Tuesday, April 30, 2019
Apple earnings are on tap after the closing bell this evening. Thus, anything can happen. The top last year was an easy call with the overbot conditions, rising wedge pattern, universal negative divergence, upper band violation and price extended above the moving averages. The mighty Apple falls from the tree and turns brown in Q4. Alas, the apple tree blooms again recovering higher from the V-bottom to start the year.
Note that the indicators were in positive divergence to begin the year encouraging the recovery, however, the MACD line remained weak and bleak. AAPL should have came back down to test the 200-week MA at 139-ish in January but the central bankers would have none of that.
When the stock market began rolling over and collapsing on 1/3/19, the global central bankers colluded stepping-in to save the stock market for their elite privileged class masters. The central bankers are the market. The corrupt central bankers perform the bidding of the wealthy elite class that own large stock portfolios. The Fed's money printing does nothing to help the middle and lower classes, the poor or the disadvantaged. One-half of Americans do not own one single share of stock.
The weak MACD line clearly verifies the power of the central banks. The central banks nullify chart moves with their one-decade long dovish chatter. The central banker intervention always overrides all technicals and fundamentals. The charts then price the news into the chart. As Apple recovers this year, price comes up to fill the gap from Q4. There is another gap at 220-ish that could use a fill (orange circles).
The purple boxes for the ADX show that the trend higher in 2017 was a very strong trend but this petered out in early 2018. When Apple fell apart like everything else in Q4 last year, that sick trend lower was a very strong trend lower. Then the central banker stick-save occurs but despite this 4-month parabolic rally, the ADX says the trend higher in price is not a strong trend this year.
Price violated the upper band so the middle band at 176, which is also the 20 MA, is on the table. AAPL should also want to back kiss the 50-week MA at 190.
For the price highs occurring over the last three weeks, the stochastics and money flow are overbot agreeable to a pull back. The RSI, however, is long and strong and not yet overbot. The histogram, stochastics and money flow are all in negative divergence wanting to see AAPL trend lower for a few weeks forward but the RSI and MACD line are long and strong.
Thus, price needs a 2 to 4 week jog move, either down one week and up the next, or down-up-down-up, to place the multi-week and likely multi-year top (the RSI and MACD need to roll over with negative divergence as price prints a new high). The juice in the RSI and MACD line will likely carry AAPL higher on the weekly basis for the 2 to 4 week period but as soon as the RSI and MACD go neggie d the top will be in. This is likely in early or mid May.
The AAPL daily chart is receiving three days of softness due to the neggie d and overbot conditions. The weak chart indicators on the weekly chart above will conspire with the weakness on the daily chart to create more sogginess in the days ahead, however, the earnings release today is a crap-shoot capable of sending the stock to the moon, or to Hades. As mentioned, based on the weekly chart above, no matter what happens tonight, AAPL likely wants to see another high.
Keystone does not own AAPL right now. Apple is not worth playing with earnings imminent. Although price will likely head higher to 220-ish for a top, chasing the upside seems like picking up nickels in front of a bulldozer. The potential play on AAPL is to wait a couple weeks to see when this weekly chart tops out and then play AAPL short. All eyes will be on Apple after the closing bell tonight. CEO Cook better not be cookin' the books. Will investors eat his cooking? 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 Wednesday Morning, 5/1/19: Last evening, Apple beats on earnings, no surprise, hikes the divvy and promises more buybacks. This provides a +5.3% move for AAPL in the pre-market to 211.20. Today is Fed day and the first day of May trading. The monthly charts have a new data point cast in concrete yesterday and the May saga begins today.
Monday, April 29, 2019
SPX S&P 500 2-Hour Chart; All-Time Record High at 2949.52; Overbot; Rising Wedge; Negative Divergence; Upper Band Violation
On Monday afternoon, the S&P 500 prints a new all-time record high at 2948.19 (12:53 PM EST) overtaking the prior record at 2941 from last September. (This high is taken out before the closing bell see below.) The bulls are kneeling and worshiping at the feet of Yi, Powell, Draghi and Kuroda, calling them modern-day money God's! The power of the central banks, especially the PBOC, Fed, ECB and BOJ, respectively, is truly astounding. The central bankers are the market.
Here is a look at the SPX 2-hour chart that was expected to set up with a top today. Price tags the upper standard deviation band so the middle band at 2921 and lower band at 2912 are on the table. The chart indicators are in negative divergence so this is a top printing now in the 2-hour time frame. There should be a new candlestick appearing at 2 PM EST and then the next one after that will be 9:30 AM EST tomorrow morning. So watch the price behavior after the 2 PM candle begins printing. She should roll over from here.
Copper sent stocks lower to begin the day but a repeat of last Friday occurs with the bulls jamming copper higher to save the day. Watch copper closely. As copper goes, so goes the market. Note that the stock market (SPX) and volatility (VIX) are both higher so one of them is wrong. Let's see if the bears can flex their muscles going forward. Bulls need to hear happy cheerleading news from President Trump or the Fed which would extend the upside. 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 1:41 PM EST: The SPX is up 6 points, +0.2%, to 2946. Copper futures are up a marginal +0.1%. The VIX is moving higher to 12.96.
Note Added Tuesday Morning, 4/30/19: The SPX finishes the Monday trade up 3 points, +0.1%, to a new all-time high at 2949.52 and new all-time closing high at 2943.03. Copper futures were dropping but the bulls jammed the red metal higher to prevent any stock market weakness. The same thing occurs this morning. Copper was down -0.6% a few hours ago but is jammed higher now up +0.3%. As copper goes, so goes the market. S&P futures are dead flat. Stocks are bullish 80% of the time heading into the Fed meetings so the bulls have a slight wind at their back for today and tomorrow. The new moon peaks on Saturday so the bears will have the wind at their backs Friday into Monday.
The banks were the last to the bull party this year but they will tell you better late than never. XLF is at a 6-month high. The joyous buying in the banks extended the broad stock market rally over the last month. XLF contains insurance companies and is not a true pure bank ETF but a great gauge of the sector nonetheless.
You can see the upward joy in price this year, however, you also see a rising wedge, overbot RSI, stochastics and money flow, negative divergence and an upper band violation. Hmmmm, that's not good. In fact, those are all bearish indications. It looks like the banks may need to pull back a few days to catch their breath.
The RSI and MACD line are receiving some momo after the late-week bullishness last week. If the RSI or MACD pop above their prior highs that will extend the top on this daily basis for a couple more days.
If you bring up the XLF weekly chart, the indicators remain generally long and strong in the near-term so it is likely not worth chasing the negativity on the daily chart on the short side. The pullback will likely be only a few days and then price should come back up due to the buoyancy in the weekly chart. The weekly chart hints at more highs coming in price say a couple weeks out.
On the weekly chart, the stochastics are overbot and money flow is flat so there is likely a topping basis occurring on the weekly chart that may occur in early May so that may be the time to look at the short side. Keystone has no position in XLF. 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 1:34 PM EST: XLF gaps higher up 1.4% to 28.08, a 28-handle. Global investors love the banks today.
Google changed their name to Alphabet which has been a goofy transition ever since. Every time someone says Alphabet they then say Google to clarify. Today is Google Earnings Day. The Silicon Valley marching band, with fleece vest uniforms, is coming down main street. If you listen hard you can hear the calliope music.
As always, earnings are a crap-shoot day for any company. Google reports after Monday's closing bell (4/28/19) and will set the tone for the tech sector for this week. The daily chart says down but again, a big positive EPS beat and the price may rock and roll higher. For the Friday near all-time record price high, the chart indicators are all in negative divergence wanting to see a spankdown. There is momentum, however, over the last couple days. Watch to see if the money flow can poke out a new high, or not.
The RSI and stoch's are overbot agreeable to a pullback. The price action has a rising wedge vibe to it which is bearish. Price has violated the upper band so the middle band at 1227, and rising, is on the table. So the daily chart says down but the earnings release will tell the story.
Google is extremely important because during this year's global central banker-induced stock market rally, the FAANG stocks have not placed new record highs except for Alphabet. So a lot is riding on tonight's earnings. Google needs to hit it out of the park to rev up the engines of the other FAANG stocks and carry the broad stock market higher. If Google lays an egg at 4 PM EST today, that will not portend well for the stock prices of other FAANG's and a multi-week top in the stock market may be identified.
On the GOOGL monthly chart, the higher high in price comes with universal negative divergence, an upper band violation, a double-top, or M-top formation, all are bearish. Price also gapped-up last month so that will need filled at some point forward. The monthly chart shows near-term momentum with the RSI and stochastics because of the central banker money-printing this year, so this mo-mo must be respected. Google is cooked and the long-term top (multi-month and multi-year) is in for the stock as long as the chart indicators do not move above the thin red lines in the margin. Anyone long the stock will regret it. If one of the indicators does pop above the thin red line, that will only extend the long-term top a couple months, but if long, it will give you more time to exit.
Keystone is not playing GOOGL right now and tries to stay away from any trade where an earnings release is at hand. Going forward this year, Keystone will look at opportunities of shorting GOOGL. The earnings release this evening, and even the trading action today, will be very interesting. 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 1:35 PM EST: GOOGL is up +0.666% to 1286. Bulls believe in mighty Google and are expecting a big blowout on earnings in 2-1/2 hours. Interestingly, GOOGL is printing three hanging men in a row on the daily chart.
Note Added Tuesday Monring, 4/30/19: Google laid an egg with earnings last evening. In the pre-market, Alphabet is puking -7.8% to 1195.
DB Deutsche Bank Monthly Chart; Oversold; Falling Wedge; Positive Divergence; Lower Band Violation; Price Extended to Downside
This chart is the shame they call Deutsche Bank. DB peaked in 2007 at 125 in front of the Great Recession (2008-2009 financial collapse) and drops to 8 an epic crash of -94%. What a flaming piece of garbage. A year and a half ago, investors thought they saw light at the end of the tunnel at 20, however, that light was an oncoming train and DB was crushed to a 7-handle this year. Can CEO Christian Sewing (pronounced "Saving") save the day?
Germany is Europe's economic engine. The Deutschland has benefited greatly from a weaker euro, created by the ECB, which boosts their exports. Germany is cars and cars are Germany. Comically, Commerzbank, another German bank, is another turd floating in the Western toilet, and there has been talk the last couple years to combine the two sick individuals hoping for a miracle cure. Combining Deutsche Bank and Commerzbank is like two drunkards holding each other up in Times Square on Saturday night.
All that above negativity aside, there comes a time when the bloodshed must stop. Humorously, the beatings will always continue until moral improves. After 12 years of sadness, DB is poised to recover. The European Banking sector is up big this morning. Perhaps traders are sniffing out undervaluation in this area, or, it may simply be easy money, created by the global central bankers, rotating from sector to sector. Banks may be the latest favorite flavor.
The monthly charts tell the longer-term story. DB was in real trouble in early 2016 when it crashed through the 2008-2009 financial crisis lows. The global central bankers colluded in early 2016 to save the stock markets, like they did this year, to protect the wealthy privileged class, but Deutsche Bank instead muddled sideways and collapsed over the last 1-1/2 years to its shameful lows in the 7's.
No one knows what Deutsche Bank's future is but the monthly chart says the long-term bottom is at hand. Price is trying to recover from oversold levels. The chart indicators are in universal positive divergence over the last decade and more. For this year, it would be nice for price to come down a little bit for another matching low which will provide possie d on the money flow for the last 3 months and confirm an all-systems go for the upside. The weekly chart already bounced off positive divergence and has been muddling sideways ever since. The weekly and monthly charts are agreeable that DB can move sideways to sideways higher here on out.
Price has violated the lower band so the middle band at 12.54, and dropping, is on the table. A move like that may be timed with some type of positive news. Of course, if negative news occurs, DB may retreat again. DB is extended to the downside below the ribbon of moving averages so price needs to revert to the mean (move higher).
As odd as it is to say, and perhaps DB may slide into further trouble, but the chart says the worst is over. Price may slip from 8.20 to 7.80 (Keystone's 80/20 Rule) but that should only serve to lock in the near-term possie d on the money flow. Keystone does not own DB but may buy some. The daily chart is in a choppy sloppy sideways move this year. Keystone will watch for now and would like to snag it at 7.80. Do not be surprised if DB surprises everyone going forward and moves sideways to sideways higher for the remainder of the year. DB is down -0.8% on Monday, 4/29/19, about 4 hours into trading, so the beatings are continuing until moral improves. 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 1:36 PM EST: DB rallies +1.3% to 8.30. The banks are feeling love around the world today.
Sunday, April 28, 2019
SOX Semiconductors Weekly Chart; SOX Tags 1600 Level; Overbot; Negative Divergence; Spinning Top; Expansion (Megaphone) Pattern
The chips have carried the broad stock market higher this year. Keystone posted the SOX chart a month ago and new highs were expected on the weekly basis which occur. The SOX prints a new all-time record high at 1605 tagging the 16-hundo level. Silicon Valley enthusiasts are donning fleece vests dancing jigs of joy in front of the Facebook, Apple, Amazon, Netflix and Google (FAANG) offices. Well, what's next for the semiconductors?
Chips go into about every product made nowadays and are spear-heading the technological breakthrough's in blockchain, autonomous cars and other applications. Investors cannot get enough chips. Traders are buying shares of semi companies day after day at the ask. The blue two-leg bull flag pattern plays out. SOX jumps from 1090 to 1390 for the first leg, that is 300 points, then a bit of sideways to sideways lower consolidation (this consolidation period should last longer than it did), and the second leg begins at 1310 so 1610 is the target and bingo, the two-leg bull flag pattern is satisfied.
The SOX prints a record high at 1604.57 and record closing high at 1575.38 on 4/24/19. Chips print a new weekly high but not a new weekly closing high. That last red candlestick for the marginal down week last week is a spinning top. This candlestick pattern typically indicates a trend change. After a long run higher, like this year, a spinning top indicates indecision about the path ahead. The buyers are losing momentum to the upside so price typically rolls over to the downside. Chips are behaving like a parabolic commodity and you know what happens to them; yes, a parabolic move higher typically results in a sharp reversal lower.
With the higher high in price on the weekly basis, the chart indicators are in universal negative divergence. The MACD line over the last couple weeks or so is trying to muster-up additional strength but even if it ekes out some additional joy, it would be expected to roll over quickly again. The MACD is neggie d over the last 1-1/2 year.
Price has violated the upper band so a move to the middle band, also the 20-week MA, at 1327, is on the table. A move to the lower band at 1068 is also in play. Holy Smokes; that would be a -34% drop off the top. Note the blue expansion pattern, or megaphone pattern (the handle and mouthpiece are drawn to envision the megaphone). Price popped above the top rail so it will be interesting to see if the SOX returns inside the expansion pattern. If so, the bottom target at 1000-1070, the same area as the lower band, and upward moving 200-week MA at 1019, are all in play. There is a good chance that the year ends with chips down in this sad area. You can also watch the SMH and XSD charts.
Keystone is not playing the chips from either side lately but in a week or two the sector likely sets up attractively for the short side. Those that think the chip party can go on forever are wrong. When the recession hits, business activity will disappear quickly and chip demand will drop. It is comical that many chip prices are plummeting but traders continue buying the stocks with both hands. The SOX monthly chart is in negative divergence across all indicators which agrees with the idea that the semi's will finish the year lower than current levels. 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.
The bulls pump stocks higher to finish last week. The SPX prints an all-time closing high at 2939.88 on Friday, 4/26/19, now only a point away from the all-time record high from last September at 2941. Since price has a higher high, and the daily chart is set to roll over lower, a look at the 2-hour chart is in order.
The SPX has some momentum although the indicators are in negative divergence. The upper standard deviation band at 2945 must be respected which would be a new all-time record high. If copper futures are up overnight Sunday into Monday morning, the new record will likely be guaranteed. If copper futures are weak, the record may have to wait.
The neggie d jives with the daily chart so a spankdown should be initiated. The rising wedge wants to see a hard smackdown. The RSI and stochastics come off overbot levels agreeable to some price softness ahead. Since the S&P 500 has some momo and excitement, if this follows through, the 2945-2946 print is likely, but the expectation would be for the neggie d to remain in place so the top should still occur. If a candlestick or two of more upside occurs, that is 2 to 4 hours, so a stock market top would be expected Monday in the morning anytime or early afternoon. If the negativity on the daily chart then kicks in, the SPX may fall quite a ways.
Watch the 2-hour chart and as long as none of the indicators move above those thin red lines in the right margin, the top should be in. Copper behavior is key. 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; All-Time Closing High; Overbot; Rising Wedge; Negative Divergence; Upper Band Violation
The bulls are unstoppable. Copper failed last week ushering in stock market softness but the dip-buyers were tripping over each other to buy the weakness. Copper then recovered providing the bulls with a happy weekend of Fed wine drinking celebrating the never-ending rise in equities. The S&P 500 prints a new all-time closing high at 2939.88, ending the day and week at the high, but the all-time high at 2940.91 from last September remains in place. The bulls only need a dollar and three cents to print a new all-time high. The internet web site and newspaper headline writer's will enthusiastically cheer the accomplishment if it occurs.
However, technical-wise, the chart is sick. Price prints the higher high after the better than expected 3.2% GDP number. At the end of last year, most analysts expected GDP to be a 1-handle in Q1. Recent estimates came up to the 2.2% to 2.3% range but the 3.2% was a blowout. Digging down in the data, you see the big inventory build due to the US-China trade war. Companies are ordering more parts than necessary worrying about supply-line disruptions. These inventories will have to be used-up going forward. At the same time, consumer spending remains lackluster prone to fits and starts. Imports are lower verifying the potentially lower spending trend.
The Q1 GDP number is usually the weakest of the four quarters so the Wall Street analysts are upping their targets for GDP and the stock market. Analysts and money managers are telling investors to jump into the stock market since the back half of the year is guaranteed to be better. The market Einstein's say there is nothing but blue skies and rainbows ahead. It may be comical in Q3 and Q4 when they remove their rose-colored glasses revealing a rainy day. The GDP popped because of the global central banker dovish intervention (easy money; the world is awash in liquidity) and the US-China trade war (building inventories). This market behavior is a one-off and unprecedented, therefore, analysts, strategists, traders and investors have a hard time discerning (reading) the tea leaves and will likely get it wrong.
All that fundamental mumbo-jumbo aside, the ominous red rising wedge continues displaying itself. The collapses from rising wedges can be epic. Price has violated the upper band for a month now, so the middle band and 20-day MA at 2896, is on the table as well as the lower band at 2846, and rising. Note that price is a whisker away from the upper band again at 2946 which would be a new all-time record. This level must be respected but the chart will likely remain in neggie d.
All the chart indicators are in negative divergence wanting to see price receive a smackdown going forward. It is a broken record commenting on the low CPC and CPCE put/call ratios but it is worth repeating since the price action is very unique. The low put/calls signal uber complacency. Traders are buying stocks without any fear that the stock market will ever go down again. The third year of a presidential cycle is typically up and investors believe the economy will be juiced into the presidential election in November 2020. The central bankers are the market and the Fed, PBOC, ECB and BOJ are flapping dovish wings like madmen.
The ADX has finally showed a strong trend higher for price but the ADX on the SPX weekly chart indicates a weak trend. The green line on the Aroon is pegged at +100 representing maximum bullishness. The red line should be at zero considering that a new record high just printed but it is not.
The expectation for the SPX is down going forward. This may be a significant top right now leading to multiple weeks of downside, otherwise, the SPX will jog back up to the current highs say after a week of softness on the daily chart, and then roll over for a multi-week decline. Therefore, perhaps very important stock market top will print anytime forward say from now into early May. You should likely ditch any long position that you are not willing to hold for many months or years. 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.
Saturday, April 27, 2019
Keybot the Quant whipsaws back to the bull side late Friday at SPX 2935. The bulls save the day by jamming copper higher. Stay alert for a whipsaw move back to the short side. The price action is historic. More information is found at Keybot's site;
Keybot the Quant
Keybot the Quant
Friday, April 26, 2019
The rise in the US dollar index, $USD, or the dixie, $DXY, is receiving lots of attention. The dollar spikes with the rise in crude oil prices. It is interesting to see the US stock market print new highs as the dollar rises. A lot of the recent pop and rise in the US stock market may be due to China's SSEC tanking about -5% over the last week; that money must have flowed into US stocks (the Shanghai Index is a rocket launch this year so the pullback is not that significant in context).
The US dollar strength story may actually be more of a euro weakness story. The two baskets own about two-thirds of each other's currency so the euro and dollar move inversely; and this is clear from the charts with the euro setting up with positive divergence and the dollar with negative divergence. European Central Bank (ECB) President Draghi opined two weeks ago about the lackluster economy in Europe. Draghi is very concerned about US tariffs further beating down the downtrodden situation across the pond. Italy's economy remains in shambles. The euro weakens.
The ECB will continue providing accomodative monetary policy. Draghi will continue flapping his dovish wings dropping euro's from the sky. The central bankers are the market. Each nation around the globe wants a cheaper currency to boost their economy but the concern is that confidence may be lost during this process.
Two weeks ago, the euro was at 1.124. You can see the big drop off with the last two candlesticks. The euro is printing at 1.1134 as this message is typed on Friday morning, 4/26/19. The euro is receiving support from that congestion zone (blue circle) back in the summer of 2017. The dollar is trying to punch up through the congestion zone from 2017 and the Friday trade is very important to dictate the final look of the candlestick.
The charts are mirror images of each other which would be expected since they move inversely. The moves in the currencies may be due more to the euro weakening, as mentioned, rather than dollar strength. The euro chart indicators are in possie d (green lines) wanting to see a recovery in price going forward. The dollar chart indicators are in neggie d (red lines) wanting to see a pullback in the buck going forward.
Markets are very emotional and news-driven these days. Any messages from central banks can immediately influence the direction of the currencies.
Note the multi-year tightness in the standard deviation bands (pink arrows). There is likely a big move coming for currencies over the next couple weeks. Tight bands portend big moves but do not predict direction. By the behavior of the charts, it appears that the tight bands are squeezing the euro lower into complete collapse while squeezing the dollar higher with a rocket-launch into the stratosphere. You have to give this another week or two for confirmation because at the same time, the band limit violations hint that the euro wants to at least recover to 1.133 and the dollar wants to drop to 96.40. There are big gaps above and below for the euro (orange circles).
The wedge patterns and divergences are forecasting the opposite move of the current direction of the band squeezes. It's a mixed bag. Interestingly, the ADX's are in the cellar so the trend lower in the euro, and trend higher in the dollar, over the last year, are NOT strong trends.
One thing for sure is that it will be a wild time in currency land over the next week or two. Either the tight bands will confirm an ongoing euro collapse and dollar rally and the divergences will have to reset, or, prices will dramatically reverse from this two-week path, as the divergences and wedges indicate, with the euro gaining strength and the dollar retreating lower and the tight bands exacerbating these moves in this direction. Keystone has no positions in the currencies currently but if a side had to be picked, the expectation would be for the euro to move sideways to sideways higher for the weeks and months ahead while the dollar moves sideways to sideways lower for the weeks and months 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.
The stock market bulls have had a joyous year thus far after rich Daddy Fed and generous Uncle's PBOC, ECB and BOJ saved equities by printing money like madmen. Keystone's BPSPX tool is on a double-whammy buy signal. The BPSPX had reversed six percentage-points to the upside so that was a market buy signal and price crossed above the important 70% level in April creating the double-whammy buy.
The SPX floats higher to a new all-time closing high at 2934 this week but did not breach the all-time high at 2941 from last September.The S&P 500 high for this week thus far is 2937.
The BPSPX peaks at, let's call it 79.6, a couple weeks ago. So a six percentage-point reversal is 73.6. That would be a market sell signal and tell you that trouble has begun for equities. If the 70 level then fails, that will be a double-whammy sell signal and stocks will be falling in earnest. Bulls are fine and have no worries as long as the BPSPX remains above 73.6. 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 Saturday Morning, 4/27/19: The BPSPX finishes the week at 74.80. The drama continues.
Thursday, April 25, 2019
Keystone's proprietary trading algo, Keybot the Quant, flips to the bear side at SPX 2920 after this morning's opening bell ending a six-week rally. Copper failed creating broad stock market weakness. Bears should flex their muscles as long as CPER remains below 18.07 (now at 17.92). As always, stay alert for a potential whipsaw. More information is found at Keybot's site:
Keybot the Quant
Keybot the Quant
The SPX weekly chart is very important these days. The daily chart has wanted to roll over for a month and more but the central bankers prove too powerful so far. Any small pullback is bot by enthusiastic dip-buyers. The complacency and uber bullishness is verified by the low CPC and CPCE put/call ratios and the low VIX. Thus, the weekly chart may have to top out to kick the daily chart negativity into gear and take the whole shooting match lower.
The SPX prints the new all-time closing high this week at 2933.68 on 4/23/19 but the all-time record high at 2940.91 from 9/21/18 (7 months ago) remains in place. The SPX prints a high this week at 2937 which is 4 points shy of the record.
With the matching and higher price high as compared to last September, the chart indicators are in negative divergence (red lines) sans the MACD line. It is always the pesky one; the last one to show up at the party and last one to leave. The RSI is also trying to sneak out a higher high so watch that. To call the top on the weekly basis, the RSI and MACD line have to roll over with negative divergence as price prints a higher high; but there are interesting things occurring. These comments so far are in reference to the last few weeks.
If you look over the last 7 months, the chart indicators are in negative divergence for that time frame. This is important since the MACD line that wants another higher high on the weekly basis in this near-term, may be overruled by the broader longer term negative stance. In other words, price may simply start dropping anytime as the brown line in the margin suggests. Otherwise, the MACD line requires at least one jog move, down one week up the next, for the top to then form with the MACD going neggie d in this near-term; that will be the top, say, in a couple weeks as May begins or the first-half of May.
You can see the SPX overextended to the upside for the prior tops. Price is above the moving average ribbon (above the 20-day MA above the 50 MA above the 100 above the 150 above the 200). Price typically needs to mean revert under this scenario and the early 2018 top sent price to the 50-week where it bounced. This year, the bottom occurred when the central bankers intervened in early January at the 200-week MA support. The 20-day is not yet above the 50 but that should occur over the next couple days and price again needs to mean revert lower.
The ADX purple box shows the strong uptrend in 2017 and 2018 it was one for the record books. That strong upside trend petered out last summer. As stocks topped out in September/October, Keystone highlighted this back then as he called the top. The trend higher was no longer strong. The waterfall crash occurs in Q4 and this was developing into a strong trend lower, as the ADX shows. That is when the Fed, PBOC, ECB, BOJ, and the whole Hee-Haw gang panicked and stepped into markets in January to save the day, which they did. It is fascinating to see that despite this historic rally in Q1 this year into Q2, the ADX is down at 16 telling you that it is not a strong trend higher despite the new record closing high.
The Aroon readings are at peaks and valleys for the prior two tops. The green line is pegged at 100.0 and the red line at 0.0 but this time around the green line is at its euphoric maximum but not the red line. Considering that a new closing high was printed this week, the red lines should be at zero. As mentioned above, the expectation is for the SPX to print a multi-week top at anytime forward into early May. This should open the door to several weeks of weakness. The low put/calls have not taken their pound of bull flesh and the expectation would be that the chunk would be from 40 to 100 SPX handles or more. 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.
The central banks collude this year to save global stock markets; it is a repeat of 2016. The purple box shows copper in retreat but the PBOC steps in with triple R cuts. The cuts in reserve requirement ratios allows banks to lend easier to spur the economy. The Federal Reserve quickly followed with Chairman Powell flapping dovish wings. Then the ECB, the BOJ, you get the idea. The central bankers are the market.
Copper jumped higher when China's central bank cut the RRR's. After touching 2.55 intraweek, price leaps higher to 2.75 in a couple weeks time. Copper is a key indicator for the economy and with China pumping stimulus, it was par-tay time ahead for global markets. The world remains awash in liquidity.
Copper ran higher and never looked back. Price hits its head on the 2.95 ceiling for the last two months. The chart indicators are negatively diverged agreeable to price retreating lower. The MACD line, however, is sloping negatively but it would have been better for copper to print 2.95 this week as another matching high to confirm negative divergence. Nonetheless, price has hit a ceiling for many weeks so the bias does appear down.
Copper tagged the upper standard deviation band so the middle band at 2.82 is on the table. Copper is down -1.0% to 2.887 as this message is typed Thursday morning. The lower band at 2.62 is also on the table. Stochastics and money flow are overbot.
The RSI is not overbot so that is something that copper bulls can hope for. The blue ascending triangle is also in play which is a bullish pattern. The orange dot shows price now at 2.887. Obviously, the copper bears win bigtime if price falls below 2.88. The 2.82 will likely follow. Bulls win if price breaks out above 2.95. The 2.88-2.95 zone is noise.
Keybot the Quant remains long the stock market and has been tracking copper a couple weeks as the main parameter impacting broad stock market direction. Thus, as copper goes, so goes the market.
The chart has a negative bias but it leaves you guessing. If a US-China trade deal is announced, boooiiiinnnggg, copper will likely catapult higher. If the trade deal collapses or is a stupid deal, copper may tank. In early 2016, when the global central bankers colluded and intervened in markets to save the day, copper had a similar pop and then chopped sideways for many months forward. If copper slips away, that would jive with the SPX weekly chart that hints at multi-weeks of weakness after a top prints anytime over the next three weeks. Keystone has no positions in copper currently. 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 7:22 AM EST, Thursday Morning, 4/25/19: As Keystone finishes his windbag commentary above, copper is now down 3.35, -1.2%, to 2.883. Things are getting interesting. Hang on Nellie. S&P futures are dead flat.
Note Added 7:34 AM EST: Copper is now down 3.15, -1.1%, to 2.885.
Note Added 8:15 AM EST: Copper is now down 3.35, -1.2%, to 2.882. S&P futures +3. VIX 13.18. Both futures and volatility are higher so one of them is wrong.
Wednesday, April 24, 2019
SPX S&P 500 Daily Chart; New All-Time Record Closing High; Overbot; Rising Wedge; Negative Divergence; Gaps
The bulls are singing songs and dancing jigs of joy as the stock market floats higher. The SPX prints a new all-time closing high at 2933.68 on 4/23/19 (yesterday) overtaking the prior all-time closing high at 2930.75 on 9/20/18 seven months ago. The SPX all-time record high remains at 2940.91 from 9/21/18. The HOD yesterday was 2936.31 only five points away from the all-time high. S&P futures are flat about 90 minutes before the opening bell for the regular Wednesday trading session.
Traders want to buy even the smallest of pullbacks since the central banks have promised to print money forever. This price action is very similar to 2016 when the global central bankers colluded to save the markets. Short-sellers are running for their lives, throwing in the towel, creating upside short-covering rocket fuel. The banks have found love after earnings. Other company earnings hit a homerun which causes Joe Sixpack to run out and buy stocks.
Tech and chip stocks carry the broad market higher. NDX, COMPQ, SOX, XSD, SMH and XLK are all at record highs. Interestingly, however, none of the hot-shot high-flying techs such as FB, AAPL, AMZN, NFLX and GOOGL, the FAANG stocks, are at record highs. Alphabet (Google) is only a hair away so watch GOOGL to see if the broad stock market rally has more upside legs.
XLY, consumer discretionary, is at a record high. Of course it is. In this new Gilded Age, the wealthy continue buying the fancy and high-priced trinkets and bobbles. The huddled masses worry about making ends meet each month. The Trump administration would be expected to hype the US-China trade talks to keep the stock market rally alive and this morning there is news of more trade talks and everything is going swimmingly. Of course there is.
Keybot the Quant remains long the market and pegged at the maximum possible +100 level and is tracking copper intensely for the last couple weeks. The price action in the stock market is epic and historic but everyone is yawning.
On the daily chart, yesterday's joy gave a bump to the RSI for a higher high. The other indicators remain in negative divergence (red lines). Thus, price will need to jog, down one day up the next, to another matching or higher high, to get the RSI to roll back over into neggie d. After such a big pop in price, there is momentum, so price may remain buoyant today digesting the gain, if so, the jog move occurs in the subsequent day or two.
The RSI, stochastics and money flow are all at or coming off overbot levels agreeable to a pullback in the daily time frame. The rising wedge is ominous since the collapses can be dramatic. The upper band was violated so the middle band, also the 20-day MA, at 2879, is on the table and the lower band at 2810. The upper band at 2947 must be respected if the momo continues; this would be a new all-time record high above the current 2941 all-time high.
The volume candlesticks tell an interesting story. The two highest volume days over the last month are two sell days. None of the buying day's volumes are stronger than the two big sell days. That is the institutions passing off shares to Uncle Joe and Aunt Harriet that are caught up in the bullish television hype. The red circles show distribution days where the smart money is passing off shares to the dumb money.
The bulls are happy to see the pop in the RSI which provides a couple more days of life as discussed above. The golden cross occurred in late March and remains in play helping bulls. A pullback would have been expected when the golden cross occurred but again, all dips are bot strongly.
The ADX finally indicates a strong upside trend (blue box). Bears will need the ADX to roll back over to the downside. The Aroon is pegged at the epic +100 level indicating off-the-charts bullishness. This also occurred days ago at the same time the red line was at zero. It is impossible to get more bullish than that; the scale is pegged. And now, as price makes a new record high, the red ADX line is not at zero, and it would actually be expected to be negative although this is impossible, but rather sits at 20; a divergence.
There are enough gaps down below to look like Swiss Cheese so they are appropriately shown in yellow. Gaps are typically filled at some point in the future.
The SPX daily chart has wants to correct since late February early March but each pullback is met with strong buying on central bank promises, US-China trade talks, short-covering rallies and earnings joy. Keystone has highlighted the long and strong SPX weekly chart through this same time period and obviously it is dominating the price action. The low CPC and CPCE put/call ratios have also wanted a large pull back in the stock market for going on a couple months now.
Instead of the daily chart dropping from 40 to a 100 handles or more over the last couple weeks or so, and then returning higher to satisfy the weekly chart, price simply grinds higher. The top in the SPX weekly chart will likely dictate this near-term top. The bulls have pushed it this far so what is a couple more weeks?
The SPX weekly chart is in negative divergence across its indicators except for the MACD line in the very near-term (the MACD line on the weekly is neggie d as compared to the September record highs). Thus, the weekly chart likely needs another jog move, down one week up the next to a matching or higher price high, to negatively diverge the MACD line. So it continues to appear likely that the S&P 500 will top-out on the weekly basis say the first or second week of May (perhaps "Sell in May and Go Away") or perhaps sooner. This will lead to multiple weeks of downside and the low put/calls will surely kick in with negativity.
Since the upside joy continues day after day with traders dancing in the streets drinking Fed rum, ECB champagne and PBOC and BOJ rice wine, expect anything in the days and weeks ahead. It would not be surprising to see the S&P futures down 50 handles overnight at any day forward.
So summing up all the above mumbo-jumbo, watch copper closely. Bears need weaker copper or they got nothing. If copper weakens today or going forward it will tell you that the party is over. Watch GOOGL since it is teasing at new record highs. If GOOGL prints new record highs, it will take other FAANG and tech stocks higher and continue the broad market rally. If Google falters and rolls over, that will indicate the broad rally is out of gas. Watch the all-time record high for the SPX at 2941 from last September. The S&P 500 was only 5 points away yesterday. A new record high would be a big bull win and may push the momentum forward.
Watch the RSI on the daily chart above to see if it rolls over and identifies another top in this daily time frame. Watch the MACD line on the SPX weekly chart since it will likely identify the multi-week top in early May. Be prepared for negativity to arrive at any time, any day, any hour forward. 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 9:38 AM EST: The Wednesday, 4/24/19, session is off and stumbling. Stocks are flat. Interestingly, the RSI is now dead flat as price prints a matching high. No need to wait for a couple-day jog. The RSI is quickly in negative divergence again. Copper futures are up +0.3% (lower than a couple hours ago). GOOGL is down -0.3%.
Monday, April 22, 2019
Oil is a big focus as the new week of trading begins after the Easter holiday. Traders are nursing hangovers from cheap booze. Chocolate bunnies, jelly beans, Peeps, hard-boiled eggs and beer are sloshing around in investor's bellies creating a queasy start to the week. S&P futures are off -8 about 3 hours before the opening bell for the regular Monday trading session.
The Trump Administration plans to eliminate waivers on the Iranian oil supplies. In other words, President Trump is tightening the sanctions on Iran (tightening the screws against the rogue nation that supports terrorism in the Middle East). On one hand, Trump is pressuring OPEC to keep the oil flowing freely to keep prices low to aid the US economy (lower gasoline prices) but on the other hand is limiting the oil supplies out of both Iran and Venezuela two of the world's key producers. American's are noticing that gasoline is back above $3 per gallon, a 3-handle. It took $80 to fill Keystone's pick-up truck the other day.
The president does not want nations to take Iranian or Venezuelan oil, however, many transfers continue taking place between tankers on the high seas. Trump pressures OPEC, controlled by Saudi Arabia, to keep the oil taps open but the Kingdom is keen on protecting their own interests. The Saudi's need a high oil price since that increases their revenues so they can support the population keeping the huddled masses at bay. The world's oil market grows more complicated daily.
Key news that has not been publicized enough by the media is Libya. The nation is in civil war again and oil supplies will be impacted. President Trump is now singing a different tune supporting the rogue general that is marching on Tripoli. Trump is extremely concerned about the oil market as evidenced by the change in policy over the weekend. The US will back any actors, good or bad, if it keeps the oil flowing, especially out of Libya. That is what it is all about; money and greed.
So currently, oil production is limited in Iran, Venezuela and Libya. West Texas Intermediate Crude (WTIC) oil is up +2.4% to 65.51 (green dot) this morning the highest since November. Brent oil is above 74 bucks.
The weekly oil candlestick chart above shows how price violated the upper band so the middle band at 62.22, and rising, is on the table. You will have to look at the chart today to see if the spike higher in crude on the Iran and Libya news creates neggie d. It is likely that it will as shown by the thin red lines. However, oil is trading on emotion and news making it a tough nut to crack. Look at the news this morning that spikes oil +3%. Short sellers are getting their pants pulled down and are given wedgies to begin their week. Oil bulls were hesitant to play the long side and they miss the pop.
Note the ADX showing a very strong down trend playing out in Q4 (purple box) but the long upside rally in oil this year is not a strong trend higher. The light blue lines show an inverted H&S pattern playing out with the head at 42.5 and neckline at 53.0. That is a difference of 10.5 so the target is 63.5 when price broke up through the neckline, which was achieved satisfying the H&S pattern.
The light grey lines also show an inverted H&S pattern with head at 42.5 and neckline at 55.5 so that is a difference of 13.0. So price should target 68.5 if the 55.5 neckline was taken out, which it was. Price is at 65.51 as this is typed so that target would be another 3 bucks. The upper standard deviation band is at 66.17 so there is a couple of upside targets here if the news continues that limits oil supplies.
Many charts are exhibiting ominous red rising wedges. The collapses from rising wedges can be quite dramatic. As the world worries about the oil supply-side, perhaps they should actually be more concerned about the demand-side in the weeks and months ahead. Keystone is not playing in the oil arena these days. If a direction had to be chosen the preference would be to play oil short going forward. 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, April 18, 2019
NDX Nasdaq 100 Index Daily Chart; New All-Time Record High; Overbot; Rising Wedge; Negative Divergence; Upper Band Violation
The fleece vest's in Silicon Valley are throwing confetti, drinking Fed wine and congratulating each other with their Apple wrist phones. The Nasdaq 100 Index prints a new all-time high at 7715.07 and new all-time closing high at 7680.72 (green lines) taking out the prior all-time high at 7700.56 from 10/1/18 and prior all-time closing high at 7660.18 from 8/29/18.
The Nazzy 100 record highs follow the new all-time highs in semiconductors. The SOX and NDX are parabolic comically trading like commodities. You know what happens to parabolic charts. The global central bankers have destroyed all price discovery and business cycles with their obscene Keynesian money printing. The chips and tech stocks are the main drivers of the Q1, now into Q2, stock market rally.
The ADX is up at 40 in the stratosphere confirming the strong trend higher in major tech stocks (think FAANG). The market bears will need the ADX to roll over. The Aroon is historic. It is nice to lock the chart into history displaying the perfect +100 and zero Aroon readings. The price action is historic. The trading volume jumps higher. Perhaps that is Joe Retail running into the big tech stocks ready to hold the bag; every top needs a sucka.
The upper band was violated so the middle band at 7505, and rising, is on the table, as well as the lower band at 7270. The collapses from rising wedges can be quite dramatic. The RSI, stochastics are overbot agreeable to a pullback. The chart indicators are in negative divergence wanting to see price retreat lower. That gap at 7400 is big enough to drive a truck through. There are other gaps below.
Despite the four-month rally, the 150-day MA line remains dead flat. Isn't that something? That pink line went negative in December and the Nasdaq 100 major tech and high-flying stocks remain in a cyclical bear market pattern ever since. That is amazing as price prints an all-time high. These are not your grandfather's markets.
The death cross (black circle) occurs in December and remains in play. The bears will need to drive the NDX down to 7K and get it to trend lower from there to maintain the death cross, otherwise, a golden cross will be likely out in May/June. It will be interesting to see if the likely imminent neggie d spankdown and rising wedge collapse can send price down to there quickly. The ongoing uber low CPC and CPCE put/call ratios continue signaling rampant complacency and fearlessness that needs to correct with a beating.
The Mueller report is going to be released in the hours ahead which may cause wild swings either way. The charts want to pull back but President Trump keeps hyping the US-China trade deal and Chairman Powell remains in the basement of the Eccles Building printing money like a madman. 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 Good Friday, 4/19/19: US markets are closed today. In the Thursday session, the NDX does not print a new all-time high, so the record high at 7715.07 from 4/17/19 remains in place. The Nazzy 100 does print a new all-time closing high at 7689.72 on 4/18/19 interestingly, exactly 9 bucks above the record closing high from the prior day. The NDX daily chart remains in full negative divergence across all indicators. The SOX (semi's) prints a new all-time record high at 1576.79 on 4/17/19 and a new all-time closing high at 1558.13 on 4/18/19. SMH and XSD are also at record highs. None of the FAANG stocks (FB, AAPL, AMZN, NFLX, GOOGL) are at all-time record highs. Alphabet (Google) is the closest. Any sogginess in stock trading on Thursday due to the release of the Mueller report was nullified by the pre-holiday and full moon bullishness. Perhaps stocks will finally start to come back down to earth on Monday which is Earth Day.
Tuesday, April 16, 2019
SPX S&P 500 Daily Chart; Overbot; Rising Wedge; Negative Divergence Developing; Upper Band Violation
The SPX daily chart continues wanting to top out but the happy news messages keep tweaking prices ever higher. Treasury Secretary Mnuchin's comments on an agreement on enforcement methodology for a US-China trade deal creates another push higher. Ditto the Fed's Evans, a dove, who says an interest rate cut is on the table ahead if inflation remains subdued. The central bankers are the market. Boooiiinnng. Equities receive more love on the happy talk.
The chart indicators remain in negative divergence except for the money flow. With a US-China trade deal imminent and the central bankers promising ongoing easy money, the money flow pops higher. This juice creates a couple more days of upside joy. The expectation is for price to drop one day, due to the neggie d on the other chart indicators (Monday), but then recover for a day to another new price high (today; Tuesday), and at that price high, as long as the money flow does not print another higher high, the top is in again on the daily basis with universal neggie d.
S&P futures are up +9 about five hours before the opening bell for the regular trading session on Tuesday morning. If this happiness remains, the SPX will print another new high at 2911-2916. Simply check the money flow (and other indicators) to see if they are all in neggie d, if so, the top is in again. Stocks will drop unless President Trump, or his henchmen Mnuchin and Kudlow, or the central banks, speak more happy talk. If so, that will squeeze out another couple days of upside.
The upper band at 2928 must be respected, say if a trade deal is announced, but price has already tagged the upper band so the middle band at 2856 is in play and more likely. The lower band at 2805 is also in play going forward. Keystone's 80/20 Rule says 8's lead to 2's so price overtaking 2880 opened the door to 2920. If price tags 2918, that opens the door to 2922. The 2908 level opens the door to 2912. Remember that the rule works in reverse as well and 2's typically lead to 8's.
The red rising wedge pattern is ominous since the collapses from rising wedges can be quite dramatic. The low put/call ratios continue to want to bite off a big chunk of bull flesh. The red lines show indicators all in neggie d sans the money flow as discussed above.
The purple box for the ADX shows the strong downtrend in Q4 at the end of last year but this long 3-1/2 month uptrend has not been a strong trend, until now. This is very odd market behavior. The bulls will be happy if the ADX continues higher since it will show that the rally has new legs and will extend a while. Bears need the ADX to simply roll back over lower or flatten.
The Aroon green line remains pegged at the maximum ceiling while the red line is at the maximum floor at zero. It does not get any more euphorically bullish than that.
The SPX daily chart will likely top out today on the new price high and want to sell off but the weekly chart still has upside juice available on the weekly basis. So, the stock market will either take a big drop right now (due to uber low put/calls signaling rampant complacency) but then recover in a couple weeks back to new highs again and then print a top later this month or early in May that leads to a multi-week decline, or, stocks will chop with only minor pullbacks for 2 or 3 weeks as the weekly chart tops out, and the big drop and significant multi-week decline begins and occurs in May and June.
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 Good Friday, 4/19/19: US markets are closed today. The SPX is sitting at 2905 up 13 of the last 17 weeks a phenomenal run. The NDX, SOX, SMH and XSD are all at record highs so obviously tech and chips are the main driver of the stock market this year. None of the FAANG stocks (FB, AAPL, AMZN, NFLX, GOOGL) are at all-time record highs. Alphabet (Google) is the closest. Any sogginess in stock trading on Thursday due to the release of the Mueller report was nullified by the pre-holiday and full moon bullishness. Perhaps stocks will finally start to come back down to earth on Monday which is Earth Day. The SPX daily chart should continue to experience a slap down due to the neggie d. The SPX weekly chart is neggie d across all indicators except for the MACD line. This hints at a jog move ahead to likely create the multi-week top. Stocks may retreat next week to satisfy the daily chart but price will come back up due to the long and strong MACD line on the weekly chart, thus, down one week, but the following week, say the week of 4/29 to end the month, May 1 is a Wednesday and FOMC decision day, stocks should recover to top-tick the weekly chart. The S&P 500 weekly chart will likely top out with neggie d at the end of this month or early May and that will lead to a multi-week decline. Perhaps the low put/calls are simply waiting now for the SPX weekly to top out and this extreme euphoria and complacency will send equities down the rabbit hole along with the neggie d.