SPX S&P 500 Monthly Chart; Stock Market Fractal Behavior Mimics the 2000 and 2007 Major Stock Market Tops

The neggie d spankdown occurs as was described during last year. The stock market top is displaying the same characteristics as the two prior major tops in 2000 and 2007. The dark blue boxes highlight the fractal behavior for the major stock market tops. They all form after long uptrends. Price moves into a rising wedge, which is a bearish pattern, and the RSI and stochastics are overbot. The indicators negatively diverge (the RSI, histogram, MACD line, stochastics and money flow roll over and slope lower exactly when the SPX prints a higher price) which creates the smack down.

The SPX falls through the 10, 12 and 20-month MA's. Price then drops to the 50-month MA and recovers. At this point, the S&P 500 plays around a little bit deciding if it wants to break the 50-month or not. Price then collapses though the 50 and look out below. Note how the RSI gets that little crook in its line as it crosses down into bear territory below 50%. That same little crook in the RSI line is occurring now.

The 2000 and 2007 tops moved sideways for a couple months digesting the shocking down moves off the epic tops--kind of like now.

The SPX came down for that low at 2444 teasing the 50-month MA support at 2339. The short-term charts want the SPX to sell off and it may very well drop to 2340-2400 over the coming days or week or two. The SPX weekly chart keeps setting up for a multi-week rally so this would jive with a one or two month recovery (red circles) say mid-January into February maybe sneak a hair more of bullishness into early March. Then, goodnight Irene, Irene, goodnight.

The market bears were cheated back in 2015. The stock market peaked and failed, another top Keystone identified ahead of time, and it truly should have been the major top. As Keystone explained at the time, the central bankers panicked and fired off their global money bazooka's to save the day, as they always do. The central bankers are the market. They keep printing money to protect the wealthy class that own large stock portfolios.

That coordinated global central banker intervention in February 2016 created the Tweezer Bottom (green circle) and the easy money joy ride higher began in force. It is shameful how the central bankers have destroyed all price discovery and economic and business cycles. No one truly knows what any asset is worth anymore due to the ongoing decade-long Keynesian money-printing by central bankers.

This is why the current fractal may not quite work out the same on the way down as the prior tops. The difference between now and 2000 and 2007 is the ongoing global central banker collusion. The 2015 behavior is proof of how the central bankers can save the day. One wonders that when the SPX falls through the 50-month and begins dropping into free fall, if the central bankers will step in to save the day again. The Fed is already backing off on rate hikes. The PBOC (China's central bank) cuts its triple R's this year and another cut and other easy-money measures are likely before the 2/5/19 new year. It is the Year of the Pig and humorously, pigs are not supposed to fly. The central bankers are sick one-trick ponies ready and willing to grease that pig.

Keystone forecasts a big drop in the stock market in the spring. The indicators above are all weak and bleak except for the RSI doing its hook move so the chart wants to see lower lows in the monthly time frame. After a multi-week rally, the top will likely be in that March-May time frame probably from above SPX 2700.

A big collapse will occur but the central banks will likely step in. Either that or the US and China may agree to a trade deal to save the world markets. So instead of the waterfall drop like 2000 and 2007, the stock market may bounce mid-year and chop sideways sorting out the central bankers. All confidence may be lost in central bankers and that truly is the end game. Once confidence is lost in these money God's, all is lost.

Keystone then expects the big waterfall slide in early 2020. The other outcome is that confidence is lost in central bankers right away this year as the stock market collapses during April-May, and there is no saving the day. It's over. This outcome is the waterfall crash just like 2000 and 2007.

Thus, choose your poison. A big drop in the spring that will then recover in the back half of this year then a crash in early 2020, or, a big drop in the spring, complete confidence is lost, and a waterfall crash occurs immediately this year playing out just like the 2000 and 2007 fractals.

The monthly chart shows weak and bleak indicators in this monthly time frame so this may take several months to work off the negativity which means down and down in price. The Wall Street analysts are proclaiming SPX 3000 targets, comically, many simply move their missed targets from 2018 into 2019. The chart above says lower lows are ahead on the monthly basis. This is plain as the nose on your face and yet Wall Street analysts are wearing 'SPX 3K' hats for 2019. It is hard to think how the market can recover extra big in the back end of the year to make it up to those lofty upside SPX targets. 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.