The band plays its fifteenth encore as the stock market refuses to roll over. Weakness occurs in the SPX as per the neggie d and price comes up again due to that sliver of juice remaining in the MACD line. That MACD energy is now gone with the matching price high; the MACD finally slopes lower into negative divergence with the matching high in price. The top is in for the daily time frame although there are always caveats. The main two are obviously the happy US-China trade talk and the global central banker collusion. These two energy machines are the fuel behind the two-month record-setting rally. Never forget, the central bankers are the market.
Price has momentum closing at the highs. The money flow and RSI are trying to squeeze out a tiny bit more juice but both are in negative divergence for the several-day time frame. The blue line is 2815-ish resistance where price came up to touch last week. This matches the major tests of this resistance from October and November. The television faces keep talking about 2800 but this is simply a psychological level as are all whole numbers. This 2815-ish is far more important. Thus, price may want to pop 10 handles to kiss it again.
That upper band limit at 2824 has to be left on the table due to the Friday momo. The S&P 500 has not yet shown respect to the middle band after the upper band was already violated so the 2757 remains firmly on the table as well as the lower band at 2690.
The Keystone Speculator's 80/20 Rule also remains in play. 8's typically lead to 2's, so the move above 2780 opened the door to 2820 which is only a handful of points away from last week's high. 2818 would open the door to 2822 so keep an eye out concerning that 2818 level. Thus, price may want to spurt to 2815-2824 for a quick look-see but that would likely be short-lived even if it occurs.
Friday's action is a hanging man candlestick pattern. The long lower shadow of the candlestick is over two times longer than the head of the candlestick. You can see that it looks like a man hanging from the gallows. After an uptrend, this pattern typically indicates a reversal to the downside. The hanging man indicates that sellers are beginning to take control of much of the daily price action. Price recovers by the end of the day but the bears are flexing their muscles under the surface. Look for potential of follow-through from the hanging man pattern which would be a substantive drop in the SPX price.
The 150-day MA at 2747 continues stumbling sideways and will not tip its hand. The stock market remains in a cyclical bear market by this metric. The SPX remains above the 12-month MA at 2748 so the stock market is in a cyclical bull market by this metric. One of these two parameters are wrong and the solution will tell you the path ahead for the stock market on a short and intermediate term basis. Bulls obviously need the 150 to slope higher climbing above 2747 while the bears need to push the SPX below 2730. One of them will flinch.
The NYA is at 12701 above its key 40-week MA at 12485 which signals a cyclical bull market by this metric. The NYA 40-week and SPX 12-week dictate the overall stock market pattern and the bulls have won back control, however, bulls still need the 150-day to cooperate. If the 150 begins sloping down again, the SPX and NYA will both drop and may easily slip back into the cyclical bear.
The overbot conditions in the SPX daily chart above are agreeable to a pullback. The red rising wedge is ugly and ominous. The collapses from rising wedges can be quite dramatic. The SPX still needs to show respect to the 20-day MA at 2757. The ADX remains subdued at 22 so despite a two-month pump by the happy US-China trade talk and global central banker collusion, the stock market is NOT in a strong trend. Isn't that something? The last strong trend was the downside trend during Q4 (purple box). You can see Friday's buying volume was nowhere near the selling pressure on Thursday (volume candlesticks).
The Aroon remains on a positive cross reflecting the ongoing bullish joy. Looking back at a potential fractal to gauge the path ahead, the Aroon green line is at the same level as back in late September. That's interesting. The green Aroon line is at the exact same level as the top in the stock market before the Q4 bloodbath began. Six days after this point in time, the Aroon negative cross occurred so this fractal may repeat now with the SPX stutter-stepping for a day or three then rolling sharply over to the downside.
The same broken-record continues about the uber low CPC and CPCE put/call ratios (complacency and fearlessness in markets) that have yet to be rectified. Ditto the elevated NYMO. The SPX needs to retreat to remedy this euphoric party atmosphere in the stock market currently.
The expectation is that the top is in now for the daily basis. The new moon peaks on hump day this week at 11:03 AM EST. Equities are typically weak moving through the new moon each month so this provides a favorable tail wind for the bears. Covert military raids occur during the new moon periods by forces with superior night-vision technology. Earthquake and volcanic activity may increase mid to late week into next weekend since the Earth and Moon will be at a gravitational inflection point.
Stocks should trend lower in the daily basis for either a few days or perhaps a week or two. It depends on how much happy talk occurs, if any, and how this never-ending happy talk is perceived over time. The trade deal can be hyped but there comes a time where King Donny has to show some results. Ditto the central bankers. It is very surprising that there is trust in the central banks considering the about-face that occurs over the last few months. It is obvious the bozo's are clueless and just making it up as they go along. Humorously, the blind (investors and money managers) are following the blind (central bankers).
The Federal Reserve succeeded in making the wealthy filthy rich over the last decade while screwing common Americans that suffer through low wages and lack of opportunities. Only one-half of the US owns stocks and only the wealthy own the large equity portfolios. This is how the crony capitalism system works in America. There will be payback when the recession begins. A rich versus poor class war is coming to a city near you. Make sure you are prepared.
The SPX weekly chart displays long and strong strength for the MACD, histogram and money flow so the SPX has more juice on the weekly basis. Thus, after the weakness in the daily time frame plays out as explained above, say for a few days or week or two, the SPX will likely come all the way back up for more matching and new price highs say late this month and early April. This action will produce a more substantive top, on a weekly basis, say, beginning late March or early April.
So the SPX may shed, say, a 100 handles over coming days, say into mid-March, and then come back up say 100 to 180 handles off that bottom during late March into early April, and then this will be an important top on the weekly basis. A guess would be for a significant top at 2880-ish say early April which then leads to extended multi-week, perhaps multi-month, downside for the stock market. An optional scenario is for the stock market to simply head lower and establish a multi-week sickness at anytime going forward (the bullish trade talk and central banker hype is over-the-top this year thus far). 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 9:25 AM EST on Monday, 3/4/19: Trading in the regular session is minutes away. 15 minutes before the US futures began trading last evening, more happy trade talk is announced with the US and China supposedly on the verge of a deal. S&P futures popped +14 out of the gate and remained elevated overnight. Do you think the stock market is a rigged casino? Volatility began trading at 3 AM EST and also rises. Volatility and futures are both up so one of them is wrong. S&P futures run out of gas as the morning plays out only up by a few points. The Trump administration runs to a microphone and announces more happy trade talk news so S&P futures pop +12 into the opening bell.
Note Added at 9:35 AM EST on Monday, 3/4/19: The stock market ramps higher as the new week of trading is underway. The SPX pops to 2817 and trades up 12 points at 2815. The negative divergence remains on the daily chart although the RSI is threatening to pop higher due to the happy trade talk overnight. If the RSI prints a higher high than those February highs, that behavior will likely extend the top in this daily time frame for another day or two. For now, the SPX daily chart continues to appear out of gas and should top out. Price prints a new high but the indicators are in negative divergence (although the RSI may try to create further juice). The happy trade talk creates the upside momo. The SPX 2-hour chart is neggie d across all indicators over the last week, however, the gap-up move this morning creates near-term thrust. Thus, it may take a couple of 2-hour candlesticks to place the SPX top and begin the drop. So stocks may top out in 2 to 6 hours, which would be today or first thing in the morning tomorrow. The new moon peaks Wednesday morning at 11:03 AM EST, which is Ash Wednesday, and stocks typically favor the bears through the new moon each month. The TICK machine hit +1100 after the opening bell verifying the euphoric bullish joy and stock market ecstasy.
Note Added at 9:49 AM EST on Monday, 3/4/19: The SPX is at 2815 and VIX at 13.52. Volatility slips a hair negative on the session thus, stocks were correct and the VIX was wrong. Volatility now drops consistent with stocks moving higher. Is this the trend today or is it a fake-out move?
Note Added at 9:51 AM EST on Monday, 3/4/19: Whoopsies daisies. The SPX is at 2811 and VIX at 13.63. Volatility moves a hair positive. Both stocks and volatility are higher. One of them is wrong.
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