The BPSPX remains on a double-whammy buy signal (green arrows). The bears were on easy street in May but the BPSPX bottomed at 49. The six percentage-point reversal to 55 was a stock market buy signal and then the move above 70 is the double-whammy buy signal.
Price peaks at 75.60 on 7/17/19 so a six percentage-point reversal would be 69.60. The stock market will be in trouble with a sell signal if the 70 level is lost. A double-whammy sell signal will occur if the 69.60 is ruptured and equities will be crumbling lower in earnest. All the bulls have to do is keep the BPSPX above 70 and they will keep whistlin' Dixie all day long as stocks climb higher.
The stock market typically floats higher into the Fed decision, which is Wednesday afternoon. The new moon peaks for the month at 11:11 PM EST Wednesday evening and equities are typically weak moving through the new moon each month. Interestingly, these two seasonality-style factors point to a market that floats higher into Federal Reserve Chairman Powell's press conference on Wednesday afternoon and then rolls over to the downside for Thursday. It will be interesting to see if these effects occur. Bulls win if the BPSPX remains above 70 but the bears will growl below 70. 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 7:52 AM EST on Thursday Morning, 8/1/19: Today is the first day of trading for August. The BPSPX drops to 70.40. The stock market bulls remain in the game; they are working hard overnight dragging sofa's, chairs, tires and other debris into the street to form a barricade at the 70 level. Bulls must hold the line at 70, otherwise, as explained above, equities will collapse if the BPSPX loses the 69.60-70.00 level.
Note Added Sunday, 8/4/19: The stock market falls apart lower on deterioration in the US-China trade talks and the Fed aftermath. The BPSPX plummets to 61.40 and is now on a double-whammy sell signal.
The new record highs keep on coming for the S&P 500. The SPX prints a new all-time high at 3027.98, call it 3028, on 7/26/19 and new all-time closing high at 3025.86, call it 3026, on 7/26/19. The global central bankers are colluding to maintain accomodative monetary policies forever so every day is a party in the stock market. No need to worry since rich Uncle Fed can print limitless money to drive asset prices higher and protect the world's wealthy class. It is fascinating price action.
Interestingly, the VIX prints an 11-handle last week, down to 11.69, when the SPX printed its record high at 3020 (blue circle). Thus, if the S&P 500 now explodes higher to the euphoric 3028, it is a no-brainer to expect the VIX to be an 11-handle and probably down to 11.5-ish. As seen on Friday, 7/26/19, as the epic new all-time high is printed at 3028, the VIX only dropped to 12.01 and did not even print an 11-handle the whole day. A divergence. As the German behind the fern plant on the Laugh-In television show said many years ago, "Velly interesting."
On the daily charts, the same divergence is occurring. In April, as the SPX printed record highs in the 2910-2950 area, overcoming last Fall's all-time high at 2941, the VIX fell to 11-flat intraday. The VIX should be at least a point lower considering that the stock market continues printing new record highs. The VIX has to make a decision at this 12-flat level. Bounce (to make for happy bears) or die (to make for happy bulls). The pivot from 12 will dictate the path ahead for the stock market.
On Monday, the VIX needs to immediately begin printing an 11-handle and move towards a 10-handle to make the bulls feel good about the rally continuing higher. Bears need higher volatility. Copper fell -0.7% in the up tape on Friday and the red metal drops -2.5% last week as stocks print joyous highs. 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 8:00 AM EST on Thursday Morning, 8/1/19: Today is the first day of trading for August. During Fed Chairman Powell's press conference yesterday afternoon, the VIX pops to 16.55 and SPX plummets to 2958. The SPX begins Thursday at 2980. S&P futures are up +2 with the VIX trading at 15.05.
The US stock market is one big party these days. The wealthy privileged class, that own huge equity portfolios, dance with glee as they rape the country for all its worth. The Federal Reserve members are all too eager to maintain accomodative monetary policy since they will be rewarded with a quid pro quo by the investment banks once they leave public office. Crony capitalism has gone amuck in America.
One-half of the country does not own a single share of stock. As the recession approaches, so will a class war in the US. The divide between rich and poor in America is at a 50-year peak. Ironically, it was back in the 1970's when you saw such disparity between the rich and poor and that was the decade where a common person would utter daily, "F the rich." History repeats.
Crony capitalism is on its last legs. The years ahead will be fascinating to watch. History teaches us many lessons on socialism systems failing. Ditto communism and fascism regimes as well as dictatorships. However, the collapse of capitalism is a new animal to behold. The crony capitalism continues in America until faith and confidence is lost in the Federal Reserve, and other global central bankers, that collude daily to keep the world's stock markets propped-up.
In the near-term, the stock market complacency is off the charts; literally. Traders and investors have not been this euphorically bullish since June 2018 over one year ago. Floor traders don lamp shades on their heads daily, dancing a jig of joy as they buy stocks by throwing a dart at a dartboard. The Fed and other central bankers have promised easy money forever so there is no need for worry or fear. Everyone is buying the stock market fully expecting the party to continue without pause.
As a general rule, you want to think about going long and participating in a tradeable bottom when the CPC pops above 1.20-ish or is at least near there. Above 1.20 confirms that traders are fearful. They do not expect stocks to ever recover again; there is nothing but doom and gloom ahead. Blood is flowing in the streets and traders are jumping from windows; hopefully they are on the ground floor. Of course, this is the time to buy.
Conversely, a CPC below 0.80 increases your radar in expecting a market pullback. Traders are drunk as skunks buying stocks with reckless abandon. It does not matter what you buy since everything will go up forever. Of course, this is the time to sell.
The red circles show past times over the last year where traders became euphoric and sure enough, all are stock market tops. The green circles show rampant fear and panic which correspond to market bottoms. Humans are so predictable. What do you think will happen in the days and couple weeks ahead?
It is a tricky time for the stock market since next week is a crazy economic data barrage as well as more earnings. The BOJ, Fed and BOE will all release rate decisions. The month of July ends (EOM). The Jobs Report is next Friday. Interestingly, the ominous new moon lurks in the background on hump day peaking for the month at 11:11 PM EST (stock are typically weak moving through the new moon). Epic stock market history is occurring each day which will be talked about for decades to come. 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.
Keystone's proprietary trading algorithm, Keybot the Quant, flips bullish on Wednesday at SPX 3009. Interestingly, the quant already wants to flip back to the short side. Bears need SPX below 2997. Bulls need stronger copper.
Keybot the Quant
The sick central bankers keep printing money like madmen driving note and bond yields lower (prices higher) and the stock market higher. Traders and investors are buying any asset with a heartbeat since the global central bankers are colluding and providing easy money forever.
After the Fall 2018 stock market crash, stocks bumped higher after Christmas Eve. This was short-lived, however, because on 1/3/19, the US and global markets begin slipping away into Hades. Keystone described this price action at the time. It was over for the stock market. The Federal Reserve has technicians and other market experts chained to desks in the basement of the Eccles Building so they knew the game was over. The global central bankers panicked on 1/3/19 and immediately coordinated a strong response to once again save the day and protect the wealthy privileged class. The Christmas Eve bottom held.
The Fed stepped into markets in January promising to print money basically admitting the December rate hike was a big mistake. It is surprising that investors continue believing in the Fed even after a 180-degree move from hawkish to dovish from December to January. Go figure. There is likely a delayed reaction involved. At some point forward, the realization will occur in people's heads that the sick global central banker collusion game cannot continue for much longer.
The blue circles show the big volume push in buying to begin the year once the Fed guaranteed that they will support easy money policies again. It would be expected for price to come back down into this 77-82-ish area for a look-see at that high-volume month. The selling volume was robust in May but then the dip-buyers jump in to send HYG to more new price highs albeit on lower volume.
Despite the recent ongoing euphoric joy in the stock and bond markets (global yields move lower), due to the central banker money-printing and a world awash in liquidity, the chart is ugly. This is a monthly chart so the long-term picture ahead is very negative. The RSI and stochastics are overbot and agreeable to a pull-back on the monthly basis. The red rising wedges are ominous since the collapses from rising wedges can be quite dramatic.
The red lines show universal negative divergence across all indicators; that is ugly. There is no more fuel in the tank to take prices higher. The Aroon is pegged at 100 with no place to go except down. When the green Aroon line crosses below the red line it is over for HYG. Price has violated the upper band so the middle band, at a minimum, at 82.20, is on the table. HYG is extended above its moving averages requiring a mean reversion. The ADX is down to 14 indicating that the rally higher is NOT a strong trend higher.
JNK is the same chart so you can bring that one up for further study. LQD, the investment grade corporate bond ETF, has gone parabolic, but its chart is in neggie d. MUB, the muni's, have also gone parabolic. HYG and JNK would be expected to roll over first, over the next couple months, and then LQD and MUB will likely top out and roll over, say, in the August-October period. It will not be surprising to see HYG at 77-82 in a month or two and at the 45-65 level in 2020 and 2021.
Equity earnings are questionable going forward. If earnings slow down, the level of debt takes away margin. It appears that it is a sell the high time for high-yield. Keystone does not currently have a position in HYG but will likely short it and/or JNK 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.
Note Added 6 AM EST Friday Morning, 7/26/19: Bloomberg News reports that much-followed hedge fund manager David Einhorn at Greenlight Capital is now shorting high-yield and corporate debt. Einhorn is betting against junk and investment grade debt.
Stock market topping behavior is identified with the SPXA150R which is the percent of stocks in the S&P 500 above their 150-day MA's. When the SPXA150R tags 75 and higher, the stock market is in a topping process. Each move higher brings the downside drop in equities closer. The red circles show three key highs over the last 1-1/2 year. What do you think will happen going forward?
If you like to sell short, you are salivating as the SPXA150R moves higher above 80, perhaps 85, maybe tagging 90. Keystone calls this activity the "bet-the-farm indicator" since a reading above the 85 to 90 area is the closest thing to a guaranteed short that exists in the stock market. If the SPXA150R moves above 85-90, it is virtual lock that in the weeks ahead the SPX will be far lower. It's easy money.
After a washout, such as the Fall 2018 crash, the SPXA150R will of course fall with the broad stock market. When the 30-35 level is breached, the stock market is setting up for a significant bottom. Last year, that bottom was Christmas Eve (green circle) and you can see the SPXA150R bottomed about the second week in December a week or two ahead of the actual bottom in the S&P 500. When the SPXA150R drops below 20, that is the bet-the-farm signal for the long side since the selling is way overdone and the baby is thrown out with the water; there is blood in the streets which is the best time to buy.
The SPX prints an all-time high at 3018 on 7/15/19. The SPXA150R prints a high a smidgeon over 80 on 7/5/19. The SPXA150R then prints a high at 79+ on 7/12/19. The downside in stocks may have legs. If not, the SPXA150R will simply float higher for a few days again and place another top. Bears need higher volatility if they want to prove they can take stocks lower. 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 Keystone Speculator's Housing Market Indicator signals the start of a housing recession. Say what?! The talking heads on television as well as the Wall Street fat-cats say the economy is fantastic, the housing market is steady and fine, all is great with the US and world especially considering the never-ending global central banker collusion and market intervention.
7 years and 5 months ago, on 2/16/12, Keystone called the housing market recovery. The homebuilders had gapped lower and housing market doom and gloom was rampant. Many believed the housing market would never recover after the 2008-2009 financial crisis. Of course it is always darkest before the dawn. Traders thought Keystone was smokin' something with such a bold call back then but that is what his proprietary data showed.
In a few short weeks, the XHB homebuilder ETF had recovered and analysts were beginning to step aboard Keystone's housing market bandwagon as it rode through town. In a few short months, everyone was on Keystone's side and the housing market recovery expanded and the joy continues up until......Wednesday, 7/17/19.
The housing recession now begins, on 7/17/19, after a long 7-year-plus recovery.
The only caveat would be to watch the housing data over the next two months for confirmation, or perhaps non-confirmation (confirmation of a reversal of trend would be expected to continue). In early 2012, when the indicator flipped bullish, indicating the housing recovery had started, that turn occurred on a dime and the indicator never looked back, so the same may occur as the housing recession now begins.
A jog move of a couple more months with the data would not be unexpected but the writing is on the wall. Even if the housing permits, starts and other data would catapult higher in earnest, it will likely not be enough to reverse Keystone's indicator. For example, the next release of Housing Starts would need to register 1.7 million units and higher to avoid a housing recession and that is not going to happen. We are going into Fall in 3 short months in the northern hemisphere not exactly the time to be breaking ground on new houses and apartment buildings.
Interestingly, the end game is likely approaching for the corrupt global central bankers. Markets can only be goosed for so long with easy money. The wealthy privileged class, that is well-represented with media cheerleaders, that tout the capitalism system (which does not exist in America it is actually a crony capitalism financial system), will often quote Margaret Thatcher who said, "Socialism fails when you run out of other people's money." It is ironically funny that America's crony capitalism system is now on its last legs, and entering the last stage of failure, since it is 'running out of its own and other central banker's money'.
All financial systems and governments throughout history typically fail after the 200 to 250-year mark. This occurs because humans are corrupt and greedy animals. The other major problem is that transparency in government and with companies does not exist no matter how much it is touted and cheered by the criminal politicians and CEO's. The wealthy hide their nefarious endeavors easily. It is great to be rich and in control.
Former Federal Reserve Chairman Bernanke started this sick path forward for America, in support of crony capitalism which protects the wealthy privileged class, in March 2009. The central bankers have held the wolves at the door for the last decade and 4 months but how much longer can they hold out? Housing and autos are the two major components of the economy. Peak Auto has likely occurred and with the housing recession now starting, the future looks bleak. Overall economic recession will likely begin this year or early next which will kick off a class war in the United States.
If you are a young person, think long and hard about any long position you own in the stock market. You will likely lose money over the next year or two perhaps one-half or more of your capital. It is likely wiser to simply sit out of the stock market for the next year or so and see what happens. You will likely be a very happy camper down the road and then take that cash hoard and buy top-notch companies on the cheap, just like the smart investors did after the 1929 crash.Anyone holding lots of cash was king; everyone else lost their shirt.
The SPX prints an all-time high at 3017.80 on 7/15/19 and an all-time closing high at 3014.30 on 7/15/19. Last year's epic high before the crash was 2941. So after nearly 10 months, the S&P 500 has gained a whopping (said cynically) 77 points, or +2.6%. Understand that investing in the stock market now is akin to picking up nickels in front of a bulldozer. Sure, you may see a few more percent of upside, but is that worth the risk of seeing downside at -20% to -80% over the next couple years for your capital? You decide.
The Keybot the Quant algorithm, Keystone's proprietary trading model, incorporates the housing market indicator into its programming so the start of the housing recession is a serious black eye for markets 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.
Note Added 7:00 AM EST on Wednesday, 7/24/19: Stocks rally yesterday but the homebuilders take the pipe in the up tape. XHB crumbles -0.6% with all 16 of its components negative. Pulte provides disappointing guidance going forward. Of course they do. Read the above article again. PHM crashes -8.3%. LEN -0.3%. KBH -3%. DHI -2.6%. In addition, Existing Home Sales disappoint. New Home Sales hit the tape this morning.
Note Added Sunday, 7/28/19: MHK is bludgeoned -18% in the Friday, 7/26/19, session and is pukes -16% last week. Mohawk is scalped. If the flooring business is weak, it is guaranteed that the housing market is soft. LL slips -1% last week and has crashed -76% over the last 2 years. MAS, however, pops +10% last week. WHR gains +0.5% lat week. All the tickers above are worth watching as a gauge of the US housing market going forward. May as well throw HD and LOW in there, too (both gain a couple percent last week). Also watch ITB, IYR and XLRE. REIT's will be interesting going forward so tickers such as VNQ, VNO and NLY are worth watching.
Keystone's proprietary trading algorithm, Keybot the Quant, flips to the bear side last Wednesday, 7/17/19, at SPX 3000. Copper, volatility and commodities are currently controlling stock market direction.
Keybot the Quant
