The month ends (EOM) on Monday, 9/30/19, also quarter-end (EOQ3) so the September print will be cast in concrete on Monday and the October candlestick will begin on Tuesday morning. Monthly charts receive the new data point.
Window dressing typically occurs at quarter-end. Underperforming money managers rush to buy the best stocks during the quarter just in time to slide them into the quarterly statements for their customers. These naive fund-holders are happy since they see that they own the stocks that are hot. Wall Street specializes in smoke screens. The window dressing created buoyancy in equities last week.
New money typically enters the market at the start of a quarter so this activity may create buoyancy in stock prices the middle and late week ahead. The new moon peaks at 2:26 PM EST today, Saturday, 9/28/19, a couple hours away, and stocks are typically bearish through the new moon. This may have created some of Friday's sogginess in the stock market and perhaps into Monday's trade.
President Trump may delist or otherwise prevent or limit Americans from owning Chinese securities. The stock market fell apart on Friday on this news and it sets the stage for an interesting open to the futures markets at 6 PM EST Sunday evening, and start of Aussie and Asian trading. As usual, King Donny bloviates bravado and will walk back the dramatic words to something more palatable for markets but this may take a few days.
To add to the seasonality band wagon riding through town, Monday is the Jewish holiday where materialism is not welcome hence, "Sell Rosh Hashanah, Buy Yom Kippur." Yom Kippur is on Wednesday, 10/9/19. Lots of Jewish folks will likely not trade for a few days after Monday so this will enter the market mix as well.
Thus, on a seasonality basis, we had the window dressing. Monday may see new moon weakness along with the Trump-China tweet weakness. Tuesday through Friday stocks may experience buoyancy as new Q4 money enters markets. For the next 8 trading days, trading volume may be lighter and the buoyancy with new Q4 money may be offset by the negativity of Rosh Hashanah.
Also, the 70-year celebration of the People's Republic of China, of communism, is October 1st. The Hong Kong unrest should ramp up to soil President Xi's party.
All that background stuff aside, the monthly chart is a sick pup. This is said even with September about to log an up month. September began at 2926. The S&P 500 is at 2962 so it would have to tank 36 points in the Monday trade to create a negative September. That could happen if retail stocks, chips and/or bank fall.
The SPX monthly chart is extremely scary and significant since it is calling for an epic multi-month and multi-year top in the stock market. All the parameters are negative on this monthly basis. Of course, the Federal Reserve's dovish monetary policy, and/or President Trump's tweets, can change the chart posture immediately. As of now, on th long-term monthly basis, it's over for the stock market.
One thing that pops out is the distribution occurring (brown circles) the so-called smart money handing off shares to the bag-holding dumb money. During an up month, the pump and dumper's will tout how great companies are doing. Frank Retail, and Joe Sucka, take their savings and run into the market during the next month to buy the hyped-up stocks especially tech stocks that folks believe will never go down. Pump and dump. The higher volume in the following month shows the smart money succeeding in sluffing off the shares to novice investors. Maybe there are not as many suckers around this time since the September trading volume is very low perhaps the lowest since right before that May 2015 top. Technology is allowing common investors to become wise to Wall Street's corrupt and rigged games.
The RSI, stochastics and money flow were all overbot and the stoch's remain overbot all are agreeable to a pullback. The red rising wedge pattern is ominous since it represents the edge of a cliff. Price can fall (crash) into oblivion when the lower trend line of the wedge gives way. Price is up inside the apex of that wedge and there is not much room remaining.
The red lines show universal negative divergence across all indicators and it is drastic and ugly. Look how strong and erect the RSI was in late 2017 but now it is a limp noodle. Usually, you may see some short-term strength over the last few months that may create a month or two more of oomph but there is none of it there. This current time in the markets is when everyone is enjoying the party on the boat, drunk as skunks, singing songs and bragging to one another how large their stock portfolios are, but one partier outstretches his arm, with a cigarette in his fingers, pointing at a tidal wave four times higher than the ship that is about to hit. There is only enough time to scream.
The SPX has pegged the upper standard deviation band so the middle band at 2793 is on the table also the lower band at 2541. If the downside started gaining steam, the 2793 would be inevitable. Price remains above the moving averages requiring a mean reversion lower. The ADX shows that the upside in 2014 was a strong trend and likewise, the trend in 2018 was a strong upside trend. However, this has petered out and is no longer a strong trend higher in stocks starting in April-May of this year. Interestingly, the ADX lost its strong trend in early 2015 right before that stock market top.
Keystone cannot overstate the huge important and epic time upon us. It is here. Sure, King Donny or Jester Powell may boost stocks again but at least at this point in time, the top is in. A tweet or dovish tweak to monetary policy may extend the party for a month or two but the long-term stock market top is at hand. If you are a young person, get out of the stock market; you can easily lose one-half, two-thirds or maybe a lot more of your money over the next year or two. Let the wealthy take the losses. Don't hold their bag of excrement. If you are any investor, all stocks that you do not plan to hold for say 5 to 7 years or longer should be sold.
What is even more interesting is that October is upon us the month where severe market crashes have occurred. Do not treat this period lightly. As a student of the market for many decades, this is very serious. These levels in the SPX may not be seen again for many many years.
Market confidence is key especially full trust and faith in the Federal Reserve. The entire fate of US markets rest on Chairman Powell's thin shoulders. The action in the chart above hints that confidence in markets is waning which then hints that the market-saving measures the Fed and/or Trump may take may be viewed as too little too late. Be quiet. Do you hear that? The bell tolls. Does it toll for thee? Keystone can post this chart again in a few days once the October month is underway if folks are interested.
That PTON Pelotin IPO flop was comical. Why would anyone buy a $5,000 clothes hanger from Pelotin when they can buy an $800 clothes hanger from Wal-Mart? They should call it Pantload instead of Pelotin. This gimmicky, fad-type stuff is reminiscent of the dotcom bubble top with Webvan and Pets.com. 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 10/1/19: Yesterday, noted billionaire, book seller, commentator and money manager Ken Fisher says the bull market will continue as it has for the last decade. Fisher says earnings are improving and Europe is getting a handle on their problems. He proclaims a positive path ahead and people should focus on all the good things happening everywhere. Fisher says gridlock in Washington, DC, is great since it will correlate to higher stocks. He says a negative year for the third year of a presidency has not occurred since the 1930's. Fisher paints a rosy path ahead for the stock market. There you go. Two completely opposite views. Which horse are you hitching your wagon to for the months ahead? Keystone or Fisher?
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.