the Fed is correct to worry. The only thing the Fed has been correct about is its concern over disinflation and deflation. The FOMC is likely monitoring a similar technical presentation as explained in this article which definitely shows the United States mired in deflation with inflation nowhere in play despite the Fed's obscene Keynesian spending for over six years.

Since the 2011 peak, the indicator has moved steadily lower from above 3.60 down to 1.92 (from neutral down through disinflation into deflation). The indicator signals deflation from August 2013 until January 2014 and from August 2014 to present.

Chairman Bernanke announced QE1, QE2 and Operation Twist to stop the free-fall into a deflationary spiral from 2009-2012. In late 2012, the Fed threw the kitchen sink at the markets with the promise of QE3 Infinity, timed with the ECB's OMT Bond-Buying program, and also QE4 Infinity and Beyond (which replaced Operation Twist with outright purchases), when the stock markets were already somewhat elevated (the QE3 and QE4 pumps are now simply referred to as the QE3 Infinity program). This orgy of Fed quantitative easing, along with the BOJ bludgeoning the yen (sending dollar/yen currency pair and Japanese and US stocks higher), creates the bullish equity markets all through 2013 and into the September 2014 stock market top.  In addition, China, the BOE and ECB are all pumping the markets with easy money as well.

The current 1.92 reading is the lowest since 2009 and the line is falling off the chart; the deflation is uber serious sending a shiver down every Wall Street spine that a Great Depression redux definitely remains on the table (despite over six years of obscene Fed Keynesian money printing). Folks continue to tighten their spending to stretch family budgets. Purchases are delayed since store discounts are increasing and the item will be cheaper in a couple weeks (a hallmark sign of deflation). A cash society is growing in the US since common folks can avoid paying government taxes. This behavior drove Greece into the toilet where that financially troubled nation continues to float. The wealthy, made wealthier by the Fed with obscene stock market gains are spending their winnings on luxury goods, high-priced real estate (creating a house price bubble), art, vintage cars and collectibles (all are asset bubbles). The central bankers threw the kitchen sink at markets over the last two years but the US continues to slip-slide into deflation anyway. Deflation is a powerful force and perhaps it needs to extract its pound of flesh. Deflation was cheated and not permitted to play out in March 2009 when Bernanke stepped in with QE1.

An over leveraged economy like 2006-2008 needs to result in failures so the slate can be cleared as capitalism dictates. Free markets and capitalism are dead in America since the government now saves companies from failure; especially the corrupt banksters that are in bed with the politicians. Society, especially the elite class, does not want to experience the negativity and pain associated with the cleansing side of capitalism. People only want to experience the happy side of capitalism (when stocks go up). So the Fed tries to paper over the problems using time to its advantage but as time goes on, the chart above says the Fed's grand experiment is failing.

The lackluster action in the Baltic Dry Index (BDI) and shippers indicate a global slowdown is ongoing (although the Baltic has bounced over the last couple months). Ditto the drop in commodities and weak copper. It is interesting to watch the power of the central bankers as they pump equity markets higher but without the global economy kicking into gear it will be all for naught. The debt created will only end with a more drastic fall from grace than late 2008 early 2009 since a healthy market bottom was never allowed to occur in 2009 (free markets were destroyed as the bad side of capitalism was not allowed to take place to clear the markets properly in early 2009). America is now left with a pseudo-fee market and semi-capitalism system. The United States is not a free country; it is simply more free than most other countries.

The pundits and analysts that say Inflation and even hyperinflation are at the doorstep are premature. Inflation and even hyperinfation is definitely expected in the years ahead but it may be years away still yet. Keystone is thinking that inflation will occur in sync with the 18-year stock cycle of 1964 (bear), 1982 (bull), 2000 (bear), and 2018 (bull). So the thought is that inflation and hyperinflation are perhaps two to four years away. Even if the 18-year stock cycle left translates a couple years, that would be 2016 still many months and a year or two away before rates would rise substantially.

The expectation remains that Treasury yields should move sideways and even leak lower for the next year or three. The 18-year bear stock market cycle should raise its ugly head moving forward for the last three years of its cycle (now through 2018). Judging from history, it would not be surprising to see the stock market down say 3 of the next 4 years to finish the 18-year secular stock market cycle.

Deflation is nasty and will surely affect everyone's lives. Since prices drop precipitously in deflation, consumers do not spend money since next week the price will be even cheaper. This economic behavior leads to a stagnant and very sick economy with businesses closing doors due to the lack of demand. Companies are hanging on currently with skeleton work forces hoping for business to pick up. A downward deflationary spiral occurs since companies fire workers that are no longer needed due to falling product demand; now these people without jobs cannot buy products. Europe is on the verge of falling into a deflationary funk a la Japan's lost two decades. Long-time readers of Keystone's missives fully anticipated and expected the current global deflation despite the consensus saying that deflation would not occur.

The structural unemployment problem remains in the U.S. and the current stagnant wage growth (wage deflation) reinforces an ongoing deflationary and disinflationary theme. Technology, computers and the Internet are huge deflationary machines. Robots continue to replace human's on the job. The GOOGL driverless vehicle technology already has trucks operating on the road in California for several months and only one accident has occurred--and that was comically a human driver that hit the driverless vehicle. Just think of the impact to the trucking industry. Trucks could transport goods driverless allowing companies to drop-kick more workers across the parking lot. The pattern of 'more tech--less human's' will continue.

The structural unemployment problem will continue in the US for years and perhaps decades forward. The unemployed and underemployed create a burden on the economy over time. The wealthy on Wall Street, in bed with the Fed, made themselves wealthier taking advantage of the 2008-2009 crash while the middle class and poor (that do not own stocks) were thrown under the bus.

Companies are meeting EPS (earnings-per-share) by laying off workers and squeezing more production out of existing workers (as evidenced by flat to lower top line revenues for companies across all sectors for the last couple years!). These deflationary signals are ignored in the media. At some point, everyone will have to utter the 'D' word, deflation, and show respect to the 900-pound gorilla sitting on the living room sofa.

Watch Keystone's formula above, you can crunch the numbers to check on the indicator every few days. It was shocking to see equity markets print new record highs in recent months against a disinflationary and deflationary back drop. This behavior can only be chalked up to the amazing power of the central banker money-printing.

Inflation is not in sight despite the inflation-deflation indicator moving a touch above 3.00 in early 2014 due to rising food and beef costs. Corn and wheat prices have plummeted back to earth. Crops are producing yields at record highs this year so the food inflation will continue subsiding. The cheaper grain prices will bring down the cost of beef especially as herds increase after the culling due to drought one and one-half year ago. Stagnant wages in America will prevent inflation from occurring. When wages rise, that will tell you inflation is coming fast and Treasury yields will then rise strongly. As long as wages remain flat or lower, inflation will not exist. Think back to the last period of rampant inflation in 2006-2008; you were likely enjoying happy raises at work, right? And probably not so much from 2009 to present? Correct? Food price increases tend to be seasonal and weather-related and work through the system over time as is occurring now with corn and wheat prices falling. Fewer folks are complaining about high food prices anymore except for eggs due to the bird flu epidemic.

What does all the above wind-bag mumbo-jumbo say in a nutshell? The current answer to the ongoing inflation-deflation debate, is, Deflation; as much as everyone tries to fight it. After nearly six years of obscene Fed and other central banker money-printing, the United States economy remains mired in deflation proving that Bernanke's grand Keynesian experiment, blessed and implemented by Fed Chair's Greenspan and now controlled by Chair Yellen, as well as dovish Fed members such as Evans, may be tragically failing. Prepare yourself and your family by raising as much personal cash as possible and paying off debt. Avoid taking on new debt. Cash is king in deflation. History may repeat. The bums standing on a street corner holding a tin cup in the 1930's would ask a passerby, "hey buddy, can you spare a dime?"

Note Added Friday, 8/28/15:  Notable economist Marty Feldstein proclaims that deflation is not a problem dismissing that it every posed any real threat. Feldstein says a deflationary outcome is "certainly not true now." Feldstein reflects the majority consensus of market participants with no one wanting to mention the troubling "D" word.