Monday, December 31, 2018

SPX S&P 500 2-Hour Chart; Negative Divergence Developing

The CPC and CPCE put/call ratio charts were posted on the weekend. Scroll back to take a look. Both put/calls are uber low signaling rampant complacency, thus, a near-term stock market top is at hand anytime forward. The idea is to look for this near-term top with the 2-hour chart.

Right away, you see that long and strong MACD line so you know that the SPX price will likely want to come back up again for another higher high. The stochastics are both overbot and negatively diverged so they are cooked and prefer to see the SPX sell off. Ditto the histogram. The money flow is like the MACD line, long and strong. The jury is out for the RSI but it appears that it may want to sneak higher. Thus, the SPX is likely 2 to 4 candlesticks away from topping out (when the MACD line, money flow and RSI are neggie d). That would be 4 to 8 hours which is Wednesday. US markets are closed tomorrow for New Year's Day.

Price has ventured higher above the middle band so the SPX may seek that upper band at 2544 (purple box). This would provide time for the MACD, money flow and RSI to top out and form neggie d. It does not appear that the SPX 2-hour chart is ready to give up the ghost just yet. Keep watching for when all the indicators are neggie d and then short this near-term top hard. The complacency says the move down may be sharp.

Utilities remain buoyant which provides support for the stock market. If UTIL loses the 709 level, now at 713, there will be mayhem and trouble. Bulls need the utes to remain happy and for copper to rally. Copper was higher overnight into today's early trading but then rolled over negative.

Stay focused on that MACD line on the SPX 2-hour chart. When the SPX prints a new candlestick high and the MACD line then slopes negatively, neggie d, the near-term top is in. 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.

'Tis the Season

Do not forget the disadvantaged as the cold winter winds howl each day. Now is a great time to go through your closets and get rid of those old winter coats that you never wear anymore as well as hats, scarfs and gloves. Donate them to the local thrift store in your area; preferably the stores ran by volunteers since they are more focused on helping the needy directly in the nearby communities rather than the bigger commercialized thrift stores that are busy shoving money in their pockets. Disadvantaged kids will appreciate a new coat that they can buy for a dollar or two that will keep them warm at the bus stop.

While you are at it, clean out the pantry and get rid of all those cans of vegetables and fruit that you never plan on eating. Throw in a few cans of things you like as well since you can go buy more for yourself. Drop that bag off at the local food bank. The poor, disadvantaged and lower middle class will appreciate it. Typically, you should be able to drop off the winter coats, clothes and canned goods all at the local thrift store in your area, if not, the blue-haired gal's there will be glad to provide you with information.

At the thrift store that Keystone helps out, all the folks volunteer their time. We have long tables that stretch about 33 feet (10 m) where bread, buns, muffins and baby food from the food bank are stacked 3 feet (1 m) high free to those in need. Within two days, it is all gone and we have to restock. There are many hard-working families that appreciate the help.

Happy New Year to all and Good Luck in 2019.

Keystone's Inflation Deflation Indicator; America Remains Mired in Deflation; Inflation is Godot

by KE Stone

On the last day, and trading day, of 2018, the Keystone Speculator Inflation-Deflation Indicator is way down to 1.65 signaling that the United States remains mired in deflation. We live in special times. The ongoing deflationary quagmire (America has been in deflation for 8 of the last 10 years) since the financial crisis should correspond to depressed and falling stock market prices but this has not occurred until the crash in equities in Q4 2018.

As 2019 begins, stocks are now falling for three consecutive months; October, November, December. This December is the worst monthly performance for the US stock market since 1931. This year is the poorest stock market performance in a decade.

The power of the Federal Reserve and other global central bankers (ECB, BOJ, BOE, PBOC, etc...) and their Keynesian money-printing is astounding. The central banker printing presses have created a one-decade long stock market rally (March 2009 to present), the second longest in history, rewarding the wealthy that own large stock portfolios. Common folks, however, have not benefited from the central banker largess. The middle class, now a lower middle class, and the disadvantaged and poor are p*ssed on by trickle-down economics. One-half of Americans do not own one single share of stock.

There is an ongoing battle between goods inflation/deflation and services inflation/deflation. Generally, the goods and services should track in relatively the same direction but something special has been occurring the last few years. The central bankers have destroyed all price discovery in markets due to their Keynesian intervention. Global markets are twisted into knots; no one truly knows the correct price for anything anymore.

The chart above is weighted for the goods-oriented inflation/deflation since the CRB commodities index is used in the numerator of the ratio. The internet, technology and computers are huge deflationary machines eliminating jobs and continuing to lower prices. Electronics and products such as smartphones turn into commodities and are cheaper each passing year. Corn and wheat crops are at bumper yields. The world is awash in oil maintaining a lid on fuel prices.

On the services side, however, prices are flat after maintaining buoyancy the last couple years. Recently, services prices may be showing signs of rolling over. Those of you paying college tuition bills see prices rise each year. Heath insurance (ACA; Obamacare) and medical costs are out of control. Prescription drugs are expensive; many Americans over 50 years old take a palm-full of pills each day. Utility bills consistently sneak higher. Haircuts cost more each year. Home prices continue rising creating the inflationary vibe. These services prices that create that slight inflationary vibe are likely moderating going forward.

Another reason that market participants may think they see inflation is that the well-paid talking heads on television tout the higher services costs all the time. The reason the pundits tout inflation is because they are the ones living in the expensive homes, taking the prescriptions drugs daily, paying the high costs of insurances and saving money to pay high tuition costs for their children. Most market participants are making money and doing well in their careers so they are predisposed to believe inflation is occurring because of the costs they see in their higher-class daily lives. However, they must realize they are fortunate enjoying a higher standard of living than most other common folks across the United States.

The lower middle class, disadvantaged and poor folks instead see deflation. Generalizing, common folks of modest means live in run-down houses or apartments, many do not have health or other insurances and they have no hope in seeing their children go to college. They do not see the services inflation that the upper middle class and wealthy tout.

The services components in inflation create the vibe that inflation exists in the economy when in reality it does not. The expectation is that the US and the world will enter a recession at some point forward and the slight services inflation would be expected to roll over to the downside to join the goods deflation sitting in the basement. When the recession hits, people lose jobs, they do not spend money, prices drop. Customers begin delaying services that they routinely used before the recession. Once you lose your job, your whole life will change. Subscription services will be cancelled as people lose jobs in the coming recession.

Inflation proponents need the chart above to start ramping higher to prove their thesis correct, however, that appears a tough row to hoe. It is less likely that goods inflation will all of a sudden begin moving strongly higher to join services rather than services dropping lower to join goods, especially with a recession on the come.

The US may remain mired in deflation for a couple more years but sure as night follows day and day night, inflation will arrive again. The last time that a notable whiff of inflation existed was back in early 2011 now six years in the rear view mirror. You will know inflation when it arrives since every day all day long, coworkers, family members and strangers will complain to each other about prices of everything including milk, gasoline, food, services, utility bills, etc....; this is not happening right now.

After the chart moves higher in the months and years ahead, the velocity of money will kick in and the money sitting idle at banks will be put to work. A multiplier effect will accelerate business activity and inflation will leap higher and then the country will likely shoot up into hyperinflation say in the 2020-2025 time frame. That will be a different problem and a future troubled bridge to cross. For now, deflation remains in charge.

Keystone’s Inflation-Deflation Indicator chart shows the markets and economy remaining mired in deflation. The majority consensus on Wall Street continue to tout inflationary forces ahead. After all, the Fed did hike rates in 2018. Money managers cheer inflation since they all are heavily invested in the banks hoping for higher rates and a steeper yield curve. The Federal Reserve has called the current lack of inflation "transitory" although humorously, the so-called transitory disinflation/deflation is now running strong for months and years. Bernanke and Yellen each said deflation is transitory (comically, however, they would never say how long 'transitory' is).

Inflation is Godot. Inflation has been pictured on a milk carton for the last few years (missing). Deflation rules the roost. The chart shows that more up in yields, and higher commodity prices, are needed for the indicator to move higher towards inflation and neither are cooperating.

Keystone's Inflation-Deflation Indicator remains in DEFLATION at 1.65 the lowest since both the 2015 low and the low during the 2008-2009 financial crisis. The Keystone Speculator Inflation-Deflation Indicator remains mired in the deflation region and the low number is actually extremely problematic and worrisome.

The 10-year Treasury note price is used for the denominator (bottom number) of The Keystone Speculator Inflation-Deflation Indicator. The 10-year Treasury price is 103.50 (103 16/32) with a yield at 2.72%. Commodities are in the numerator (top number). The CRB Commodity Index is 170.97. Calculating Keystone's ratio;

The Keystone Speculator Inflation Deflation Indicator

CRB/10-Year Price = 170.97/103.50 = 1.65

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

Despite all the hoopla and trumpets blaring that inflation has arrived, the economy and markets instead remain mired deep in deflation. As the above discussion highlights, commodities and goods are in serious deflation while the services components may now be rolling over into deflation. When the recession hits, housing prices will fall. Services (fees and costs charged to the consumer) will likely trend lower with deflationary behavior to attract a decreasing number of interested users and buyers.

The main reason for the lack of inflation and ongoing persistent deflation is the lack of wage growth. Inflation cannot exist without wage inflation (watch the Friday Monthly Jobs Report to see if any wage inflation occurs) and wage inflation is not occurring. Wage inflation is growing annually at about +3% a paltry amount. When is the last time you had a substantive raise?

The Federal Reserve needs to see the annual wage growth at +4.0% to +4.5% to be comfortable knowing that inflation has taken hold and will be sustainable going forward but this is a dirty little secret they will not discuss in publicPowell performed cartwheels of joy in the hallway of the Eccles Building when wages cracked the +3% annual level but in his heart of hearts he knows wages must inflate far higher to sustain ongoing overall inflation. If the 3%-handle reverts back to a 2%-handle, Powell will be crying in his cafe latte.

The United States remains in a deflationary funk since August 2014 a solid 4-1/2 years. Think back to the summer of 2008 if you want to relive the feeling of rising inflation. Rising prices were a common daily complaint at office water coolers, supermarkets and dentist offices back in 2008; not now. When inflation occurs, you will feel it and you will hear about it from family, friends and coworkers. You will be complaining about the huge cost increases for everything. This vibe is not occurring. There is no inflation currently; only deflation. Inflation is Godot.

There is a whiff of services inflation occurring as mentioned at the top of this article. The bulk of this is due to rising medical insurance (Affordable Care Act; ACA; Obamacare) and prescription costs, increasing college tuition and rising accounting, attorney and professional service fees. Home prices have also been inflationary but have been peaking and topping off lately perhaps ready to subside. Lower house prices would dampen inflation expectations and serve to keep the chart in the disinflation and deflation camp.

The world is awash in oil but the OPEC and non-OPEC nations succeeded in colluding to limit production to artificially drive prices higher in 2017 into early 2018. That was fine for a while but in late 2018 oil prices crash -40%. The move up in oil provided a tiny whiff of inflation forces in late 2017 and early 2018, but the drastic -40% crash in oil from September 2018 to present pushes Keystone's ratio down to 1.65 proving that America is mired in deflation; perhaps only a hair from a tragic deflationary spiral that sunk the United States after the 1929 crash and during the 1930's Great Depression.

All that oil sloshing around is oversupply and deflationary.  Commodities remain very subdued in price. A large increase in commodity buying and shipping is needed to prove that inflation is on the rise and that is not occurring. The BDI (Baltic Dry Index) remains subdued.

The retail bankruptcies and store closures increase. The US is grossly overstored by a factor of 3 to 1 compared to other Western nations. The retail carnage is disinflationary since racks of clothes and other products will be sold pennies on the dollar to liquidate inventories. A recession would exacerbate this activity. Sears and Kmart stores are closing; inventories are being liquidated.

There is no demand in this sick stagnant economy that is only pumped-up by fits and starts of central banker monetary policy and/or government fiscal stimulus. Deflation is identified by consumer behavior that wants to wait for the future to buy something since they believe the item will be cheaper. Of course companies cannot maintain staff waiting for your cheap butt to buy something, so they have to lay off more workers which further exacerbates the recession and deflationary scenario. Prices drop lower and customers are only encouraged to keep waiting before buying anything since they now expect prices to drop even lower. This, folks, is a tragic deflationary spiral. It be very, very bad. Great Depression bad.

recession is long overdue. A recession will usher in deflationary behavior and is likely coming far faster than anyone realizes. Treasury yields will fall as investors seek safety in notes and bonds (price up yields down). This will surprise the consensus on wall Street that is guaranteeing higher Treasury yields going forward. Keystone’s indicator will then drop as the price in the denominator moves higher although the indicator probably does not have much further to drop. Likewise, demand for commodities decreases in a recession so the CRB index drops and a lower numerator in the indicator will send the ratio number lower as well; a 170-handle on the CRB is an extremely low and deflationary number already.

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, TSLA and other major automaker's driverless vehicle technology already has trucks operating on the road in California and other states and auto manufacturers are pouring billions into this technology that will eliminate more jobs over time. Driverless vehicles will greatly impact the trucking industry. Trucks could transport goods without the need for drivers allowing companies to drop-kick more workers across the parking lot (in actuality, there is a truck driver shortage so companies will simply be relieved that can meet their shipping demands using driverless trucks). The pattern of 'more tech--less human's' will continue. Fast-food restaurants, such as Mickey D's, are introducing kiosks that eliminate more jobs. Automation and technology is deflation.

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, make themselves filthy rich by taking advantage of the 2008-2009 crash (easy money pumps the stock market higher) while the middle class and poor (that do not own stocks) are thrown under the bus over the last decade. The Fed members perform the bidding of the investment banks since they are rewarded with lucrative speaking gigs after they leave public office; a quid pro quo for their loyalty in maintaining easy-money conditions that send stock prices higher and benefit the elite class.

It is disgusting watching the privileged wealthy class take advantage of the rigged crony capitalism system raping America for all its worth starting with sending middle class jobs overseas in the 1970's and 1980's. The greedy politicians and corporate executives kept eliminating middle class jobs in favor of slave labor overseas. The lower expenses drive up stock prices making all of them filthy rich over the last few decades. The wealthy class, about 20 million strong, spit on the other 300 million Americans over the last five decades. The best part is that the elite class makes millions off the rigged system they control then they turn around and complain to America that they pay the bulk of the taxes. You have to love the pseudo free market crony capitalism system. Capitalism does not exist because transparency does not exist.

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). Instead of creating jobs and buying equipment with the central banker easy money, companies use the dough for stock repurchase programs (buybacks) that artificially pump stock prices higher. Yes, they are greedy b*stards only concerned about increasing their own wealth.

Watch Keystone's formula above; you can crunch the numbers to check the indicator every few weeks. It was shocking to see equity markets print new record highs against a disinflationary and deflationary back drop but now markets are starting to make more sense. The current market behavior is unprecedented; perhaps a 1930's redux.

The amazing power of the central banker money-printing is God-like. The central bankers are the market. They are modern day money Gods in charge of the Temple. Kneel before their Power and Majesty. The Fed may back off on further rate hikes (dovish) and the PBOC (China's central bank) keeps stepping up its plans to provide stimulus in Q1 to goose China's economy and markets (which will also boost the global markets). The central bankers are the market. The are sick, one-trick ponies. They will print money until the whole system collapses.

The Brexit stock market crash in late June 2016 was stopped by the BOE promising easy money. The PBOC keeps pumping China’s economy and markets. The Fed has remained accommodative with low rates despite the tiny rate hike path over the last couple years. The BOJ keeps implementing stimulus programs. The ECB is supposed to end its QE program today and perhaps raise rates starting summer 2019. Pause for laughter.

The central bankers create the all-time record highs in the global stock markets. The world is awash in central banker liquidity and all that money sloshing around has to go somewhere so it pumps-up all asset classes. The wealthy dance with glee as stock, bond, art, vineyard, real estate, collectibles and classic car prices leap higher on easy money. The wealthy light expensive cigars and dab the ashes onto the faces of the once-middle-class. America is in a new Gilded Age a la the 1920's. The divide between rich and poor is the widest in 50 years. A nasty, and likely violent, class war is likely on tap for America in the months and year or two ahead likely triggered by the recession.

Inflation is not in sight currently. The inflation-deflation indicator moving a touch above 3.00 in early 2014 was due to rising food and beef costs. Corn and wheat prices have plummeted back to earth. Crops are producing yields at record highs so prices remain subdued. The cheaper grain prices will bring down the cost of beef especially as herds increase after the culling due to drought four years 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. Focus on the wage data in the monthly jobs reports.

Think back to the last period of rampant sustainable inflation in 2006-2008; you were likely enjoying happy raises at work each year, right? And probably not so much from 2009 to present? Correct? In fact, it feels like you are working for the same amount of money for the last 10 years.

All this windbag mumbo-jumbo aside, what does the above say in a nutshell? The current answer to the ongoing inflation-deflation debate is DEFLATION as much as everyone tries to ignore it and say that inflation is here to stay. After a decade 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 Greenspan, and then pursued by former Fed Chair Yellen, and now further implemented by Chairman Powell, as well as dovish Fed members such as Evans, may be tragically failing.

It is prudent to 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. Show respect to holding cash.

Many analysts argue against the overall ongoing global deflation hypothesis saying the view on services inflation versus goods inflation must be explored in more detail. Granted, services are experiencing some inflationary effects while goods are in a strong deflationary trend. The very minor whiff of services inflation will likely roll over lower as the US slips into recession in the months ahead.

All of you inflation enthusiasts do not fear, however, inflation will arrive soon perhaps in the 2020 time frame and then hyperinflation in 2021 and beyond. That will be a whole new set of problems, that is if we survive this ongoing bout with deflation. Pray that it does not develop into a deflationary spiral a la the Great Depression.If we manage to avoid the deflationary spiral, in a couple years rampant inflation will develop as the velocity of money ramps higher. This will then lead to out-of-control inflation, hyperinflation, in the 2020's decade. There is nothing but minefields ahead of us.

In a nutshell, the United States remains currently mired in DEFLATION as it has been 8 of the last 10 years since the 2008-2009 financial crisis. Inflation is Godot.

Sunday, December 30, 2018

2019 Market Predictions Template

Here is a template for anyone interested in recording your own predictions for 2019. The task is useful in developing your long-term forecasting ability and of course may provide comic relief come December 2019. It is very difficult to forecast markets and the economy 12 months in advance which is all part of the fun.

The Keystone Speculator was the top forecaster on Wall Street in 2018 predicting SPX 2440 for the end-of-year and price is currently at 2485 with tomorrow the last day of trading in 2018. Not too shabby especially considering that the majority of Wall Street, traders, investors, analysts, strategists and money managers were calling for the S&P 500 to be above 2900 and 3000 right now (humorously, the Einstein pundits only missed their SPX targets by 500 or 600 points).

Comically, Ma and Pa investors look to the same pundits for advice when none of them predicted the stock market top this year. Keystone accurately forecasted both the January 2018 and late September 2018 stock market tops using negative divergence techniques on the weekly and monthly charts. Some analysts predicted SPX 3100, 3200 and higher for 2018 which are now a world away. Most of the analysts are now saying they were too early and are simply extending their same SPX 2900, 3000 and higher targets from 2018 into 2019. That’s convenient for them.

Fill out the template below and wager a friend to see who has bragging rights as the most accurate forecaster at the end of next year. Revise the list adding or deleting other parameters of interest. Closing Prices are for end of year next year 12/31/19. The Price Range is the high and low during 2019.

Keystone will assess the successes and failures on the 2018 Predictions over the coming days and also post his 2019 Predictions in the days ahead. All the ticker symbols below can be typed into to view the charts.

2019 Broad Market Predictions
SPX High for 2019:
SPX Closing Price for 2019:
SPX Low for 2019:
Dollar Range ($USD):  
Dollar Closing Price ($USD):
Dollar/Yen Range (USD/JPY):
Dollar/Yen Closing Price (USD/JPY):
Euro Range ($XEU):
Euro Closing Price ($XEU):       
2-Year Note Yield Range ($UST2Y):
2-Year Note Closing Yield ($UST2Y):  
10-Year Note Yield Range ($TNX):
10-Year Note Closing Yield ($TNX):  
2-10 Spread at End of Year:
30-Year Note Yield Range ($TYX):
30-Year Note Closing Yield ($TYX):  
Will Yield Curve Invert for the 2-10 Spread?
Unemployment Rate % Range: 
Unemployment Rate % December 2019:
GDP Average for 2019: 
WTIC Oil Range ($WTIC):
WTIC Oil Closing Price ($WTIC):
Brent Oil Range:
Brent Oil Closing Price:
Natty Gas Range ($NATGAS):
Natty Gas Closing Price ($NATGAS):
Gold Range ($GOLD): 
Gold Closing Price ($GOLD): 
Silver Range ($SILVER): 
Silver Closing Price ($SILVER): 
Copper Range ($COPPER):
Copper Closing Price ($COPPER): 
Commodities Range ($CRB): 
Commodities Closing Price ($CRB):  
China Growth Rate % Average for 2019:

2019 Sector Predictions
Financials (XLF or KRE) Higher or Lower in 2019?
Technology (XLK) Higher or Lower in 2019?
Semiconductors (SOX, SMH or XSD) Higher or Lower in 2019?
Communications (XLC) Higher or Lower in 2019?
Airlines (XAL) Higher or Lower in 2019?
Energy (XLE or XOP) Higher or Lower in 2019?
Industrials (XLI) Higher or Lower in 2019?
Materials (XLB) Higher or Lower in 2019?
Transportation (TRAN or IYT) Higher or Lower in 2019?
Retail (XRT or RTH) Higher or Lower in 2019?
Consumer Staples (XLP) Higher or Lower in 2019?
Consumer Discretionary (XLY) Higher or Lower in 2019?
Homebuilders (XHB) Higher or Lower in 2019?
Home Construction (ITB) Higher or Lower in 2019?
Health Care (XLV) Higher or Lower in 2019?
Biotech (IBB or XBI) Higher or Lower in 2019?
Real Estate (XLRE) Higher or Lower in 2019?
Utilities (UTIL or XLU) Higher or Lower in 2019?
Telecom (VOX) Higher or Lower in 2019?

2019 Predictions for the 26 Multi-Year Bull Market Leaders
AAPL (Apple) Higher or Lower in 2019?
ADBE (Adobe) Higher or Lower in 2019?
AMZN (Amazon) Higher or Lower in 2019?
AVGO (Broadcom) Higher or Lower in 2019?
BA (Boeing) Higher or Lower in 2019?
BKNG (Booking; Priceline) Higher or Lower in 2019?
BLK (Blackrock) Higher or Lower in 2019?
CELG (Celgene) Higher or Lower in 2019?
CRM (Salesforce) Higher or Lower in 2019?
FB (Facebook) Higher or Lower in 2019?
GE (General Electric) Higher or Lower in 2019?
GOOGL (Google) Higher or Lower in 2019?
HD (Home Depot) Higher or Lower in 2019?
INTC (Intel) Higher or Lower in 2019?
JPM (JP Morgan Chase) Higher or Lower in 2019?
MA (MasterCard) Higher or Lower in 2019?
MSFT (Microsoft) Higher or Lower in 2019?
NFLX (Netflix) Higher or Lower in 2019?
NKE (Nike) Higher or Lower in 2019?
NVDA (NVIDIA) Higher or Lower in 2019?
RTN (Raytheon) Higher or Lower in 2019?
SBUX (Starbucks) Higher or Lower in 2019?
STZ (Constellation Brands) Higher or Lower in 219?
ULTA (Ulta Beauty) Higher or Lower in 2019?
UAA (Under Armour) Higher or Lower in 2019?
V (Visa) Higher or Lower in 2019?

List Further 2019 Prognostications Below:

CPC and CPCE Put/Call Ratios Daily Charts; Near-Term Stock Market Top At Hand

Whoa. The markets are moving very fast; it is difficult to keep up. The uber high CPC and CPCE's were touted by Keystone a week ago indicating rampant fear and panic. The blood was flowing on Wall Street the perfect time to buy and stocks did bounce. However, taking advantage of the pop via daytrading or VST (very short term) proved difficult because President Trump tanked the stock market with the shutdown drama. The bounce came but from a lower level. That's the way it goes. Keystone has a few VST index longs that he will have to scale out of this week and flip them short.

Look at those charts. Isn't it something? The stock market goes from rampant panic and fear to excessive complacency and lack of fear in only a few days time. The CPCE tanks to 0.44. That will get your attention. The all-clear whistle is blowing. Investors and traders are optimistic that a relief rally will occur so they are buying calls and going long stocks with reckless abandon. So we go from one extreme to the other.

You can use the 1.20 and 0.80 levels on the CPC as useful turn areas and 0.80 and 0.55 on the CPCE.

So there is a near-term stock market top at hand. Sometimes it takes a few days for the top to print. The top may print right-away on Monday or Wednesday, or later in the week even perhaps next Monday. The SPX 2-hour chart will say when. Typically, these low put/call's will lead to a drop of 40 to 100 SPX handles. The move down will likely be sharp and fast once it clicks into gear. Remember the UTIL 709 level called out by the Keybot algo. You can use that as a guide. If UTIL 709 fails, the market is likely going to fall apart quick. If utilities rally on Monday, and if copper is buoyant, the stock market will be floating higher.

To identify this near-term pending stock market top, use the SPX 2-hour to see when the indicators roll over with neggie d. You know a big drop is about to occur from the low put/calls and the SPX 2-hour chart should point the way. The MACD line remains long and strong on the S&P 500 2-hour chart so price should make a higher high on Monday. As price comes up, you can see if the MACD goes neggie d on the 2-hour, if so, and it matches the other indicators already neggie d, the spankdown is at hand, down we go, load up on shorts for the way down.

Obviously, this analysis is only useful for daytraders or those that are trading day to day or swing traders over a few-day or week or so period. Playing the pending drop, scale-in on short side, say with one-third of the position placed on Monday, another third on Wednesday or Thursday and the last third either Friday or Monday to have your full very short term short position in place. The expectation is that the stock market will likely peak this week perhaps mid-week. The new moon peaks on Saturday and stocks are typically weak moving through this period which would be Friday to Monday. Stocks may begin next week soggy. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

Note Added 6:28 PM EST, 12/30/18, Sunday Evening in the States: China gooses the markets with happy talk concerning the trade dispute with the US. President Trump reciprocates speaking optimistically about the talks. S&P futures leap higher to +21. Dow futures are up over 200 points. Traders are singing, "Happy Days are Here Again." The happy news is great for the trade set up discussed above. A pop will help float any short-term long trades higher before they are exited this week, and those positions will be flipped short, due to the low put/calls. A continued rally in the stock market is great since it will provide a nicer level to short from as per the above analysis. Respect those low put/calls. Keep them in mind constantly going forward no matter how much the stock market rallies; short into strength going forward for very short-term trading.

Saturday, December 29, 2018

TSLA Tesla Monthly Chart; Sideways Channels; Negative Divergence; Upper Band Violation

Tesla. It is a drama queen company ran by a prima donna. CEO Elon Musk's antics send TSLA stock up and down over the last few years. Over the last few months, Musk, the so-called genius by the media, got in trouble with the SEC for proclaiming on Twitter that he had a deal to sell Tesla when in fact it was fantasy. Intelligent people do not make such mistakes. Then he was videotaped smoking pot and drinking whiskey during an interview. There is nothing wrong with that, on your own time, but if you are a Tesla shareholder you do not want your CEO performing such antics in the public spotlight.

The electric car industry needs to prove itself; the jury is out. Electric vehicles are only glorified golf carts, however, the battery packs are unique. 

At the same time, Tesla is also involved with driverless vehicle technology. The autonomous car industry is a joke. The media hypes the technology daily for the last few years. If you have to run down to the store quickly for bread and milk, that your spouse or significant other needs immediately, do you want to jump in your car and be back in 20 minutes, or, do you want to sit in a driverless vehicle for 45 minutes as it slowly ushers you back and forth to the store? Duh.

What the public, even analysts do not realize, is that for any engineering project or new technology, it takes 20% of the budget to complete 80% of the job but it takes the other 80% of the dough to complete the last 20%. Autonomous vehicles are at the point where the first 80% of the job is done. Engineers and technicians pat each other on the back telling one another how smart they all are. But think about the billions upon billions of dollars spent to take autonomous vehicles this far. Four times that amount of money will be needed going forward to polish the technology for public consumption. It will take years and likely a couple decades to reach that goal far longer than anyone realizes. Among Keystone's many accomplishments, he is also a licensed professional engineer in Pennsylvania and graduated at the top of his class in chemical engineering decades ago.

This is why you see autonomous car videotape always filmed on sunny days. The technology has a formidable task dealing with dark conditions, storms, hail, snow, slush. In Pennsylvania's winters, many of the car sensors will likely be covered in slush and inoperable. When the industry finally began testing vehicles at night, an autonomous car ran over a lady killing her. Autonomous vehicles will have many excellent uses such as in open-pit mining or perhaps moving goods via trucks on interstates. However, a driverless car for Ma and Pa is still likely a decade or two away and that is if anyone would even want one. In addition, once the recession hits, you will see budgets slashed all over the place and the autonomous car budgets will be at the top of the list adding more years of time before the driverless cars are ever available to the public.

The major automobile manufacturers are bringing their electric cars to market which will create competition for Tesla. Consumers may feel better about buying an electric vehicle from a solid large carmaker that offers full service rather than shaky Tesla. China is taking away subsidies offered to Tesla. That is a new headache that may require Musk to smoke more doobies and drink more shots. All the environmental-style technologies, electric cars, solar energy, wind energy, etc.., do not economically survive without government subsidies. Germany had a thriving solar industry years ago. Once the government stopped subsidizing it, the industry was toast.

All that windbag stuff above aside, what is TSLA stock price going to do? That is all anyone cares about. Note how it printed an ascending triangle pattern the first 2-1/2 years of its life. The base at 16.8 and breakout line is 36.6 which targets 56.4 that is easily achieved. Price stutter-steps there and then rocket launches. The Federal Reserve had the money-printing operation in full gear in 2013 and 2014. Former Fed Chairs Bernanke and Yellen promised QE Infinity. Other global central bankers started printing money colluding with the Fed which continues to the present day. All stocks jump into the stratosphere as price discovery is destroyed by easy money.

TSLA spends 2014 through 2017 bouncing sideways through the 180-280 channel. Then another thrust higher occurs to begin 2017 and then price bounces sideways through the 280-380 range the last two years. The choppiness in price is due to the news soundbites. One day Tesla is running out of cash, the next day the production numbers are exceeding expectations. Up and down. Tesla sure does have a lot of drama around it. Keystone played it maybe two or three years ago for a couple trades but other than that has stayed away. It is a very emotional stock reflecting its CEO's personality. Keystone does not like drama.

The negative divergence is glaring. Tesla is about to have a religious experience in 2019. Keystone is assembling his 2019 predictions so perhaps a -30% to -50% crash in Tesla stock will be on tap next year.

The neggie d wants to smackdown price in this monthly time frame. Price lightly tapped the upper standard deviation line at 379 this month so the middle band at 322 is on the table. Price stabbed down through this band and recovered back above. The lower band at 266 is on the table going forward. Note the tight standard deviation bands the tightest in Tesla's history. There is a huge move in stock price coming on this monthly basis. Tight bands, however, do not tell direction, only magnitude.

For price to catapult above 400 over the next couple months would take some uber good news. It seems difficult to think that price would explode higher but you never know. The neggie d is important. If price was ready to breakout higher, you would probably see indicators that are long and strong rather than negatively-diverged. In the near-term, January, the stochastics have a bit of juice but the assumption would be that the tight bands will probably start a wicked move lower for TSLA.

The ADX shows that the uptrend in price was a very strong trend until 2016 and despite the buoyancy in price the last three years, Tesla is NOT in a strong uptrend. The Aroon is set up for the potential bearish action ahead. Once the red line crosses above the green line it is lights-out.

The two large volume candles get your attention. That must have occurred during positive news bite hype announcements. Price will want to revisit this price range, which it has this month, and the volume is far lower although higher than November. Tesla may have another pop left in it that firmly tags the upper band but the expectation would be for the stock to roll over in 2019.

Early next year in Q1 and Q2, TSLA may want to seek the 180-280 range again, and then fall through that range in the back half of 2019. Keystone has no position but if price bumps higher to begin the year, it may be a good short, if there are shares available to short. If you made money in Tesla stock, even if you did not, but you are holding TSLA long, get out of it. By summertime, you will likely look back and be extremely glad you did. In 2020, it would not be surprising to see TSLA down to the 50-120 range. 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.

Friday, December 28, 2018

UTIL Utilities Weekly Chart; UTIL Regains the Critical 50-week MA

Bingo. Utes recover strongly in the Thursday, 12/27/18, session which creates a boost to the US stock market. UTIL is at 710.89 above the critical 50-week MA at 708.93 which represents a trapdoor for the stock market. The bulls have recovered and close the trapdoor behind them. The bulls are mounting a relief rally taking advantage of the Santa Claus Rally period from Christmas Eve through the first two trading days of the new year.

The relief rally continues as long as UTIL remains above 708.93. Bulls next need copper to rally which will provide more upside oomph for the stock market relief rally. Copper futures are currently up +0.9%. If UTIL slips lower and loses the 708.93 level, the trapdoor reopens and pain, misery and mayhem will send stocks dramatically lower 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.

Thursday, December 27, 2018

TICK 1-Minute Chart

The bears are growling again after yesterday's record-setting rally. The Dow Jones Industrials exploded 1,086 point higher yesterday the largest point gain in history but today the Dow is thwacked 548 points lower. The SPX is currently down 62 points, -2.5%, to 2406 at 2:38 PM EST Thursday, 12/27/18.

Note the low TICK's. The TICK machine spits out -1200 numbers uber low readings verifying that the bathwater, baby and the kitchen sink are all thrown out the window. You always want to enter any long trades, or cover shorts, on the very low ticks below -1000 since it places a few pennies in your favor. Conversely, you want to enter a short trade, or exit a long trade, on the high TICK's above +1000. This is more important to daytraders and VST traders rather than short-term or intermediate-term traders.

The SPX 2-hour chart hints at the rally continuing but the SPX is mini-crashing. Whoa boy. UTIL is down to 696 creating market weakness. Bulls must push UTIL above 709 as soon as possible, otherwise, the stock market may crash. There is not a lot of time either; the bulls need to send UTIL higher within the next couple-three days or they will be out of time. The bulls will need to resume the Santa Claus Rally tomorrow to prove is in intact if today remains weak. 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 Early Friday Morning, 12/28/18: The -1200 TICK's are uber low so you look for snap-back rally. Comically, it comes in spades. The stock market stages an epic comeback rally on Thursday, 12/27/18, the Dow reversing 870-points off the intraday bottom. The TICK machine then goes wild spitting out +1400 numbers during the last 45 minutes of trading. This is off-the-charts bullishness. Shorts are covering running for their lives. After such a huge TICK print, stocks may need to relax and chop along sideways to absorb the euphoric joy.

Note Added Saturday, 12/29/18: The stock market chops sideways in the Friday session absorbing that +1400 euphoric joy.

SPX S&P 500 2-Hour Chart; Positive Divergence; Oversold; Lower Band Violation

Here is another look at the 2-hour. Keystone was showing how this chart set up with possie d since late last week. Yesterday was fun to watch. You could see the exact conception f the bull rally. Remember, the CPC and CPCE put/call ratio's were off the charts. The NYMO and BPSPX were in complete collapse. You knew markets were ready to rock and roll (on the very short term time basis).

Then looking at the 2-hour, the falling green wedge is bullish. Yesterday price came down for that one more low you see due to the weak and bleak MACD line but once that occurred, the indicators were all positively diverged and the SPX was on the launch pad. Va-room. Stocks explode higher receiving the possie d power along with all the juice from the put/calls, NYMO and BPSPX. The up day was record-setting with the Dow gaining 1,086 points the largest point day ever in history.

The SPX had violated the lower band so the middle band at 2447 is on the table and price has tagged this level. The upper band is on the table at 2568 and dropping.

All that windbag stuff aside, what next? That is all anyone cares about. What have you done for me lately? Note that the indicator lines are all long and strong (green lines). That is interesting considering that the SPX is tanking 43 points right now. The indicators want to see higher highs for price despite the strong pull back today.

Note how price made a high along with the peak in the RSI but there is no neggie d there to cause the slump in price for the last two candlesticks (it is odd to see price moving lower since the chart is more agreeable to seeing the SPX moving higher). Assessing the 2-hour chart above, the S&P 500 will likely recover and the Santa Claus Rally should continue in the hours, say a couple-three days, 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.

Note Added Early Friday Morning, 12/28/18: Stocks stage a record-setting intraday rally the Dow prints an amazing 870-point intraday turnaround to the upside. Television pundits and Wall Street guru's say they never saw the rally coming. You, however, knew it would occur as explained in the chart above.

UTIL Utilities Weekly Chart; Battle at the 50-Week MA Determines if the Stock Market is Assuming a Crash Profile

Keystone harps about the utilities a lot. The old-timer's and the new-time algorithms both pay close attention to the utes. The 50-week MA is a trapdoor trigger for the stock market. When it failed late Monday morning, the trapdoor opened and stocks fell like rocks. This is a bigtime signal line and extremely serious business. Utilities must recover above the 50-week MA as soon as possible. Each day it does not occur is huge trouble compounding exponentially.

The stock market bulls must move UTIL above 708.72 asap. This will prove that a relief rally is underway and has a little bit of upside juice. If UTIL fails to move back above 709, the stock market may crash. Strap yourself in and place a crash helmet on your noggin. Each day that utes are unable to retake the 50-week is another day closer to a major crash event a la the 1929, dotcom bubble in 2000 and financial crisis in 2008-2009, crashes. Watch it like a hawk. UTIL 708-709 tells you a lot about the stock market.

Whoopsies daisies. UTIL slips to 698 below 7 hundo. Bulls are crying into their cafe lattes hoping that the utilities will be zapped higher. Otherwise, the gallows await. 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 at 12 Noon: UTIL is at 702.

Note Added at 12:01 PM EST: UTIL is at 701.

Note Added at 2:50 PM EST: UTIL is at 697.

Note Added Early Friday Morning, 12/28/18: And Bingo was his name-o. UTIL stages a huge comeback to 710.89 and finishes the Thursday session above the 50-week MA. This is big-time. A crash scenario for the stock market is now taken off the table, however, equities remain in a cyclical bear market pattern. Keep watching UTIL 708.93 like a hawk because if if fails again, then misery and mayhem will quickly return. UTIL above the 50-week indicates that the bulls have a little bit of strength to continue the Santa Claus relief rally.

SPX S&P 500 Weekly Chart; Moving Average Ribbon; Positive Divergence Developing; 200-Week MA at 2348 Major Support

The SPX weekly chart shows the double top and neggie d spankdown Keystone explained as it occurred. The red lines show the rising wedge pattern and negative divergence across all indicators. The RSI and stochastics were also overbot agreeable to a pullback. The stars had aligned. The bears did a jig of joy in the moonlight as October began, shorting stocks like madmen. All you had to do is look at the chart and the neggie d smackdown was a very easy call. Comically, the television pundits kept telling the masses to buy, buy, buy, when the chart above said sell, sell, sell.

Price violates the lower standard deviation band so a move back to the middle band at 2751 and falling sharply, is on the table. In January, price was extended way above its moving average ribbon and boom, it was smacked lower to the 50-week MA support. The last three month's crash takes price down through the 50 like it was not even there and all the way lower to the 200-week MA at 2348. Write this down and watch it like a hawk because if this fails it is lights out for the stock market (blue circle).

The SPX back kissed the 20 and 50-week MA's after they failed but this ongoing 3-month market crash occurred through the 100-week, 150-week and down to that 200-week MA. Thus, price should retrace upwards to show that 100 respect at 2610. As a couple weeks play out, perhaps that middle standard deviation band falls like a rock to greet the 100-week MA at 2600-2610 to form a confluence; this may act as a magnet for price as January trading is well underway. 

The falling green wedge is bullish. Ditto the overbt RSI and stoch's although the RSI barely touches oversold territory. The positive divergence on the hourly and daily SPX charts bounced price yesterday and are agreeable to more up although as this message is typed the S&P 500 is puking 51 points. This bounce in the very-near term, if price recovers after today's sogginess, should last a few days aided by the RSI and stoch's in the weekly chart above.

However, on the weekly basis, the SPX will roll over again to honor the weak and bleak MACD line. The SPX will want to come down to test that low close at 2400 or all the way down to kiss that 200-week MA at 2348 again. If this occurs, price will make a bounce or die decision from the 200-week pivot and seal the fate of the markets ahead, either glory, or misery.

Price may want to play in the apex of that falling wedge. Considering that the positive divergence is starting to try and form on the weekly, price may want to sideways chop. So the thinking is that the S&P 500 will rally with the Santa Claus Rally into the first couple days of the new year but then weakness again due to the weekly chart but once that MACD line sets up with possie d on the weekly chart, say 2 or 3 weeks from now, that will be a solid bottom for the stock market, on this weekly basis, and a several week rally should begin. So after some continued sogginess in the weekly time frame into mid-January, stocks should rally then into February.

By the time I typed all that windbag commentary above, the SPX is now down 36 points to 2432 on the day. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

Wednesday, December 26, 2018

BPSPX S&P 500 Bullish Percent Index and SPX S&P 500 Daily Charts

When the BPSPX goes sub 35, you start looking for a relief rally. Holy smokes. An 11-handle. That is unbelievable. The negative sentiment is completely off the charts. Stocks are thrown out the window with indiscriminate selling. Folks are frantically selling and they do not even know why they are selling. The baby, bathwater and the kitchen sink are all thrown out the window.

The pundits now call for doom and gloom in 2019. These are all the same pundits that told folks to go long at the stock market top in late September early October.

The green circles show where rallies begin. What do you think will happen?

The six percentage-point reversals are key for the BPSPX. Thus, if price can reverse to 17.80 moving higher that would confirm that a relief rally is underway. This 11.80 number is really something; a complete collapse. It has nowhere to go but up which means a relief rally wants to begin. If President Trump will quit bashing Fed Chairman Powell and quit causing a commotion, stocks should recover strongly.

Considering the high put/call's, the uber low NYMO and the uber low BPSPX, it would not be surprising to see the Dow print a couple 1,000-point up days over the next couple weeks. The charts are ready to go for the bulls in the very near-term; it all depends on Donny.

On Monday, UTIL lost the 50-week MA at 709 which opened a trapdoor and flushed the stock market lower. If UTIL remains below 709, markets will crash going forward. If UTIL recovers above 709, that will reinforce a near-term relief rally theme. Ditto copper. Copper rises +1.8% finally printing an up day. Bulls need stronger copper for several days to kick a relief rally into high gear. Traders await President Trump's tweets to see if he is going to play nice for the holidays or continue the Ebeneezer Scrooge demeanor.

The Santa Claus rally period runs now through 1/3/19 so the bulls have this seasonality factor in their favor. Keystone continues adding index longs each day since last week (these entries are underwater now), however, Keybot, that operates on more of a short-term to intermediate-term smoother time frame, remains short. When Keybot flips long, you will be confident that the relief rally is underway. 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 Thursday Morning, 12/27/18, Before the Opening Bell: The stock market catapults higher on Wednesday setting multi-year records. The Dow gains 1,086 points the largest point gain in history. Speak of the devil, there's a 1,000-point up day. Now you can see the power generated from the high CPC and CPCE put/calls and low NYMO and BPSPX that signaled uber negativity and off-the-charts bearishness (stocks typically bounce when there is blood in the streets). However, the BPSPX is only up to 12.00 a small bump higher; bulls need the BPSPX to push above 17.80 to provide a market buy signal. There will probably be another big day ahead or at least a couple 5 or 6-hundo upside days for the Dow. US futures sink Thursday morning. S&P futures are down -38 with the VIX at 32.20 about 3 hours before the opening bell. The positive divergence on the SPX 2-hour chart launched the stock market higher. Ditto the daily chart. A pulse backwards is no surprise today but the bulls should be able to push the stock market higher for another higher high. Bulls need UTIL above 709 and CPER above 17.18. If either the utilities or copper do not move above these levels, the rally has no legs and will crumble and fall apart. If at least one of these parameters turn bullish, that will support the relief rally moving forward. Copper futures are down -0.7%.