SPX (S&P 500) Daily Chart; Sideways Channel; Federal Reserve Chairman Powell Speaks from Jackson Hole, Wyoming, USA

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.