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.
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