The SPX 2-hour chart is lined up with oversold conditions, a falling wedge and universal positive divergence across all indicators. The lower band is violated so the middle band at 2796, and falling, is on the table. A bounce in this 2-hour time frame would be expected. Of course, the news sound bites can send stocks in either direction. There is 55 minutes remaining in the trading day and week. 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 3:28 PM EST: The SPX drops to 2752 testing the lows of the day. LOD is 2750.63 a critical number which occurred after the opening bell. The VIX is at 18.71 versus way up above 19.40 when the prior intraday lows were made. Will price bounce from the lows of the day, or die? Will stocks tank into the close or rally?
Note Added 4:02 PM EST: The SPX neither tanks or rallies it simply slides out the door sideways into the weekend. The SPX loses 37 points, -1.3%, to 2752. The SPX pukes -2.6% this week and collapses -6.6% for the month of May. The monthly charts receive new data points cast in concrete. The June candlesticks begin on Monday.
President Trump proclaims more tariffs against Mexico due to the immigration crisis (caused in part by Trump himself whipping everyone into a frenzy by threatening to shut the border; this rhetoric causes a larger influx of immigrants towards the US since they figure it is the last chance they have to enter America). So this announcement last evening in the United States, as Asia markets began trading, tanked US futures. The S&P's are down -27.
Traders are likely more concerned about the pending retaliatory tariffs and other measures that China plans to announce this evening. That will give everyone the weekend to ponder the escalating trade war and rapidly increasing global protectionism. Protectionism is what exacerbated the Great Depression in the 1930's. All nations begin slitting each other's throats and all end up dying on the bloody floor.
The US dollar/yuan pair, USD/CNY, is trading at 6.9034 and market participants anxiously monitor the key 7.0 line in the sand. The communists may weaken the yuan (renminbi) past the 7.0 level to give their manufacturers and exporters an economic edge. The yuan is in the denominator of the currency pair so as the yuan weakens, the pair number rises. Thus, a higher USD/CNY number represents a weakening yuan while a dropping number represents a strengthening yuan. Of course the communist leaders in Beijing control the renminbi and set its daily exchange rate range.
This evening China will announce a combination of retaliatory measures including tariffs against the US, perhaps a plan for weakening the yuan, perhaps hassling US companies operating within the commie nation and other counter punches. The communist leadership is already running Korean war movies nightly across China to foster hatred for America and US products. China exports far more goods to the US than the US ships to China so the communists cannot match America's tariffs tit for tat. The commies will announce other measures in addition to tariffs that will attempt to equal the recent US tariffs. The trade war is getting uglier each day.
Bells will ring and sirens will sing when the yuan weakens past 7. Last Halloween, the yuan ran to 6.98 a breath away from 7. China may weaken the yuan past 7 to give their exporters an economic advantage which will help support the economy. But a weakening currency is not all wine and roses.
A weaker yuan will increase debt pressures on companies. It will increase the cost of imports when China's plan and goal is to grow the domestic economy which will require more imports. Most worrying for the filthy communists, is capital flight of money out of China. This has been occurring the last few years and the communists keep implementing stricter capital controls to stop the exodus of money, especially foreign capital, from China.
Another disadvantage to communist China for weakening the yuan past 7 is that their hopes for more respect in the world's currency markets will diminish. China wants the yuan to be more respected worldwide but manipulating the currency lower will severely damage that reputation. In addition, many Chinese companies maintain large balances of US dollar-denominated debt.
China's currency reserves topped over $4 trillion a few years ago and now slip below $3 trillion. China has ammunition available to shoot from both the monetary and fiscal barrels but the powder is running low. Of that $3 trillion, China needs to keep a steady base of reserves that are not touched. There are also cash-flow obligations occurring which places portions of this nest egg off limits. So China has some ammunition available to handle difficult times ahead but the piggy bank is clanging if you shake it.
The China retaliatory tariffs and other measures to be announced tonight will impact global markets and of course the yuan. Grab your popcorn and candy bars while you sit and watch the yuan weakening towards 7. 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: The renminbi (yuan) currency chart above is provided by CNBC and annotated by Keystone.
Note Added 6 AM EST: China strikes back against the US in retaliation for the treatment of Huawei. The communists announce plans to release a list of "Unreliable Entities." This list will obviously slap US companies in the face. Let the festivities begin. USD/CNY 6.9019. S&P futures are deteriorating to -34. VIX jumps to 19.666.
On Thursday morning, 5/30/19, US Treasury yields are; 2-year 2.11%, 5-year 2.07%, 10-year 2.26%, 30-year 2.68%. The 2-10 spread is 15.2 bips. The 3-month-10-year spread remains inverted. The 2's-5's remain inverted at 4 basis points. You can see that the 10-year yield is at lows not seen since 2017.
The chart shows the 38%, 50% and 62% Fibonacci retracements for the big bond selloff period from July 2016 to October 2018. Yield expands higher during that 2-year+ period from sub 1.40% to over 3.20%. Traders and investors were dumping bonds and notes like madmen convinced that inflation was here to stay and the Federal Reserve has no choice but to keep raising rates. In December 2018, Chairman Powell bumped rates higher which is now viewed as a step too far.
Investors immediately searched for perceived safety in defensive stocks, high-dividend plays, staples, utilities, real estate, gold and Treasuries so the yields trail lower since last September/October for nearly three quarters.
The yield stuttered slightly at the first 38% Fib at 2.51% but the bond and note bulls prevail sending the note prices higher and yields lower. Yield then tests the 50% Fib at 2.29%. It looked like the 50% Fib would hold as support but yesterday the bond and note bulls came in again buying Treasuries sending yields lower rupturing the 50% Fib so the 62% Fib at 2.07% is now in play.
A head and shoulders (H&S) pattern top also is playing out. The brown lines show a neckline at 2.62% and head at 3.25% which is a 63 bip difference so the downside H&S target is 1.99% if the 2.62% level is lost and it was lost. Same idea with the orange H&S if you want to draw it at an angle. Both H&S's breakdown from the same place. Note how yields came up for the back kiss after the neckline and then failed lower again; that is textbook technical analysis behavior.
So the Fib retracements open the door to 2.07% and the H&S downside target is 2%-ish. This creates a landing zone in the 1.99% to 2.07% range in the future. This does not have to happen right away. Reference the prior posts about TNX (the 10-year yield) and the TBT and TLT ETF's for more information.
If yield collapses to 2.07% now, that will be in conjunction with a stock market crash. The more likely scenario is sideways choppiness for a month, then recovery in yields to at least back kiss the 50% Fib at 2.30%-ish and higher. Then a rollover as the year progresses so the 1.99%-2.07% may be more of a Q3 and Q4 thing.
If yields continue lower, it will verify that inflation is Godot which has been Keystone's mantra the last few years. Humorously, the largest inflationary expansion is the size of the wallets of the greedy crony capitalists that have destroyed America over the last five decades. 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 VIX is at 17.90 popping above the important 200-day MA at 16.94 that separates a short-term bull market from a bear market. The bears rule the stock market as long as they keep the VIX above 16.94. The bulls must push the VIX below 16.94 to have any hope of sending equities higher. The VIX begins trading at 3 AM EST each morning. 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, 5/30/19, at 7:30 AM EST: The VIX is at 17.44 with S&P futures up +7. The bulls got nothing unless they push the VIX below 16.94.
The SPX 12-month MA cross is the most important stock market indicator that separates a cyclical (weeks and months) bull market from a cyclical bear market. The 12-month MA is at 2781-2782. The SPX is at 2779; failure. The stock market is in serious trouble right now. The SPX LOD thus far is 2766.06.
20-week MA 2813
10-month MA 2784
12-month MA 2781-2782
Price is at 2779
50-week MA 2776
200-day MA 2776
With 90 minutes of trading remaining in the hump day session, the S&P 500 is battling for its life. Cluster those key moving averages and you have a range of 2776-2784 for all the marbles. Stock market carnage will occur sub 2776 (the SPX failed earlier in the day to 2766 but then recovered). The bulls will live to fight another day and stocks will recover if they can push price back above 2784. Who will win?
Interestingly, FBI Special Counsel Mueller, who investigated President Trump, gave a press conference after 11 AM EST where he said if he and his team thought the president did not obstruct justice, they would have said so. In other words, the president was up to nefarious behavior but Trump cannot be charged while in office so the investigation could not render a black and white decision. The stock market tanked and the SPX lost the critical 12-month MA at 2782 after Mueller's comments. 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 2:35 PM EST: The SPX is at 2777. VIX 18.30. Gold 1282. 10-year yield 2.23%.
Note Added 2:37 PM EST: The SPX is at 2775; complete failure below the 2776-2784 critical range. Strap yourself in. The ride may become turbulent from here. VIX 18.32. VIX HOD 19.04. Bears will need to push the VIX above the 19.04 to prove that they mean business.
Note Added 2:40 PM EST: The SPX is at 2772.
Note Added 3:05 PM EST: The SPX is at 2768.
Note Added 3:43 PM EST: The S&P 500 rallies 19 points higher off the 2768 low. The SPX is at 2787 back above the critical 2776-2784 zone. The bulls are throwing confetti.
Note Added 3:52 PM EST: The SPX is at 2779.
Note Added 3:57 PM EST: The SPX is at 2785.
Note Added 4:11 PM EST: The SPX ends the session down 19 points, -0.7%, to 2783 inside the critical 2776-2784 support range. It is a bull win that the SPX regains the critical 12-month MA at 2781-2782 representing a cyclical bull market but by only one point. VIX 17.76. The bulls and bears return to their camps to lick their wounds and prepare for another battle tomorrow. The fight to take hill 2776-2784 continues. The bulls are on one side and the bears on the other. One side will flinch and the other side will win and dictate stock market direction forward. If you listen hard, a harmonica can be heard in the distance echoing across the battlefield just like Gettysburg many decades ago. The bulls and bears know that one side or the other will meet their fate tomorrow.
Keystone talked about the drop in Treasury yields a week or so ago. The flight to safety is increasing over the last couple days; investors shun stocks and buy notes and bonds. The buying of Treasuries sends note and bond prices higher and yields lower (prices move inversely to yields). This also provides a disinflationary and deflationary vibe.
TNX and UST10Y are useful chart symbols for the 10-year yield. TNX and UST10Y charts, since they show yield, move higher as notes and bonds are sold off. The two ETF's most traders prefer are TBT and TLT. TBT moves in the same direction as the 10-year yield so as notes and bonds are sold off, yields move higher, and TBT moves higher. TLT moves inverse to the 10-year yield so as notes and bonds are bot, like the last couple days, yields move lower, and TLT moves higher, and TBT lower.
TLT has been slowly setting up with neggie d while TBT s slowly setting up with possie d. Keystone bot TBT early last week due to the possie d on the 2-hour and daily charts, for a quickie trade, but quickly exited the trade, which turned out to be flat, as yields rolled back over to the downside. That was expected as explained by that prior TBT weekly chart.
As the flight to perceived safety continues, the Treasury yields inch lower. Interestingly, however, the yield curve is not flattening as much as would be expected. On Wednesday morning, 5/29/19, yields are; 2-year 2.08%, 5-year 2.03%, 10-year 2.23%, 30-year 2.666%. The 2-5 spread is inverted by 5 bips. The 2-10 spread is at 14.6 bips nowhere near the flattening of 9 bips we have seen over the last many months.
Since yields are dropping, TBT is dropping further and TLT is moving higher. In the chart above, the RSI now makes a lower low. Ditto the MACD line. The stochastics are oversold and looking for a bounce in yields. Ditto the histogram and money flow that are positively diverged wanting TBT, and yields, to move higher. So a couple jog moves on this weekly basis are likely needed to place a bottom. Say, an up week, then down week to satisfy the RSI and MACD, then up a week, then down again for one week to create firm possie d with the MACD and that will be the bottom in Treasury yields and the TBT, and the corresponding top in TLT, since the TLT chart is the mirror image of TBT.
TBT has violated the lower band so the middle band at 34, and dropping, is on the table. The falling green wedge is a bullish pattern for TBT.
So yields and the TBT should bottom over the coming 1 to 4 weeks. TLT should top-out over the next 1 to 4 weeks. Keystone will wait until the exact bottom in TBT, and corresponding top in TLT, occurs in the coming days and couple weeks or so and play TBT long and/or TLT short. If a longer term trader, you could have started to scale-in to TBT already. Then another buy say this week, then the week after that, as previously mentioned, and then hold it into summertime.
If the positive divergence sets up for TBT over next couple weeks, that hints that yields will rise and that the pullback in stocks may not have legs. When investors think the coast is clear, or perhaps become optimistic going into the G20 meeting (looking for a US-China trade deal) in June, they will exit Treasuries (selling notes and bonds, yields move higher) and buy stocks.
You must be a nimble trader going forward, however, since the TBT monthly chart hints at more lows ahead, thus, Treasury yields will likely resume the downside in the back half of the year probably as the stock market falls apart. So Treasury yields, and TBT will move sideways to sideways lower for a couple more weeks, then recover with a multi-week rally, say into July-September, then roll over again to finish the year lower than the current levels.
As mentioned in the prior post, it was important for TBT to hold 32. Since it did not, Keystone's 80/20 Rule says 2's lead to 8's so the sub 32 number, now at 31, opens the door to 28. What you may see is a bottom in TBT in June in the 30-31 area, then multi-week recovery to 32-35, then roll over during the last 5 months of this year down to 22-28. The other scenario is a flush in the stock market now, which drives TBT down to 28 in June, then the multi-week recovery occurs and then the back half of year rollover. 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 2:42 PM EST: The Treasury yields are; 2-year 2.08%, 5-year 2.03%, 10-year 2.23%, 30-year 2.666%. The 2-10 spread is 15.5 bips. Interestingly, as the stock market tanks, the yield curve actually steepens by a bip.
Keystone's most important cyclical (weeks and months) indicator is the SPX 12-month MA cross. Very simply, the US stock market is in a cyclical bull market pattern since the SPX is above the 12-month MA at 2783. The stock market will drop into a cyclical bear market pattern if the SPX loses 2783 (begins today at 2802 with S&P futures down -20 four hours before the hump day opening bell).
The 10-month MA at 2787 serves as an early warning signal for the stock market. If 2787 fails, the 2783 support will be tested. Usually, the 10-month is further above the 12-month but since there is only 4 points of difference, treat the whole range of 2783-2787 as the major stock market line in the sand. It is over for the US stock market if the SPX 2783-2787 level fails.
The stock market stage is set for drama on Wednesday, 5/29/19, a battle royale between the NYA and SPX to determine the direction of the US stock market ahead. The NYA is below its 40-week MA signaling a cyclical bear market going forward but the SPX is above the 12-month MA signaling a cyclical bull market ahead. Either the NYA will pop higher and return to the cyclical bull market pattern and guarantee equities moving sideways to sideways higher going forward, or, the SPX will fail at 2783-2787, sending the stock market into Hades. 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 4:15 PM EST: The SPX finishes the Wednesday, 5/29/19 session down 19 points, -0.7%, to 2783. The 12-month MA is at 2781-2782 so the bulls hang on by the skin of their teeth. The S&P 500 fell to 2766 intraday but recovered. The battle continues tomorrow.
One of Keystone's important cyclical (weeks and months) indicators is the NYA 40-week MA cross. As the Apollo 13 astronauts said decades ago, "Houston, we have a problem." Very simply, the US stock market is in a cyclical bull market pattern if the NYA is above the 40-week and in a cyclical bear pattern if the NYA is below the 40. The NYA drops into a cyclical bear market on Tuesday, 5/28/19.
Of course, since the NYA is at 12466, only 7 bucks below the key 40-week MA at 12473, the battle will continue for several days and even a couple weeks or so and the bulls may regain the high ground. As long as the NYA is under 12473, the stock market is toast going forward. The bulls will throw confetti and sing songs of joy if they regain 12473 but all hope for market upside is lost if the NYA remains below 12473. 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.
Traders kept trying to catch the bitcoin falling knife last year but they only receive bloody hands. Keystone highlighted the positive divergence with the indicators during January and February expecting a bounce and up she goes. The tight standard deviation bands squeeze out a move to the downside in November but squeeze out an upside move in April.
Bitcoin has violated its upper band so the middle band at 4625 is on the table. Price is poking up through the resistance from last July nearly hitting 9K over the last couple days. Bitcoin is currently trading at 8717 (the chart is not yet updated).
The ADX purple box shows how the uptrend was very strong during the glory days of 2017. Bitcoin then receives a neggie d smackdown. Interestingly, however, the MACD pokes higher back then hinting that bitcoin will return to the lofty levels some day in the future.
The possie d bounce occurs as expected this year although the strong follow-through is a bit of surprise. Keystone was in GBTC this year but exited the long trade missing the parabolic move over the last couple months. Well, what's next?
The stochastics are overbot and negatively diverged wanting bitcoin to pullback for a week or so. The RSI, histogram and MACD line, however, are long and strong wanting more higher highs in bitcoin. Thus, price will likely move down a week, then up a week to a new high to satisfy the RSI, then down a week or so, then back up again for another higher high to satisfy the MACD line and then perhaps a week or two of chop, and then a roll over to the downside would be expected on a weekly basis.
Thus, after Keystone shines his crystal ball with a dirty shirt sleeve, bitcoin should move higher on the weekly basis into the 9200-9600 resistance area. The top, on the weekly basis, for bitcoin is likely in about 3 to 7 weeks. As the chart progresses, this target top area can be pinpointed much better. So, around late June or the first half of July, bitcoin will likely top out in the 9200-9600 area and roll over for a multi-week decline say into August and September.
Keystone does not own bitcoin and does not currently have any related positions. Keystone made money on GBTC this year as mentioned above but is not in it. The GBTC daily chart is in neggie d so it will be spanked lower in coming days but the weekly chart is long and strong so price will recover and print new highs on the weekly basis.
Other bitcoin-associated plays are; RIOT, LFIN, BLOK, BTSC, KODK and OSTK. Eastman Kodak and Overstock are in the basement and cannot catch a break despite the big bitcoin rally although their weekly charts are positively diverging. BLOK remains elevated since lots of investors believe in the blockchain technology which is at the root of the digital currency craze. If the stock market tanks, consider buying some shares of BLOK as a long-term (months and years) holding. 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 Federal Reserve and other global central bankers have been manipulating markets for the last decade. Former Fed Chairman Bernanke started the party in March 2009 with QE1 (quantitative easing). This Keynesian money-printing monetary policy, along with ZIRP (zero interest rate policy), create the massive stock market upside. Bernanke stepped in to save the day to protect America's wealthy class that own huge equity portfolios.
One-half of Americans do not own a single share of stock. The Fed spits on common citizens and instead favors the wealthy privileged class, the elite's, including the Wall Street investment banks, corporate executives at major corporations, politicians, lobbyists and other dirt-bag crony capitalists. The game is obviously rigged.
Fed Chair Yellen continued the party after Bernanke always maintaining her dovish posture; after all she is the Queen of the Doves. The Fed members maintain dovish accomodation because it creates massive wealth for the privileged class. Once these members retire from public office, the investment banks provide a quid pro quo paying them with lucrative speaking fees for showing up at token luncheons. This is the way America's crony capitalism system works.
In April/May 2015, Keystone called the major stock market top due to negative divergence on the charts. Stocks roll over in 2015 and are dropping into free fall to begin 2016. The Federal Reserve will have none of that and began printing money like madmen. The central bankers colluded around the globe coordinating their stimulus offerings. The stock market took off like a rocket in 2016 and 2017 due to the central banker largess.
The Fed's easy money is not used to hire workers or buy capital equipment (as promised by the corrupt system) but instead used to buy back stock. The stock repurchase programs enable CEO's to meet their EPS targets so they can pocket huge bonuses and stock option perks while screwing their employees and America. Interestingly, the stock buybacks over the last many years have inflated EPS numbers, or put another way, are artificially keeping PE's low.
Wall Street strategists say the stock market is cheap or near fairly-valued at these lofty nosebleed levels due to PE's in the 17-19 range. Shockingly, if the buybacks would have never occurred, the PE's would be 30% or more higher say in the 22-25 and higher area; stocks are greatly overvalued. When the stock market collapses in the months and year or two ahead, analysts will say they never saw the impact of buybacks on the broad market. In reality, they know the game. The market sharks keep the hype going so Joe Sixpack gets caught up in the joy and serves as the bag holder (the smart money distributes stocks to the dumb money). In Europe right now, the buybacks are ramping up dramatically as they play the same game (to keep the stock markets elevated).
The Fed and other central bankers create the Tweezer Bottom in early 2016 and save the day. In hockey, when the goalie, at the last possible second, deflects the puck with his big stick and prevents a goal, that is called a stick-save. It is the same in stock trading. The central bankers stick-saved the stock market in 2016, just as equities were collapsing, and then performed the exact same scenario at the start of this year.
Everyone talks about the big Christmas Eve 2018 collapse and stock market bottom, however, 1/3/19 was more important. The stock market rolled over to begin this year. The technicals were plain as day; the stock market was going into free fall. Once again, at the 200-week MA, the Fed stepped in to save the day. The global central bankers colluded and coordinated their offerings of stimulus to get the maximum bang for the buck. The Fed coos dovishly. The PBOC (China's central bank) follows with an immediate triple R cut (reserve requirement ratios were reduced allowing banks to lend more money to stimulate the economy).
A few days later the ECB (European Central Bank) talks dovishly willing to provide more stimuls. A few days later the Fed promises more easy money. A few days later the BOJ (Bank of Japan; Japan's central bank) promises to maintain an accomodative monetary policy indefinitely, and on and on. You get the idea. Voila, stocks take off like a rocket this year and America's wealthy dance with glee proud of the rigged crony capitalism system they have created.
In 2016, the central bankers managed to push the stock market back to the prior record highs in about 4 months time. That was easy. The SPX then chopped sideways for a few months and then the big breakout higher occurred in late 2016 about 9 or 10 months after the stick-save.
In 2019, the central bankers manage to push the stock market back to its prior record highs in about 4 months time repeating the 2016 fractal. Now we are in the sideways chop. You have to ask yourself an important question at this juncture.
Will the 2016 fractal continue repeating itself where US stocks will chop this summer but then begin catapulting wildly higher in the back half of the year and then jump strongly higher in 2020, or, is the one-decade central banker Keynesian game getting old where stocks will instead roll over to the downside?
It is surprising that the stock market has held up this well considering that Fed Chairman Powell flip-flopped from a hawkish stance raising rates in December to a dovish stance directly thereafter. Market participants surprisingly yawned. Confidence should be lost in the bozo central banker system but instead, the wealthy class cheers the dovish accomodation as they count their stock market profits each day.
At the same time, common Americans suffer through years of structural unemployment and high debt. There are jobs available if you want to flip burgers, clean bedpans, pour coffee or walk someone's dog but substantive family-supporting employment is hard to find. The corrupt elite class destroyed America's middle class by shipping the jobs overseas. These chickens are now coming home to roost after the last 3 or 4 decades.
The wealthy put their own greed for money ahead of what was good for all of America. The privileged class wanted the huge profits that come with using slave labor overseas. Expenses drop dramatically since you are no longer paying for an American worker. Vietnam is an attractive manufacturing hub these days since the workers will toil all day long for a hotdog and a Coke. The big reduction in labor costs sends the company EPS numbers higher which sends stock prices strongly higher. The crony capitalism and faux free market system in the United States has created this new Gilded Age a repeat of the 1920's. America is the land of the have's and have not's. No one talks about the American dream anymore; it is now the American joke.
When the recession hits in the weeks and months ahead, that will likely trigger a significant class war in the United States and riots that have not been seen since the 1960's. There will likely be massive looting in the US as the have not's strike back against the have's (sadly, common businessmen and shop owners will be caught in the middle and will see their livelihoods destroyed). This is the future that America's corrupt wealthy class, the greedy b*stards, have created. Few realize, see or understand what is coming down the pike but in a year or two all of America will understand. 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 S&P 500 is currently printing a textbook H&S (head and shoulders) pattern (red lines). The head is at 2950 and neckline at 2800 so that is a 150-handle difference, thus, price will likely drop to 2650 if the 2800 fails.
The ominous orange rising wedge is in play. The collapses from rising wedges can be quite dramatic and typically retrace the entire move which would eventually send the S&P 500 down to 2350-2450.
Keystone highlighted the universal negative divergence in the chart indicators in late April along with the rising wedge and overbot RSI, stochastics and money flow. A neggie d spankdown was on tap and occurs but the bears cannot receive any significant downside traction. The Federal Reserve and other central bankers are printing money like madmen to keep the global stock markets elevated and protect the privileged class that own huge stock portfolios.
The 20-week MA is 2803. The 10-month MA is 2789. The 100-day MA is at 2786. The 12-month MA is 2785. The 200-day MA is 2777. The 50-week MA is 2776. The 2800 H&S neckline support is obviously a critical support and psychological level. Price may want to come back down for another look. Since it is in the neighborhood, the major price test may occur at the 2785-2789 support gauntlet. The loss of the 2800 level would be important but the 2785-2789 level is for all the marbles. If it fails, the stock market will descend into a cyclical bear market pattern.
The negative or flat slope on the 150-day MA above continues signaling a cyclical bear market, however, price is above the 12-month MA at 2785 is signaling a cyclical bull market. Either the 150-day MA will begin sloping higher to agree with the 12-month and point to new record highs coming, or, the SPX will fail through 2785 verifying the cyclical bear ahead.
The ADX shows that the down move in Q4 was a very strong trend lower. The global central bankers colluded and stepped in to save the stock market in early January exactly like the Tweezer Bottom in early 2016. The Federal Reserve, PBOC (China's central bank), ECB and BOJ panicked on 1/3/19 (red candlestick) because the US stock market was in collapse. This year's central banker-induced rally finally attains strong trend status in April as shown by the ADX but it quickly rolls over again. The uptrend this year in equities is not a strong trend (it is another central banker pump and the one-decade long Keynesian money-printing financial engineering experiment continues).
The chart indicators are lining outs sideways as price tests the 2800-2820 level during the last couple weeks. The RSI, stoch's, histogram and money flow are positively diverged wanting a bounce in price. However, the MACD line is negatively sloped wanting to see another lower low in price or at least a test of 2800. The lower standard deviation band is violated so the middle band, the 20-day MA, at 2878, is in play. Price came up to touch the middle band but fell short of the goal. Price then rolls over and taps the lower band again. The signals are mixed and all over the map, hence, equities chop sideways.
President Trump's daily comments on the US-China trade war sends stocks to and fro. Many investors continue to believe a deal will occur after Xi and Trump meet at the G20 meeting in June. Traders also believe the Fed will continue supporting the stock market so the dips are met with buyers. Stocks may develop a buoyancy into the G20 as traders become optimistic about a deal, however, this positivity may be misplaced and the end of June and forward may begin a more difficult path for equities.
The sideways choppiness in the stock market chews up bulls and bears. It is best to avoid the 2x ETF's in this price action since those instruments will chew up capital. In general, trade less in choppy whipsaw markets to reduce losses. Watch the 2800 H&S neckline, also the 2785-2789 critical support level that dictates pain or joy for the intermediate term ahead, and also the 150-day MA support at 2745 which is the last chance corral. If the 2800 and 2785-2789 support levels fail, price will likely tumble through 2745 like it is not even there and the market carnage will become very ugly. Stock market bulls are fine as long as they do not let the critical 2785-2789 support level fail. 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 Dow, the Dirty Thirty, performs a faceplant last week printing five consecutive down weeks for the first time since 2011. The rising wedge pattern creates the spankdown and price retraces the wedge as typically occurs. Note how price plays between the 20-week MA resistance at 25701 and 50-week MA support at 25345. Thus, stock market bulls win above 25701 while bears win below 25345.
30 stocks are not a good gauge on the market but the public follows the Dow and historical data going back many decades is only available for the Dow. The S&P 500, the SPX, is the US stock market and the most important index.
Early March saw a lot of strong buying as evidenced by the large volume candlestick. Price is playing around in the same region but the selling volume is not as strong favoring bulls. In fairness to bears, trading volume is lackluster around the Memorial Day holiday. Also, five solid weeks of selling, an 8-year record level, is already a lot of volume. 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 cyclical stock market signals remain mixed. Ditto the stock market with the SPX chopping sideways through 2800-2950 since March.
The UPS 20/50-week MA cross is one of Keystone's top indicators for distinguishing a cyclical bull market from a cyclical bear. The 20-week is below the 50-week so the stock market is in a cyclical bear market pattern. The cross occurs as the year begins and that is when the Federal Reserve and other global central banks such as the PBOC, ECB and BOJ colluded to pump stock markets higher and protect the wealthy class. The party has yet to create the positive 20/50 cross, however, so the corrupt central bankers may want to ask for their Keynesian stimulus back.
UPS and FDX are the shipping giants and important bellwethers for the global economy. If UPS is slip-slidin' away, as Paul Simon will sing, the stock market and US economy will be dragged south as well. Business contracts, parts, supplies, everything that makes an economy operate, the endless Amazon packages in your neighborhood, all are delivered mainly via UPS and FDX.
Summing up Keystone's fave cyclical (weeks and months; intermediate term) stock market signals;
The SPX 150-day MA is sloping negative maintaining an ongoing 6-month cyclical bear market.
The SPX is above its important 12-month MA at 2785 signaling a cyclical bull market.
The SPX dropped only 150 points from the 2950-ish top recently a -5% pullback nowhere near a -10% correction level or -20% bear market.
The NYA remains above its 40-week MA signaling a cyclical bull market.
The UPS 20/50-week MA cross is negative signaling a cyclical bear market.
So the market signals are mixed. All of these signals will eventually line out in the same direction verifying the path ahead. During recent years, due to the non-stop central banker market intervention, the signals have all been in the bull camp. The stock market wagon is starting to wobble. The NYA is teetering so pay attention to that 40-week MA since it will tell you the path ahead for the intermediate term. Pay attention to the SPX 150-day MA slope as previously described. Watch the SPX 12-month MA at 2785 since the stock market is toast if it fails. Watch the UPS 20/50-week MA cross as described above. 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 cyclical stock market signals remain mixed. Ditto the stock market with the SPX chopping sideways through 2800-2950 since March.
The NYA 40-week MA cross is one of Keystone's top indicators for distinguishing a cyclical bull market from a cyclical bear. Price is currently at 12581 above the 40-week MA at 12487 so the stock market is in a cyclical bull pattern. The difference is only 94 skinny points so the NYA will signal a cyclical bear market if it falls only -0.8% and more. Watch it closely over the coming days.
Summing up Keystone's fave cyclical (weeks and months; intermediate term) stock market signals;
The SPX 150-day MA is sloping negative maintaining an ongoing 6-month cyclical bear market.
The SPX is above its important 12-month MA at 2785 signaling a cyclical bull market.
The SPX dropped only 150 points from the 2950-ish top recently a -5% pullback nowhere near a -10% correction level or -20% bear market.
The NYA remains above its 40-week MA signaling a cyclical bull market.
The UPS 20/50-week MA cross is negative signaling a cyclical bear market.
So the market signals are mixed. All of these signals will eventually line out in the same direction verifying the path ahead. During recent years, due to the non-stop central banker market intervention, the signals have all been in the bull camp. The stock market wagon is starting to wobble. The NYA is teetering so pay attention to that 40-week MA since it will tell you the path ahead for the intermediate term. Pay attention to the SPX 150-day MA slope as previously described. Watch the SPX 12-month MA at 2785 since the stock market is toast if it fails. 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 cyclical stock market signals remain mixed. Ditto the stock market with the SPX chopping sideways through 2800-2950 since March.
The SPX 12-month MA cross is Keystone's top indicator for distinguishing a cyclical bull market from a cyclical bear. Price is currently at 2826 above the 12-month MA at 2785 so the stock market is in a cyclical bull pattern.
Summing up Keystone's fave cyclical (weeks and months; intermediate term) stock market signals;
The SPX 150-day MA is sloping negative maintaining an ongoing 6-month cyclical bear market.
The SPX is above its important 12-month MA at 2785 signaling a cyclical bull market.
The SPX dropped only 150 points from the 2950-ish top recently a -5% pullback nowhere near a -10% correction level or -20% bear market.
The NYA remains above its 40-week MA signaling a cyclical bull market.
The UPS 20/50-week MA cross is negative signaling a cyclical bear market.
So the market signals are mixed. All of these signals will eventually line out in the same direction verifying the path ahead. During recent years, due to the non-stop central banker market intervention, the signals have all been in the bull camp. The stock market wagon is starting to wobble. The NYA is teetering so pay attention to that 40-week MA since it will tell you the path ahead for the intermediate term. Pay attention to the SPX 150-day MA slope as previously described.
If the SPX loses the 12-month MA at 2785, the stock market is toast. If the S&P 500 then loses the 150-day MA at 2745, there will be nothing but blood and carnage on Wall Street. The stock market could potentially collapse into free fall if the SPX 2785 level is lost. If the SPX remains above the 12-month MA at 2785, the bulls have their feet up on the desk and are not worried about any market pullbacks. 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.
Happy Memorial Day. The cyclical stock market signals remain mixed. Ditto the stock market with the SPX chopping sideways through 2800-2950 since March. The 150-day MA continues sloping sideways to negative indicating an ongoing cyclical bear market for stocks since December. By definition, a price above the moving average will pull it higher; that is the bull's hope.
A 150 days is about 7 months so the current 150-day MA at 2744.63 prices in the December waterfall slide. Those weak numbers in December are likely maintaining the flat nature of the 150-day MA. In about 3 or 4 weeks, that December carnage will no longer be part of the 150-day MA calculation so the moving average would be expected to slope higher potentially sending the stock market back into a cyclical bull pattern.
Thus, if the bears are going to growl, they better start pushing stocks lower within the next month. Again, by definition, a price below the 150 will move the 150 lower. The bears see the goal which is the 2745 level. Bears must push the SPX below this price pronto to maintain the negative nature in the slope of the 150-day MA which signals a lingering cyclical bear market. The market tension increases.
You can check the 150-day MA slope for all your positions. If long, you want it to slope positively like the chart above into December 2018. If short, you want it to slope negatively like the chart above December to present (if moving flat it remains in the ongoing pattern).
Summing up Keystone's fave cyclical (weeks and months; intermediate term) stock market signals;
The SPX 150-day MA is sloping negative maintaining an ongoing 6-month cyclical bear market.
The SPX is above its important 12-month MA at 2785 signaling a cyclical bull market.
The SPX dropped only 150 points from the 2950-ish top recently a -5% pullback nowhere near a -10% correction level or -20% bear market.
The NYA remains above its 40-week MA signaling a cyclical bull market.
The UPS 20/50-week MA cross is negative signaling a cyclical bear market.
So the market signals are mixed. All of these signals will eventually line out in the same direction verifying the path ahead. During recent years, due to the non-stop central banker market intervention, the signals have all been in the bull camp. The stock market wagon is starting to wobble. The NYA is teetering so pay attention to that 40-week MA since it will tell you the path ahead for the intermediate term. Pay attention to the 150-day MA slope as well as explained above.
If the SPX loses the 12-month MA at 2785, the stock market is toast. If the S&P 500 then loses the 2745 in the chart above, there will be nothing but blood and carnage on Wall Street. If the SPX remains above the 12-month MA at 2785, the bulls are not worried about any market pullbacks. 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.
Lithium was all the rage 17 months algo. Timmy Trader would brag at the water cooler each day that he was in LIT and making a mint. Timmy lost his shirt late last year. All commodities moved lower in 2018 some more so than others. Gold, silver, copper and oil recover this year after the Federal Reserve decided to goose markets again with easy money to protect America's privileged class. Lithium and other rare earth minerals, strategic commodities, have not recovered.
Rare earths are receiving lots of attention in recent days after President Xi visited one of China's processing facilities. Xi directs a veiled threat at President Trump that access to rare earth minerals, that are key for the production of smartphones and used extensively in battery, electronic, medical and energy applications, may be cut off. China controls nearly 90% of the rare earth minerals market.
LIT was lit up like a Christmas tree as 2017 ended and 2018 began. Everyone invested in lithium looked like Einstein's. What could possibly go wrong? If you were looking at the neggie d (red lines), the top call was simple. You would have been shorting LIT in early 2018 and down she goes. The downward sloping channel remains in play.
The green lines show positive divergence setting up. It is dicey, however, since there is currently strong downside momo. The LIT 2-hour chart is positively diverged and ready to bounce now. The daily chart is possie d except for the MACD so it wants to bottom this week. LIT is hunting for a bottom right now but remains susceptible to the US-China trade war rhetoric.
The ADX purple box shows how the uptrend was a very strong trend until early 2018. On the flip side, even though the trend is down for 17 months, the ADX does not consider the downtrend to be strong. This is encouraging for LIT bulls. The Aroon red line is pegged at the ceiling at 100 so it has nowhere to go but down and this previous behavior identified the bottom in the LIT price at Christmastime six months ago.
LIT has potential as a long play going forward. That downside momentum over the last month has to be respected, however. The 22.0-24.80 area is likely a nice area to start buying LIT. If you are a longer-term player you can scale-in to LIT; buy it right now, then in a week, then the week after that and then sit on it for a few months. Keystone does not currently hold a position in LIT long or short. It would only be a potential long play 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.
REMX is a rare earth minerals ETF. Like all other commodities, 2018 was a soggy year with charts moving from the upper left to the lower right. Gold, silver, copper, oil, lithium, graphite, you name it, all these plays fell apart last year creating a deflationary vibe. After the Federal Reserve and other global central bankers colluded to save the markets as this year began, commodities such as gold, silver, copper to some extent, and oil recover. Lithium and other rare earth minerals, however, do not recover.
The rare earth minerals such as scandium, yttrium, lithium and cobalt are used in smartphones and other electric and energy applications; they are strategic commodities. Nearly 90% of the rare earth production comes from China. It was by design that President Xi visited a Chinese rare earth processing facility last week. Xi is sending a subtle message to President Trump that the access to rare earth minerals may be shut off if the US-China trade war escalates.
On the Xi news, investors flock to the rare earth minerals looking for plays. Traders buy REMX with both fists last week creating a big +7% pop. The volume is a huge blowout. Comically, the REMX ETF fund contains Chinese rare earth companies. The sales will drop if China cuts off access to Western nations. In trade wars and protectionism, all nations slit each other's throats like the 1930's. Joe Retail, that got all excited about rare earths, is unknowingly swimming in a pool of sharks. Professional traders are taking advantage of the hype.
REMX was joyous in 2017. It was one big par-tay. However, the H&S (head and shoulders) pattern formed in late 2017 and early 2018 and down she goes. The head at 29.2-ish and neckline at 23.5-ish is a 5.7 difference so the downside target is 17.8 once the neckline failed, and it occurs.
Price bounces to begin the year on the universal positive divergence (green lines) across all chart indicators. The oversold conditions and falling green wedge also provide oomph to take price higher so a multi-week rally occurs. REMX rolls over during the last month as the US-China trade negotiations fall apart and then last week the big up move occurs. Price will likely chop sideways. There is nothing here to play either way especially while Emperor Xi and King Trump are playing their daily trade games. Maybe if price drops to 12-13 level and holds that level, REMX will be worth taking a shot on the long side. 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.
An 8.0 earthquake hits northern Peru. Buildings are damaged and power outages are reported. This is the largest quake in the world this year thus far. There are two major copper mines in northern Peru but there is no information yet as to how the quake may impact production. Price popped for two days due to the possie d with the histogram and the RSI and stochastics were oversold agreeable to a bounce. The other chart indicators are weak and bleak wanting price to explore the same lows for a couple days or so more and then start a relief rally. The earthquake may start a rally right away.
The symmetrical nature of the chart is truly remarkable. You rarely see such symmetry. Copper rallies big to begin the year when the Federal Reserve and other global central bankers colluded to save the stock market and protect the wealthy class. The stock market was toast on 1/3/19 so the central bankers panicked and started printing more Keynesian money like madmen. The same-o talking points occur during this year's rally as other central banker-induced rallies about how growth will accelerate so investors buy copper. The US-China trade deal was expected which sent the red metal to its peak in March-April.
Then the trade deal starts to fall apart. Global PMI data is weakening indicating a slowdown in global growth. Thus, copper demand may wane. Auto sales are lower. Housing sales are muddling along. These two sectors use the most copper so weakness in these key industries will stab daggers into copper's belly.
Copper is collapsing into the apex of that red falling wedge which is a bullish pattern. Copper is testing support levels from January. There is lots of congestion at 2.64-2.68. Copper will likely keep chopping sideways through the year. Keystone has no position in copper. 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 Friday Afternoon, 5/31/19 at 3:23 PM EST: Copper is at 2.634 down -1.8% this week. Copper had a little bit of lift from the Peru quake on Sunday and then price collapses after that (due to the weak and bleak MACD line above) into today. With the lower low in price, the copper chart is now showing positive divergence across all indicators so the red metal will likely bounce in this daily time frame. Copper may shine next week.
