Stock chart patterns and technical analysis (TA) explained simply. Disclaimer: This blog and all its contents are for educational and entertainment purposes only. Do not trade or invest based on any information seen on this blog. Please read Terms of Service. The K E Stone blog sites (Keybot the Quant) are blacklisted by Google, so enjoy the ad-free experience, and only use the Donate button when supporting the sites.
The media pundits are touting the sideways movement of the S&P 500 with the 50-day MA at 2945 as the top resistance boundary and the 200-day MA at 2805 as the lower support boundary. If they took the time to bring up a chart, they would see support is actually by the 150-day MA at 2868. Price gapped-up to the 100-day MA at 2910 yesterday morning. The 20-day MA at 2893 has stabbed down through the 50 and 100 which is bearish so watch to see if the 20 can drop below the 150, or not. The 50-day MA at 2945 is very important resistance and it may be tested this morning. If price tags 2945, the SPX will then make a bounce or die decision. The bulls left a gap behind at 3020-ish that will likely need filled at some point forward. There is the nearer gap at 2950 where price may test and fill today. 50-day MA = 2946 SPX is at 2925 Friday Morning 20-week MA = 2914 100-day MA = 2910 20-day MA = 2893 150-day MA = 2868 10-month MA = 2813 12-month MA = 2813 200-day MA = 2805 50-week MA = 2804 20-month MA = 2786 You can see that price popped through that strong resistance gauntlet at 2910-2914, that now becomes support; a big bull win. This support will likely be tested. The SPX has placed lows at 2822-ish this month so this is a key support number. The very important 10 and 12-month MA's are on top of each other at 2813. This 2813 number is uber important.So a failure at 2868 is trouble, then a failure at 2813 opens up the Armegeddon scenario. The last chance to save the day would be at 2804-2805 and if that fails, it would be over for the stock market.Conversely, the bulls are singing songs and carryin' on above 2910-2914. The red lines show the rising wedge pattern, overbot conditions and negative divergence that created the top and subsequent spankdown. The collapses from rising wedges can be quite dramatic as the chart displays. The thin red lines for the selloff over the last month show a potential two-leg bear flag in the offing. The first leg is the drop from 3020-ish to 2820-ish, call it 200 handles to keep the math simple. The sideways consolidation flag then occurs with price showing a slight upward bias. This is textbook so far. Thus, let's say the second leg down starts from 2950, that would target 2750 which is support from the early June bottom. The SPX is staggering sideways like a drunk in Times Square on Saturday night. The RSI, MACD and money flow are all sneaking into bull territory above 50%. The markets, however, are at the mercy of President Trump's tweets, China's trade talk rhetoric and the ongoing central banker largess. Equities leap higher yesterday on news that China will not retaliate against the latest tariff hikes. China is playing Trump like a Stradivarius. China's top goal is to drag the trade talks out to the US election next November. Of course China will be glad to sign a trade deal right now as long as they can keep stealing American IP (intellectual property). If Trump is defeated in 14 months, the communist's problems evaporate. In the near term, China is concerned that their big 70-year celebration party in a month will be soiled by negativity. The communists make nice with the trade talks since they are trying to keep things calm through their celebrations. If the Chinese communist celebrations are marred, global markets will likely retreat. The Hong Kong protests will likely be crushed by the commies over the next 2 weeks. The Beijing leadership will not want to soil the celebration with ongoing Hong Kong civil unrest and they will not wait for the last minute. Therefore, the communists will likely crush the protesters during the first half of September and sweep the streets clean by mid-September. China wants to get through the near-term communist celebration period, and after a couple months will then say the US is not negotiating in good faith and they will end the trade talks. That places the timing in the US holiday season when the communists know that Americans will be preoccupied with eating turkey in November and opening Christmas presents in December, topping it off with a drunken stupor to begin 2020. This will delay the US-China trade talks into 2020. By then, the US presidential race will be heating up and getting nasty sucking the oxygen out of the room. China is willing to roll the dice come November 2020. University of Michigan Consumer Sentiment is on tap this morning a very important number. Retail sales are carrying the stock market higher, as odd as that is, and sentiment directly correlates to consumer spending. Happy and carefree people tend to spend more money while sad and worried people tend to spend less. If Sentiment dips, that may be a 'warning sign on the road ahead', as Neil Young will sing (Rockin' in the Free World), and retail stocks may top out. If Sentiment is joyous and strong, the stock market will likely remain buoyant and happy. The new moon peaked for the month 90 minutes ago. This is the darkest time of the month so military raids are taking place around the world by the forces with the superior night-vision technology. Typically, stocks are weak moving through the new moon so what surprises are in store through the weekend? Right now, about an hour before the opening bell, the S&P futures are up +15 and the VIX is at 17.28. The bulls are walking around with their chests puffed out. Stocks usually rally during the two days before a three-day holiday weekend and professional traders were front-running this move that continues through this morning. China knows this. That is why they bot tons of calls and went long a boatload of stock before their happy announcement on trade talks. Making millions has never been so easy. The world's financial markets are a corrupt cesspool. Insider trading is the norm. In addition, the happy talk is timed with the opening of the European markets at 3 AM EST to receive more bang for the buck. The communists learned this trick off President Trump when he will sometimes announce happy news before the European open to give the stock market more upside juice. So the seasonality factors are even providing mixed signals these days. We are seeing buoyancy in equities due to the pre-holiday bullishness but the potential negativity from the new moon is hanging around in the background. Stocks continue chopping sideways. Simply watch the moving average lines to gauge who is winning. 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, 8/31/19: The SPX is flat on Friday finishing at 2926. The HOD is 2940 so not yet high enough to test the 50-day MA resistance at 2945. As mentioned above, that 2910-2914 resistance was key, and price jumped above, so the 2910-2914 becomes support and yesterday, price came back down intraday for the back kiss. LOD is 2913 that occurred as the European stock indexes closed for the week and stocks rallied from there a win for the bulls. The SPX then chops sideways through 2914-2928 from 11:30 AM EST into the weekend. Equities rally Wednesday through Friday into the holiday weekend which is expected (seasonality factor). The new moon weakness may have dampened the mood during Friday afternoon trading. The monthly charts have a new data point cast in concrete on Friday at 4 PM EST. The trading month of September, usually a shaky month, begins on Tuesday, 9/3/19. New money is put to work to begin a month so there may be some slight buoyancy to stocks early next week. The SPX monthly chart remains in neggie d across all its indicators, the stochastics are overbot, a rising wedge pattern is in play, the upper standard deviation band is violated, price is extended above its moving averages; all these parameters are bearish and indicate that the stock market is likely continuing to place, or has placed, a major multi-month and multi-year top. Consumer Sentiment gets your attention with an 8 handle at 89.8. That's a slap in the face to the retail stocks. Gloomy people do not buy as much stuff. The last 8-handle was 89.40 when.... wait for it.... President Trump was elected in November 2016. Optimism and market euphoria followed the president's election sending the Sentiment into the 90's and 100's for nearly 3 years but that party now ends. The ConCon on Tuesday was more optimistic. Gasoline prices have been steady so it is a surprise to see such a drop-off in sentiment. The huddled masses, that have struggled for one decade since the financial crisis, while watching the wealthy elite class become filthy rich courtesy of the Fed and other global central bankers, are sick of working two and three jobs, and with the trade war negativity now in the news, become sad and gloomy about their future. The wealthy elite privileged class in America wonder why everyone is so glum; life is great for us. Prices across all asset classes are pumped higher every day by central banks, however, you have to own assets to watch them appreciate dramatically due to the Keynesian easy money. One-half of Americans do not own a single share of stock; they watch the greedy wealthy rape the US financial system day after day. Like the old saying goes, payback will be a b*tch.
As fears of a global economic slowdown persist, and the US-China trade war lingers, the perceived safety and dividend plays including utes (UTIL and XLU), REIT's (VNQ), telecoms (T), consumer staples (XLP, PG, etc...) and Treasuries (higher prices lower yields) explode higher. This is a bit surprising since the expectation was for much of this to already be priced-in. Keystone remains short the utilities but is underwater. Things looked good a month ago for the downside but the blind buying in utilities sends UTIL and XLU to record highs. Utilities are key since they either lead by up to two months, or move coincidentally, lower with the broad stock market when a significant market top is occurring. When utes are weak and tumbling lower, it tells you that the overall stock market is in serious trouble. If utilities remain buoyant or continue higher, any pullback in the broad stock market will likely be short-lived. Utilities love lower rates since they fund large projects worth billions of dollars over many years. The flight to safety, however, appears to be dominating the buying. Traders and investors, perhaps after reading a couple of financial books at the bookstore, are buying the perceived safety plays thinking the economic cycle is running out of gas. Look at the big buying volume candlesticks over the last 5 weeks. Timmy Trader read a Peter Lynch book and is now buying utilities and staples with both fists. These are not your grandfather's markets. The central bankers, with their obscene Keynesian money-printing, have destroyed all price discovery as well as the economic cycles. No one knows what any asset is truly worth anymore; all are pumped higher on one-decade of easy money. The world remains awash in liquidity so folks pick up money laying on the ground and buy stupid stuff as well as overpay for all stuff. Thus, utilities, staples, REIT's and Treasuries are all pumped-up into the stratosphere due to the central banker largess, but the trading community continues whistling past the graveyard pretending that markets are functioning normally and now is the time to buy defensive stocks. Look at the charts! Utes, staples, etc...., are all at record highs like the broader stock market (these sectors are not underperforming beaten-down areas that would be more attractive when the economic cycle runs out of gas; their prices are pumped higher like all other assets on the central banker money printing). Good luck to everyone. As Norman Fosback taught many moons ago, watch the 15-week lookback price for utilities and also the 50-week MA. These two parameters are excellent predictors of cyclical stock market behavior. Count back to the weekly close 15 weeks ago and compare that number to the current number. If the current price is higher, the utes are in a weekly uptrend and ditto the stock market. If the current price is lower, the utes are in a weekly downtrend and stocks will be trailing lower or about to begin dropping lower. Price was in that 800-ish area 15 weeks ago so you can see that the utility bears have their work cut out for them going forward. Treasury yields are rising this morning (lower prices higher yields) so utilities may get slapped around a little bit today. The 50-week MA is important since utilities have typically already fallen into a weekly downtrend when this occurs. If the 50-week gives way, many times it is like a trap-door for equities, and the SPX could easily lose 20 to 50 handles in a heartbeat. That is a wicked red rising wedge pattern. As you know, the collapses from rising wedges can be quite dramatic. The chart indicators are in negative divergence except for the RSI that pokes its head up into overbot territory. This is very strange since if the RSI was heading higher, the MACD line typically always is heading higher. The MACD is in neggie d although it is climbing above its red moving average line. So the expectation is for a top although the RSI may jog it for a couple weeks (down one week, then a recovery back to current prices the following week, then extended down). If utes fall today in this Friday trade, since it is a weekly chart, you may see the RSI not poke higher than the previous peaks which will tell you the top is in now on the weekly basis. A lot depends on all these knuckleheads buying perceived safety and defensive plays when in fact all they are doing is covering themselves with a fig leaf. Another oddity is the ADX. Considering that price has gone parabolic, the ADX should be in a beeline higher to 35 now. Instead, it is dropping down to 23 telling you that the move higher is NOT a strong trend. Very odd with the price action. Price has violated the upper standard deviation band so the middle band, also the 20 MA, at 809 is on the table and this will place price in the neighborhood of testing the highs from 15 weeks ago. Look at that Aroon. That is a rarity, like spotting an albino deer or seeing a bee swarm move its nest. The happy bullish blue Aroon line is pegged at the maximum possible 100.0 level. It has nowhere to go but down (bearish for utes). The sad bearish red Aroon line is at the minimum possible 0.0. It has nowhere to go but up (bearish for utes). Boy, there must have been a long waiting line at the library for novice investors reading Peter Lynch books and other outdated financial guides explaining economic and business cycles and cyclical versus safety plays. They should read more Keystone and less Lynch. If they keep chasing into utilities they may end up lynched. If you bot utes because you read an article on the internet that tells you what to do late-cycle, realize that this is all fantasy land after nearly 11 years of Fed, ECB, BOJ, BOE, RBA, PBOC and other global central banker intervention. Keystone remains a seller of utes going forward. If utes begin trailing loiwer, it tells you that stocks may be in trouble in the weeks ahead. If the stock market and utilities then begin falling lower in unison it tells you that dark days are ahead for equities. If utes remain flat or buoyant, the stock market will continue hanging in there hoping for resolution in the US-China trade talks and expecting central bankers to print money forever. 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, 8/30/19: UTIL finishes the day flat. Utilities remain well bid. As investors worry about the future, they flock into perceived safe haven plays such as utes and staples but most are too stupid to look at a chart to see that the prices have already gone parabolic due to many years of central banker largess. The perceived safety and defensive plays are pumped to record highs like all other stocks due to the Keynesian easy money. Anyone chasing XLU and XLP higher is likely going to have their perceived-safety fig leafs ripped from their bodies. Note the RSI is not at a higher high to end the week it is at an equal high as the previous two highs as price has gone parabolic over the last few months; this is negative divergence, price is running out of gas in the weekly time frame. Ditto the daily chart. Utilities may be a big story next week. Watch utilities very closely going forward. XLP, staples, are topping out now and set up for a good shorting opportunity; the weekly chart is in neggie d.
Keystone's proprietary trading algorithm, Keybot the Quant, turns bullish in yesterday's trade at SPX 2920. China plays nice on trade talks sending stocks higher. More information is found at Keybot's site; Keybot the Quant
Bitcoin feels some love this year (from 3700 to 13K and now at 10.3K) but has been chopping sideways into a sideways triangle over the last three months. Typically, a fake-out move will occur one-half to two-thirds of the way through the triangle and this occurs. Bitcoin breaks out higher, above the top triangle trend line, in early August. Sure enough, it was a fake-out, and price returns inside the triangle and collapses out the lower side. Bitcoin comes up for the back kiss and just begins to roll over to the downside so it may be a successful back test for the bitcoin bears and sadness for the bitcoin bulls. The vertical side of the triangle is from 8500-ish to 13000-ish; call it 4500 points. Thus, a breakdown from 10.5K will send bitcoin to 6.0K. If the bitcoin bulls can save the day and send bitcoin higher, above 10.8K, the upside breakout would target 15.0K. Bitcoin is making a big bounce or die decision right now at the apex of the triangle. Bitcoin bears have the upper hand currently. Trouble occurs under 10K. If 9500 is lost, goodnight Irene, Irene goodnight. Keystone does not own any bitcoin. 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 8:20 PM EST: Bitcoin is at 10141. Note Added Wednesday Evening, 8/28/19, at 8:36 PM EST: Bitcoin collapses through 10K to 9688. Irene is whispering to bitcoin to kiss her at 9500 support and make a critical bounce or die decision. Note Added Friday Morning, 8/30/19, at 5:23 AM EST: Bitcoin drops to 9500 now printing at 9554 making its critical bounce or die decision. If you are in bitcoin, flip a coin, heads you win, tails you lose. Note Added Saturday Morning, 8/31/19: Bitcoin is at 9575 continuing to kiss support and make that critical bounce or die decision. Note Added Monday Morning, 9/2/19: Bitcoin bounces to 9851.
The NYA 40-week MA cross dictates whether the stock market is in a cyclical bull market or cyclical bear market. Watch it closely. NYA is currently printing 12488 and popped to 12529 so far today. US trading has just gotten underway to begin the week.The key 40-week MA is at 12545 so the bulls got to within 16 points of victory but now stumble lower. Bears win for the weeks, months and perhaps year or two ahead as long as the NYA remains below 12545.Bulls regain control of the stock market and begin sending equities to new record highs again if they overtake NYA 12545. Easy-peasy. 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 PM EST: The NYA 40-week MA is at 12545. The NYSE Composite finishes the Monday session at 12520. HOD 12529. Despite the big up day in the stock market, the NYA gains +0.8%, it was not enough to reverse the growling cyclical bear market.The battle will continue on Tuesday. The importance of NYA 12545 cannot be overstated. Note Added Tuesday Evening, 8/27/19, at 8:14 PM EST: The NYA 40-week MA is at 12545. TheNYA is at 12474 remaining in a cyclical bear. The bulls managed to push the NYA above 12545 after the opening bell but it was a gap and crap and stocks fell on their sword collapsing back below the 40-week MA. The choppy sideways bull-bear battle, reminiscent of a Batman television show fight scene (POW, BOOF, THWACK, BONK, etc...), continues. Each day the NYA is below 12545, the stock market cancer metastasizes. Note Added Wednesday Evening, 8/28/19, at 8:32 PM EST: The NYA 40-week MA is at 12546. The NYA is at 12559 so the bulls battle back into cyclical bull market territory. The knock-down drag-out bull-bear battle continues. NYA 12546 tells you everything you need to know going forward. Note Added Friday Morning, 8/30/19, at 5:26 AM EST: The NYA jumps to 12704 so the bulls are singing, "Happy Days Are Here Again."
TNX, the 10-year Treasury note yield, falls to 1.47% and recovers to 1.53% currently. The drop in yields around the world is historic with over $16 trillion in negative-yielding debt. Things are getting out of control. During 2018, folks were happy with stocks moving higher and yields floating higher. The purple box shows the ADX above 28-ish in early 2018 so the trend higher in yield was strong. The inflationists said their day has finally come and the 10-year yield will quickly tag 3% then 4% with some analysts calling for higher yields. 3%-plus was hit but yields then fall on their sword. The stock market fell into the Q4 2018 crash and folks ran to perceived safety buying Treasuries, staples (XLP), utilities (XLU, UTIL) and REIT's (VNQ). Treasury yields plummet lower as note and bond prices leap higher (prices higher yields lower; notes and bonds are rallying greatly). Worries of a pending recession, deflation, disinflation and a falling stock market create increased buying in Treasuries. The Fed remains dovish. The collapse in yields is intense. Yield hugs the lower standard deviation line for months and desperately needs to mean revert higher at least to the middle band now at 2.08% and falling sharply. The purple box shows the down move is a very strong trend and low yields will likely stick around for a long time. The green lines show oversold conditions and positive divergence wanting to bounce yields in the weekly time frame, however, the MACD line remains weak and bleak. Thus, TNX likely needs a jog move to place a bottom in this time frame (an up week, then back down for about a week, then, if the MACD line turns possie d, the bottom in yields is in and will begin a multi-week up move). Yield may chop for a couple weeks or so but the chart says the bottom in yields in the weekly time frame is likely in early September. Of course any tweet from President Trump can immediately change things. 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 Evening, 8/28/19, at 8:42 PM EST: Yields continue lower the 10-year dropping to 1.44% today now at 1.4666%.
The overnight session is a wild ride. S&P futures tank out of the gate Sunday evening US East Coast time down as much as -45 pointsbut stage a dramatic recovery after President Trump says China called US trade representatives and want to restart trade talks. Comically, as usual, China state-run media says the Beijing leadership does not know what phone call the president is referring to. Nonetheless, the announcement was timed with the start of European trading at 3 AM EST to boost global stock markets and always protect the wealthy elite class. S&P futures turn around by a huge 75 handles and now about 15 handles off the overnight top at +14. The S&P futures have traveled 90 handles overnight a huge move down and back up covering 3.1% of the entire range. The put/call ratios are elevated showing panic and fear; ditto the low NYMO. The stage was set nicely for a large tumble in equities this morning and it would have likely been a great buying opportunity for a quickie long trade for a snappy relief rally. Alas, others were thinking same and the S&P futures launch like a rocket. Now there is more likely choppiness ahead as reporters keep questioning President Trump about the so-called phone call. At the G-string 7 meetings, Trump opined about doing things differently after he thought about the Friday stock market collapse. Humorously, Double-Down Donny doubled-down again saying that he regretted not imposing stiffer tariffs on China earlier. The light bulb went off in Trump's head that China is simply trying to play out the clock. If Trump is defeated in the November 2020 election, only 14 months away, China's trade war problems immediately evaporate. Of course Trump should have went big and bold and hit the communists hard over a year ago if that was his game plan, but he balked and chose an easier path. This only allowed China to stretch out the trade drama for over a year already. China wants the ebb and flow of on-again off-again trade talk drama since this allows the commies to keep stretching out the clock and letting all the chips ride on the US presidential election next year. China may want more trade talks but after a couple months or so will break them off again always with the goal of running out the clock. S&P futures came off the highs a short time ago when Trump was questioned about the phone call that came from China; the phone call story smells like BS and the president kept avoiding answering the question. The announcement that China wants to restart negotiations is likely more Trump trade negotiation drama. The Dow Jones Industrials futures print a near 600-point turnaround overnight.As the VIX sustains above 20 and higher, the intraday and day-to-day point moves in the stock market will become larger and more dramatic. Sometimes the big moves will be both ways, on the same day, like today. 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 US 10-year Treasury note yield slips to 1.47% not seen since August 2016. The intraday low from July 2016 is at 1.31%. During Sunday evening in the States, Treasury yields are; 2-year 1.47%, 5-year 1.36%, 10-year 1.47%, 30-year 1.98%. The 2-10 yield spread is at zero a dead-flat yield curve. Gold 1555. S&P futures -25. Global 10-year yields are; Brazil 7.23%. Mexico 6.94%. India 6.57%. China 3.04%. US 1.47%. Canada 1.17%. Australia 0.88%. Portugal 0.15%. Spain 0.13%. Japan -0.26%. France -0.38%. Netherlands -0.54%. Germany -0.68%. Swiss -0.99%. Watch Spain and Portugal to see if their 10-year yields go negative, or not. 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 Monday Morning, 8/26/19, at 7:10 AM EST: The 10-year yield falls to 1.45% but is currently trading at 1.51%.
The 3-month to 10-year yield spread, YC3MO, inverted (drops below zero) earlier this year and more recently, the 2-year to 10-year yield spread, YC2YR, inverts a couple weeks ago. The inversion of the 2's-10's yield curve created market angst on Friday. Most Wall Street analysts and pundits, however, are quick to pooh-pooh the yield curve inversions and proclaim that there is no fear of a recession in the near-term. History is somewhat on their side as evidenced by the charts. The yield curves inverted in early 2006, recovered back above, and then inverted again in mid-2006. The stock market peaked in October 2007 and went into a multi-month downtrend then into a crash profile September 2008 through March 2009. That is why the pundits proclaim no chance of recession. The blue circles show the October 2007 stock market topping area; the yield curves had clearly re-steepened by then. Thus, it took from 16 months to 22 months for the stock market to peak and the recession to begin arriving. This is why the analysts and strategists are whistling past the graveyard; they say a recession and stock market top may be 1-1/2 to 2 years away. That is what played out last time. Even using the 3-month inversion that began a few months ago, this still places the recession and stock market top out 1 to 1-1/2 year which would be Q3 2020, Q4 2020 or Q1 2021. They will be surprised if the recession is actually beginning now; in Q3 2019. There is a fly in the ointment. The modern-day, obscene Keynesian monetary policy carried out by global central bankers began in March 2009 with former Fed Chairman Bernanke. The Fed, BOJ, ECB, BOE, RBA, RBI, PBOC and other central bankers continue colluding, coordinating and intervening in markets for over one decade!! Lord Have Mercy on Our Souls!! No one truly knows what any asset is worth anymore since every asset class has been purchased into lofty heights due to the easy money liquidity. People do stupid things with money when it is free and easy. Price peaks may be appearing in stocks, bonds, real estate, art, collectibles, antique cars, etc... The Keybot the Quant algorithm identified 7/17/19 as the start of a housing recession. The wild card is the impact of central banker policy on the yield curve. Like negative rates around the world, no one knows the impact from this sick and twisted central banker behavior. Throw out your college economic textbooks; they are worthless in this insane and historic market environment. The wealthy do not care about a negative outcome ahead because they got theirs; they raped the crony capitalism system for all its worth over the last decade so it is no skin off their backs if everything goes to H*ll in a handbag. It's great to be rich. Do you think a recession and stock market top is another 1-1/2 to 2 years away? Or has markets already peaked in this September 2018 to July 2019 time period? If the stock market peaked the recession may be here already. There is lots of manufacturing data on tap this week as well as GDP on Thursday and the Fed's favorite gauge of inflation, the PCE data, on Friday. Consumer sentiment and confidence is key to sustaining an elevated stock market. When people lose hope and confidence, they stop spending money. The Con Con data drops at 10 AM EST Tuesday 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.
In recent days, the currencies are getting bounced around on the trade talk rhetoric. World leaders are meeting this weekend at the G-string 7 in France. In a tweet on Friday, President Trump 'hereby ordered' American companies to move their companies out of China. The comment tanked the US dollar that already had a downward bias from Fed Chairman Powell's dovish speech from Jackson Hole, Wyoming. You see the red candlestick. The markets are jumping to and fro on the trade war drama. As US dollar and stocks collapsed on Friday, traders were seeking the perceived safety of Treasuries and the Japanese Yen. The green upward-sloping channel tells the dollar's story over the last year; choppy whipsaw trading with an upward bias. As the dollar came up for the matching high over the last month, and price tests the upper rail of the channel, the chart indicators were out of gas. The red lines show the negative divergence so there was no longer any fuel, in the daily time frame, to take the dollar higher. The neggie d slapdown occurs. The blue boxes show the prior times when the dollar price was extended to the upside above its ribbon of moving averages (price is above the 20-day MA above the 50-day above the 200). Price typically needs to mean revert under these conditions, and always does. Note that for the prior times, the dollar has ran down to or near, the 200-day MA which is now at 96.73. The drop in late April was different with price coming down to kiss the 50-day MA and then recovering when it made its bounce or die decision (purple circle). Thus, every prior example shows a mean reversion occurring off the price extension and every case took the dollar at least down to the 50. The 50-day MA is at 97.08. The RSI slips into bear territory sub 50%. Keystone is not playing in the currencies nowadays. 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 dollar/yen pair is in a long-term (multi-year) sideways symmetrical triangle that just broke down. The yen rallies on safe-haven buying by international traders. As the yen strengthens against the dollar, the dollar/yen currency pair number moves lower; the US dollar weakens against the yen. USDJPY moves higher if the dollar strengthens against the yen; the yen weakens against the dollar. The currencies are getting bounced around on the trade talk rhetoric. As US stocks collapsed on Friday, traders seek the perceived safety of Treasuries and the yen. In a hasty tweet on Friday, President Trump 'hereby ordered' American companies to move their companies out of China. Most folks roll their eyes at the president's ongoing antics. The comment tanked the US dollar that already had a downward bias from Fed Chairman Powell's dovish speech from Jackson Hole, Wyoming. The markets are jumping to and fro as the powerful people play their crony games. Usually, for the sideways triangles, a fake-out move will occur about one-half to two-thirds of the way through the triangle, but that did not occur for the USDJPY. It is a clean triangle hitting the rails and continuing on the path towards the apex, until the failure. The vertical side of the triangle runs from 98 to 126 so that is 28 points. The breakdown from 107-ish then targets 79 (107-28) for the future. No one is likely ready for that. The world will be a lot crazier then. Typically, a back kiss will occur so price will have a chance to either return inside the safety of the triangle, or, flat out collapse to 102 support then through 100 to 95-98. Keystone is not playing in the currencies nowadays. 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 Sunday Evening, 8/25/19 at 6:46 PM EST: S&P futures begin trading Sunday evening on the US East Coast time and tank -40 points. The USDJPY currency pair drops to 104.65 testing critical support from April 2018 at 104.56 and the flash crash low from 1/3/19 at 104.87 when global markets were falling apart. Remember, the Fed, ECB, BOJ, PBOC and other central bankers stepped in to save the day on and after 1/3/19 since they saw the writing on the wall (markets were about to crash). That Keynesian spending activity bought markets 8 months but the rabbit hole beckons once again. If the 104.50-104.70 level is lost, 102 may happen in a flash. Dollar/yen now trading at 104.75. Traders seek the yen as a perceived safe haven. The yen is at the strongest level of the year; ditto kiwi (New Zealand dollar). Note Added Monday Morning, 8/26/19, at 7:39 AM EST: The dollar/yen pair moves to 104.47 overnightand is now printing at 105.90. The yen weakens against the dollar sending the currency pair higher. President Trump says China called and wants to restart trade talks although Chinese state media does not know what the president is talking about. S&P futures stage a huge +75 move off the lows overnight now +14.
It has been a while since Keystone has posted the eclipse indicator. This is a very subjective and obscure market indicator with its roots in metaphysical science which humans will likely not understand for a few more decades. The method begins with identifying the eclipse dates. If there are a couple around the same time period, average the dates to arrive in the middle. Then go one month before that date and one month after and those are the key dates where a significant stock market top may occur, give or take 2 weeks. Is that clear as mud? The entire square eclipse window is prone to a market top and sell off but the circled areas correspond to the key time periods where a major top may occur. You can see the track record is not too shabby. It does not matter that you do not know how or why an indicator works; all that matters is that it does work. If the neighbor left the house each day at the same time, and each time she wore a blue hat the stock market rallied, what would you do on a given morning when you see her walk to the car donning a blue hat? The blue circles show tops that occurred within these eclipse windows. When the first key circle area does not produce a top, it is more likely the second circle will. If the first circle does produce a top, it likely takes most of the energy, and the second circle may be uneventful, or if it is a top it may only be a small pullback. There were two eclipses this summer; 7/2/19 and 7/16/19. Thus, the midpoint is 7/9/19, and going one month before and one month after yields a potential market top in the late May to mid-June area or late July to mid-August. The first window was a bust; the May sell off was already in progress. Interestingly, the first window was uneventful but the energy came to be in the second window calling the late July top on the dot. What does this modern-day voodoo predict ahead? The next eclipses are 11/11/19, 12/26/19 and 1/10/20. December 26th would be the one-year anniversary of the stock market bottom. So the November eclipse stands alone but the other two are near each other for a cluster. Thus, look for a major stock market top to possible occur on 10/11/19 +/- 2 weeks, or 12/11/19 +/- 2 weeks. Also, 12/2/19 +/- 2 weeks, or 2/2/20 +/- 2 weeks. It is interesting that the two December dates overlap. You typically do not see this since the eclipses usually have longer spacing. This December, only about three months away, may be a special time for markets. Using The Keystone Speculator's Eclipse Indicator, the following time periods are targets for potential significant stock market tops ahead; late September through Halloween (late October), and/or Thanksgiving (late November) through Christmas (3rd week of December), and/or mid-January through mid-February 2020. The eclipses, full and new moons, solar flares and other celestial events impact human behaviors but the metaphysical world remains a deep mystery. 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 NYA keeps bouncing to and fro across the critical 40-week MA at 12533 one of Keystone's most important cyclical (weeks and months perhaps a year or two) stock market signals. On Friday, the NYA collapses through the 40 ushering in a cyclical bear market. As always you have to give it a week or two to see if the bears have the beans to maintain the negative move. The NYA fell into a cyclical bear market during the Q4 2018 stock market crash (red circle on the left). Equities bottomed on Christmas Eve but on January 3, 2019, as Keystone described in real-time, stocks took a turn for the worse and the internal data clearly showed a crash ahead. Equities were in the process of collapsing until the central bankers panicked stepping in to save the day. The global central bankers including the Fed, BOJ, ECB, PBOC and others colluded and coordinated messages and monetary policy to save the stock market and once again protect the wealthy class. Stocks catapult higher as the central bankers promise to print money forever. The NYA regains the 40-week MA in early February (green circle) as it was quite obvious that the central bankers will never let the stock market fail. The NYA teased a failure during the May malaise but this price action only served as a bear-trap. Equities run higher to all-time record highs in July, and then fall on their sword. As mentioned above, this 3-week battle at the NYA 40-week MA determines who wins and loses going forward. Each day the NYA remains below the 40-week MA is another nail in the bull coffin. Anyone long the market or individual stocks will be losing money if the NYA remains below the 40. Bears will be humiliated and have to run away with their tail between their legs again if the NYA regains the 40; the bulls will be running stocks towards the highs again. The table is set. The bears are in control for the weeks nd months ahead unless the bulls can reverse the NYA 40-week negative cross. Keystone's most important cyclical market signal is the SPX 12-month MA cross. The SPX 12-month MA is at 2807. The S&P 500 dropped to 2822 this month and was down to 2835 on Friday. The SPX sits at 2847 only 40 points above the 2807 Armageddon bull-bear line in the sand.If the SPX loses the 12-month MA at 2807, it is over for the stock market. If the NYA remains in the cyclical bear below the 40-week, but the SPX 2807 support holds, the bulls will likely recover and take a run at moving the NYA back above the 40, or at least performing a back kiss. 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.
It is interesting to watch the ongoing collapse of crony capitalism that will play out in the months and years ahead. The markets have become a complete joke after March 2009 when former Federal Reserve Chairman Bernanke implemented QE1 to save the stock market and protect America's privileged class that own large equity portfolios. The wealthy politicians, CEO's, corporate executives, billionaires and millionaires have raped America for all its worth over the last five decades. Capitalism is dying. The United States is best described as a faux free market crony capitalism financial system. The wealthy control the legislation and direction of the nation and always ensure that their wallets receive big chunks of cash. The democrats and republicans are two sides of the same coin. Keystone often describes them as demopublcans and republocrats. They only care about their reelection. President Trump promised to help the little people but instead gave a tax break to the wealthy class. The reason for this is to build a war chest of money for his reelection. The individuals in the privileged class that each received about $25K for the tax cut immediately donated one-third to one-half of it to Trump's reelection campaign. This is the way the crony capitalism game is played. President's Obama, Bush and all the rest did the same thing. As John Dalberg-Acton proclaimed, "Power tends to corrupt, and absolute power corrupts absolutely. Great men are almost always bad men." Trump continues to publically denigrate Chairman Powell for several months and the attacks are becoming more abrasive and ignorant. The reason is simple. If the economy turns south, Trump needs someone to blame. None of this is rocket science. Trump is the one who hired Powell and the president says he only hires the best people. The president is a walking contradiction which is creating increased market angst. The chart above tells the market story for Friday. China imposed more tariffs pre-market which sinks the US futures. The Trump tariff and trade war escalation creates the gap-down open for the benchmark S&P 500 (the stock market). Comically, Powell is the one who rides to the rescue saving the day with more dovish talk. Then, Trump hastily tweets his anger at China and at Powell even spelling the chairman's name wrong. Powell commented during his Jackson Hole speech that he is accountable to Congress and the American people. Trump demands loyalty and butt-kissing adoration from everyone so this non-acknowledgement of the president's importance increases his anger. Humorously, King Trump orders all companies to no longer do business with China. His decree is bazaar especially since products from Trump's own companies are made in China. Stocks collapse. It is the Trump trade war escalation that sinks the markets on Friday. The central banks are another sick reason for the ongoing demise of capitalism; they created the income inequality problem. Their obscene Keynesian money-printing monetary policies, for over one decade, have inflated all asset prices around the world including stocks, bonds, real estate, vineyards, art, collectibles, antique cars, etc.... No one knows what any asset is truly worth anymore and humorously, the world remains awash in liquidity. Easy money encourages stupid investment. The Federal Reserve, and other global central bankers, have destroyed all price discovery. Officials at the Federal Reserve and other central banks perform the bidding of the large Wall Street investment banks since they are rewarded with lucrative token speaking engagements once they resign from public life; a quid pro quo for their dovish loyalty to the privileged class. This is Crony Capitalism 101. One-half of Americans do not own a single share of stock. The wealthy class are rewarded with riches far beyond their wildest dreams (due to the central banker Keynesian money printing schemes) while common folks suffer through one-decade plus of structural unemployment and high debt. Interestingly, the number of people holding three jobs is at an all-time record high. It takes two or three jobs for people to make the same income they did before the 2008-2009 financial crisis; dubbed the Great Recession. Protectionism increases around the world as central bankers race to the bottom (competitively debase their currencies to gain an economic advantage but in the end only serve to slit each other's throats). Protectionism extended the Great Depression through the 1930's. Capitalism is failing in the US for two main reasons; humans are corrupt and no transparency. That is all there is to it. The privileged class operate by a different set of rules than the common people. They are privy to all the insider information on legislation and companies and make money in securities effortlessly. Wouldn't you like to know how the game ends before it begins? You too could make a lot of money in a corrupt rigged system if you were one of the chosen ones. Most people do not know that Congress is actually allowed to trade on insider information. That is why a lowly representative will go to Washington, DC, wanting to do good for his constituency, but in a very short time becomes corrupted as money is shoved into his pockets and leggy women whisper sweet nothing's in his ears while playing with his necktie. Why do you think nearly all of the representatives and senators inside the corrupt beltway are millionaires? Typically, all governments and financial systems fail within 200 to 250 years or sooner due to human corruption and lack of transparency so America is overdue for a change/revolution of some sort. The 2020's may look a lot like, and rhyme with, the 1960's. Once the recession begins, it will likely quickly morph into a class war. The divide between the rich and poor is at a five decade high and basically a one-century high. Payback will be a b*tch. The huddled masses are going to want to blame someone for their decade of misery which will have no end in sight once the recession begins and the wealthy privileged class will have bullseye's printed on their backs. The class war will likely become very ugly with violent individuals targeting CEO's, politicians and anyone that has the appearance that they are wealthy. There is a sad future over the horizon created by greedy humans. The wealthy will likely seek out gated communities for their own protection as the class war intensifies. JPM CEO Jamie Dimon is now touting a line that companies should care more about people than profits. That is hilartious. Dimon is smart enough to see what is coming down the pike as well and he is getting out in front of it all. When the ugliness begins, and protesters begin showing up at McMansions, Dimon will be telling everyone that he feels their pain and has been on their side from the start; of course trying to save his and his crony buddies' skin. These people are so predictable. Dimon filled his pockets with money over the last 10 years and likely now worries that they all got a little too greedy. That is the thing about greed; even when you start to realize you are greedy, you cannot help yourself and you continue being greedy. Starting a couple years ago, China placed limits on what any rich citizen could flaunt in public. They obviously see class war problems on the horizon and know that someone walking around in expensive jewelry and furs, driving a $100K Mercedez-Benz, will not be viewed nicely by a person scrounging for some bread to eat. It is all fascinating to watch. 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.
Keybot the Quant algorithm flips to the bear side yesterday before lunchtime at SPX 2873.Retail stocks and the NYA Index are the two key parameters that will impact stock market direction on Monday. More information is at Keybot's site; Keybot the Quant
Look at that plate of spaghetti; I see a couple tomatoes in there. You can see the choppy whipsaw markets between the blue channel that is ongoing for the month of August. The EOM is next Friday. The lower bound of the blue sideways channel is 2822-ish; call it 2820. The upper rail of the blue channel is at 2945. Thus, obviously, bulls win hugely if the 2945 is taken out to the upside. Conversely, bears will celebrate if 2820 gives way to the downside. Between 2820 and 2945 is continued choppy noise. The red lines show the stock market topping due to negative divergence, overbot conditions and upper band violations. The July top came with the ominous rising wedge pattern Keystone described at the time. The collapses form rising wedges can be quite dramatic and bloop, it was from 3000+ to 2820-ish in a heartbeat. Note that the MACD line was weak and bleak when stocks took the positive divergence bounce (green lines) off the early June bottom. The MACD line likely wants price to come back down to 2720-2740 in the future. The SPX tested the lows this month at 2820-ish and the green lines show possie d and oversold conditions bouncing price higher. The stochastics and money flow remain long and strong wanting more highs in price although the RSI sits dead-on the bull-bear dividing line at 50%. Markets are waiting for Federal Reserve Chairman Powell to bring the tablets down from on high in Wyoming this morning. Powell will tell the traders how to trade in this sick world of global central banking in 2019. Thus, the stock market is a crap-shoot right now. If Powell coos dovishly (promising lots of rate cuts), stocks will catapult to glory, the VIX will collapse below 15, and the bulls will be singing happy songs into the weekend. If Powell does not speak dovishly (adapting a wait-and-see approach and unwilling to proclaim a large number of rate cuts ahead), or perhaps tries to be too cute, creating confusion and angst, stocks will sell off. Charts will have to price in the Powell doctrine today and early next week. Note how the selling volumes far outweigh the buying volumes. There is distribution taking place with the smart money handing shares off to the dumb money. The yellow arrows show the tight band squeeze that shot price southward. Tight bands indicate a huge move on tap but do not predict direction. The rising wedge, neggie d, overbot conditions and upper band violation indicated that down was the direction. The lower band was taken out harshly in the downdraft so price needed to at least recover to the middle band, which is also the 20-day MA, at 2923, and price did accomplish this goal with the SPX sitting directly on this moving average and making a bounce or die decision. The upper band at 3030 is in play and may become real if Powell puts on his dove suit and flies above the adoring crowd today dropping money (talking dovishly). Price is using that 100-day MA at 2910 as support the last three days so keep an eye on that important moving average; bulls win above while bears win below. S&P futures are up +10 with the VIX at 16.56 about 90 minutes before the opening bell for the US Friday trading session. Emperor Powell will make his decrees at 10 AM EST. 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 8:05 AM EST: China announces plans to levy tariffs against the United States. The US-China trade war festers; the wound is becoming infected.S&P futures drop -14 with the VIX spiking to 18.01. The bears cheer. F, GM and TSLA are punched in the face (auto makers). USD 98.33. Gold 1511. 10-year yield 1.60%. The VIX 200-day MA at 17 dictates a bull versus bear market. Note Added Saturday Morning, 8/24/19: The bears slap the stock market lower yesterday after the US and China go at each other's throats over the trade war. Autos, retail and chips are beaten severely. The VIX explodes higher to 21.07 and settles at 19.87 so stocks collapse. The SPX finishes down 76 points, -2.6%, to 2847. LOD 2834.97. The 150-day MA resistance is at 2862. The 200-day MA support is at 2803. Note that both the closing and intraday lows have not ventured down to test the 2820-2822 blue channel bottom trend support line as yet. Price is in the neighborhood and will likely want to tap on this critical 2820-ish trend line to say hello and of course, make a bounce or die decision. The sideways, erratic, unstable, choppy whipsaw stock market action continues. Chairman Powell flapped his dovish wings and stocks rallied but President Trump and China are firing insults and more tariffs at each other sinking equities. Trump continues to denigrate Powell publically, even now calling for his resignation. Trump is the one who hired Powell and says he only hires the best people. During Powell's speech he said he, and the Fed, answer to Congress and the American people. King Donny does not like that; he requires everyone to kneel and kiss his shoes each day. Powell's comment likely got under Trump's thin skin causing him to lash out erratically yesterday. The Trump drama, instability and most of all, uncertainty, sends the stock market into a tizzy. Trump says President Xi is his friend yesterday but at the same time asks who is the worst enemy of America; Xi or Powell. No one knows what Trump will say or do next most of all he does not even know. Companies cannot chart a logical course forward on policies that change hourly.
The knock-down, drag-out, fight between bulls and bears continues all week long and Federal Reserve Chairman Powell enters the ring this morning to decide who wins. Powell will bring the tablets down from on high and tell global traders how to trade at 10 AM EST.Emperor Powell is in Jackson Hole, Wyoming, USA, with other crony central bankers colluding and communicating the next step in coordinated money-printing around the world. The wealthy elite class always protects itself above the common huddled masses. The week began with that gap-down move in the VIX as the global central bankers place their jack boots on the throat of volatility. On Monday, the bulls push the VIX below the 200-day MA at 16.98-17.07 so equities are happy. The VIX moves inversely to the stock market (SPX) about 90% or more of the time. The bears battle back on Tuesday morning but the bulls slap them in the face again. The bears fight back again but then the gap-down move occurs on Wednesday morning the jack-booted central bankers crush volatility to pump stocks higher. The bears were not giving up and jam the VIX higher on Thursday morning (yesterday) feeling proud that they are in control again. That did not last long as the bulls push the VIX below 17 again. The VIX is trading right now, three hours before the opening bell for the US trading session, at the short-term bullish, albeit ominous, 16.66 with S&P futures +6. Of course the main event today is the Powell doctrine that will be laid out in the coming hours. The stock market wants to hear never-ending dovishness. It wants the global central bankers to keep printing money like madmen which inflates asset prices. This will give the privileged class time to exit lots of investments and let the huddled masses idiots hold the proverbial bag. This is the way the game is played. Keep watching the VIX 200-day MA at 17; it tells you the stock market direction ahead. Bears win above 17 while bulls will keep choppy markets flat to buoyant between 15 and 17. Bulls will be celebrating record highs ahead if the VIX drops below 15. The beat goes on. Powell is at the free buffet right now wiping a jelly stain off his necktie. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision. Note Added at 8:09 AM EST: The VIX spikes above 18 now at 17.61-ish (bouncing around) above the 17 bull-bear demarcation line. The bears are dancing a jig of joy. China announces new tariffs against the United States so the US-China trade war deepens. Note Added Saturday Morning, 8/24/19: The bears came to play on Fridayaided by the deterioration of the US-China trade war. The VIX pops above 21 and settles for the week at 19.86. The SPX collapses 76 points, -2.6%, to 2847, in the Friday trade. LOD 2835.
