The drama continues with the near-term stock market top. Each time it wants to roll over, the central banks or the US-China happy trade talk pump equities higher. Friday was interesting as the MACD line flattened in the morning, then turned back into a long and strong posture after lunch but then fell back into negative divergence marking the top. At that point, President Trump ran to a microphone announcing big progress on the US-China trade talks and a meeting with President Xi in late March.
Stocks held steady and did not rally as one would expect considering that the leaders will only meet if a trade deal was being finalized. In fact, stocks started to look soggy. Perhaps many traders figured if the leaders will not meet until late March the deal will not occur for another five weeks. Treasury Secretary Mnuchin then runs to a podium and proclaims more happy talk on trade but the stock market continued to bump sideways. President Trump stepped in during the last half hour of trading on Friday with an impromptu news conference where he kept pumping the trade talks. Stocks caught a bid into the closing bell jumping higher. The Trump pump is successful again.
On that late-day Trump pump, the MACD line went back to long and strong (brown circle). Remember, the broken-record statement, the top is not in until you have universal neggie d. All the indicators are ready to push price lower except the MACD. So another jog move may occur, down one day, up the next day for another higher high, and at that time the MACD should finally be in neggie d to mark the top. Considering all the central banker intervention and trade deal happy talk that have supported markets since 1/3/19, equities can retreat now, falling under their own weight, or place their top say tomorrow or Wednesday squeezing out a slightly higher high (due ot the long and strong MACD). You have to see if Trump's happy talk today boosts the MACD, and perhaps the RSI, higher, or not.
The low put/calls and elevated NYMO continue to want stocks to pull back in the near-term. The 150-day MA continues to slope negatively by a hair (pink box) so the cyclical bear market remains in play. The 20-day MA at 2725 and rising is coming up to meet the 150 and 200-day MA's both at 2748. Obviously, the 2748 carries a lot of clout going forward and should be shown respect with a back kiss. The 20 is coming up to meet the 150 and 200 about 2 or 3 days out so that 2747-2748 confluence area may act like a magnet for price in the days ahead, perhaps the first stop on a pullback in this daily time frame. Price has needed to back test the 20-day MA for several days.
The SPX weekly chart remains long and strong so after a several day pull back occurs, due to the weak daily chart, the S&P 500 should rally again and come back up to the current highs on the weekly basis.
15 minutes before the US futures opened for trading Sunday evening on the East Coat, here comes King Donny again with a new decree. Trump says he will delay the Chinese tariff deadline this Friday, 3/1/19. Booiiiiinnnngg. S&P futures pop to +9 and remain elevated overnight. Crooked crony capitalism is always on full display. S&P futures are now up +11 as this message is typed about 5 hours before the opening bell for Monday's regular US trading session.
Comically, Trump, that complained about China manipulating its yuan (renminbi) currency for the last 2 years, enters an agreement with the filthy communists that the US and China agree to manipulate the yuan to prevent it from weakening. That is hilarious. It will be interesting to see how the trade deal handles the intellectual property (IP) theft and the forced technology transfer issues. The chief US trade negotiator Lighthizer is at loggerheads with King Trump. Lighthizer is a staunch unrelenting hawk on China and a touch negotiator but it looks like Donny is softening his stance against the commies. Trump is worried about the stock market dropping in front of his reelection campaign so he wants a trade deal with China to keep equities elevated (although he may be in for a rude surprise if his watered-down trade deal does not support stocks).
The market manipulation gets better. Overnight, China's central bank, the PBOC, reduces regulations on banks and securities firms. Bingo. The CSI300, which is China's blue chips, jumps +6%. Every Chinese stock that has the word 'securities' in it prints huge gains. Always remember, the central bankers are the market and why stocks have rallied for the last decade. The obscene global Keynesian spending by the world's central bankers creates stock markets that are nothing more than Potemkin villages. It will be interesting to watch when it all unravels.
So, after another few days of US-China trade deal happy talk, a delay of further Chinese sanctions, a proposed meeting between Trump and Xi, and continued Fed, PBOC, ECB, BOJ, BOE, RBA and other central banker dovishness, the S&P futures are up +11 albeit a lackluster move considering all the weekend pumping. Interestingly, the VIX is at 13.81 up over +2% this morning. Futures are up and volatility is up. One of them is wrong. 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.
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