The stock market is at an interesting juncture. When the utes roll over from zero to 2 months ahead of the broad stock market, and trend lower, equities will fall like rocks. It will not be a run-of-the-mill pullback like the last decade where the dip-buyer's rush in because it is guaranteed that the Fed and other global central bankers will always print money to support markets and protect the wealthy elite class.
The action in utilities over the coming days and couple-three week period is uber importante. If the utes roll over from here, resuming the downtrend, it is over for the stock market. If utes rally from here heading back up towards the highs in September and October, the stock market bulls are fine and no matter what selloff is occurring in the broad stock market, equities will recover.
The two key parameters to watch with the utilities is the 15-week lookback number, which determines if utilities, and correspondingly the broad stock market, is in a weekly uptrend, or downtrend, and the 50-week MA currently at 801 and rising.
The candlestick on the right-hand side of the chart is in progress since today is Friday and the last day of the week to effect the candle. Counting back 15 weeks is the brown circle which is the weekly close of 831.22. This number only matters today. For next week, 12/2/19 through 12/6/19, the first week of December, counting backwards 15 weeks is the purple circle at the weekly close of 832.03. Thus, if UTIL fails at 832-ish over the next 6 trading days, the stock market is in big-time trouble. Note that the thick blue lines, that show strong price support levels, call out 830 as a key support level. So lump the two together and over the next 6 trading days, the UTIL 830-832 support level is uber important. If it fails, stocks will be falling apart in a serious way.
UTIL is at 853 so the stock market bulls are feeling pretty good about themselves. They have a full belly of turkey, mashed potatoes, pumpkin pike and Fed wine and feel great about the future. Every day is sunshine and rainbows in the US stock market and the month will not end in a November Rain, as Guns 'n Roses would sing (one of the top videos in rock 'n roll history noted for its cinematic imagery and Slash's epic and haunting guitar solo's).
The interesting week is 12/9/19 through 12/13/19. In those few short days ahead, for that week, the 15-week lookback number is at 845.52 (orange circle). Thus, stock market trouble starts in earnest if UTIL slips below 846 during the week of 12/9. With price currently at 853, that is only a few dollars lower. Obviously, if UTIL fails below 832-ish the week of 12/9, the stock market trouble is well underway and by the week of 12/16, stocks will be tumbling sharply lower. All the bulls have to do is keep UTIL above 832 for the next six days and then above 846 during the week of 12/9 and they will be singing and dancing into Christmas.
Tax loss selling typically hits its peak in early December so this may be a drag on the stock market in the coming days. New money typically comes in to start a new month so the first few days of December may have lift trying to offset the tax-loss selling negativity.
The thick blue lines show strong price support at the 818 palindrome and 806 levels. If the utilities are collapsing, the 818 and 806 levels will serve as temporary support on the way down. The very important 50-week MA is at 801 and rising. You can see that moving average perhaps coming up near that strong price support at 806 so that 801-806 support level would be for all the marbles. Think of it as a trap-door. If UTIL is dropping, stocks will be selling off in force, and if price comes down and fails at the 50-week, carnage begins. The trap-door will open and within a half hour or so of this failure will likely see the SPX down 30 handles, for starters. The stock market could potentially go into a crash once the UTIL 50-week MA fails.
Summing up, UTIL is at 853. If the 830-832 level fails before 12/6, the stock market is toast and equities will be tumbling lower in earnest. Stocks will remain buoyant if the 830-832 does not fail before 12/6.
If UTIL loses the 846 level during the week of 12/9, the stock market is toast and equities will be tumbling lower in earnest. If UTIL remains above 846, moving sideways or higher over the next couple weeks, the bears got nothing and the stock market bulls will be fine.
If UTIL is dropping like a rock and takes out the 818 palindrome support, the stock market is in serious trouble and may be headed for a crash. At this time, watch the UTIL 50-week MA like a hawk. If it fails, stocks will be taking out stops like they are not even there with prices dropping drastically. A crash or flash crash would be on the table. The table is set; what part of the menu would you like to dine on in the days ahead? You should be watching utilities every day forward into mid-December. It will tell you the fate of the US stock market in the intermediate and longer-term. 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.
Happy Thanksgiving to all! Beware the tryptophan; you don't want to fall asleep in Aunt Sally's mashed potatoes. The November rally continues higher fueled by Soybean Donny's happy trade deal tweets. The bears have thrown in the towel resigned to eating franks and beans on this Turkey Day. The bulls are celebrating at Itchycoo Park, what great fun it is, the bulls dance while singing, "It's all too beautiful."
For the last two weeks, we have been looking for the top, the elusive Godot Top, since the uber low put/calls, low volatility, record short VIX positions, and other parameters verify the off-the-charts euphoric bullishness and rampant market complacency. Complacency marks a top which did occur, followed by three or four days of downside, however, if you blinked, you missed it. The negativity was gobbled-up by the ongoing US-China trade deal hype.
Traders remain relaxed about all-time record stock market highs since even if equities choose to sell off, the global central banks will collude and step in to save the day as they have for over a decade. Money managers, traders and investors sing Praise and Honor to the Four Horseman of the Perpetual Rally; the white Fed, red BOJ, black ECB and pale PBOC. During any stock market downturn, these modern-day Money God's, that guard the Temple, ride in to save the day to protect the wealthy elite class.
These harbingers of near-term gratification at the expense of long-term capitalism, the central banks, have engineered the longest recovery and rally in stock market history. The world remains awash in liquidity. Easy money fuels stock repurchase programs (buybacks) that artificially send earnings numbers, and equity prices, higher. It is a fantastic world if you are wealthy and own a large stock portfolio. Too bad for the one half of Americans that do not own one single share of stock.
The low put/calls hint at a potential 150 point, or more, sell off on tap, but humorously, it may occur after rising 70 handles. The SPX daily and 2-hour charts lined up with neggie d a few days ago which identified the short-lived top, and now price is higher at new records again (only due to trade news since the chart indicators do not want the SPX to move higher). The SPX, the US stock market, the S&P 500 cash index, prints an all-time high at 3154.26 and an all-time closing high at 3153.63 on Wednesday, 11/27/19, the day before the Thanksgiving Day holiday, in light volume.
The Dow Jones Industrials (INDU; DJI; DJIA), Nasdaq Composite (COMPQ), Nazzy 100 (NDX), the tech sector (XLK) and consumer staples (XLP) all print new record highs. Sound the Seven Trumpets!
The Semiconductor Index (SOX) did not print a higher record high this week thus far; ditto the XSD and SMH. The RUT small caps and trannies (Dow Transportation Index; TRAN; DJT) lag the broad stock market. Real estate (XLRE) and consumer discretionary (XLY) also do not move above their prior highs. Real estate and utes are defensive plays, along with consumer staples.
Utilities (XLU) have not printed higher record highs since late September. This is a big, big deal. Keystone always preaches about the utes. Utilities topped out 2 months ago. If you see utilities roll over and drop from here, it is very likelly that the broad stock market is about to have a religious experience. Watch the utes like a hawk over the next couple weeks. If they fail lower, it is over for the stock market. If utilities rally in the days and weeks ahead, the stock market bulls will be on easy street.
Nothing has changed in the SPX daily chart above. The overbot conditions have opened the door to a move lower. The red rising wedge pattern is ominous. The red lines show universal negative divergence. Price made it to the new highs on light volume and fumes. The SPX nails the upper band at 3153 so the middle band at 3100, and rising is on the table, as well as the lower band at 3046 and rising. Price is way extended above its moving averages requiring a mean reversion. Usually stocks would be expected to be weak the last couple days of a month that went all up. Tomorrow, Friday, is EOM. For the last few days, it is all systems go for the bears but Soybean Donny keeps tweeting every couple hours that the trade deal is almost ready. It is in its final, final, double-quadruple final stage.
King Donny promised that the US-China trade deal is in its "final throes" which lit a fire under markets to the upside. Xi and Trump talked on the phone so the deal looked like a done deal. Comically, in true Trumpian fashion, an hour after waxing optimistically, Donny says he is holding back a deal to get a better deal. Obviously, he continues talking out of multiple sides of his mouth and tells the crowd in front of him whatever they want to hear.
President Trump insinuated that he waits until the team comes up with a deal then he will review it to make a decision. It is surprising that he is not more directly involved. Then again, it is not surprising at all; he is a politician. Donny is employing plausible deniability. If the trade deal blows up, he blames Mnuchin and Lighthizer for not handling things correctly. If it is successful, Donny will brag and bloviate that he directed the process at every turn and of course he will announce it as the greatest trade deal ever known in the history of mankind.
So the stock market prints its joyous highs and then sly ole Donny Boy, hiding in the bushes, the evening before Thanksgiving, quietly signs the Hong Kong bill that sides with the protesters. Dictator Xi told Donny for the last five months to not meddle in Chinese affairs. Again, in true Donny fashion, he signs the bill and says he is doing it to help Xi who probably blew a head gasket when he saw that message.
S&P futures immediately dipped -10 and sat there overnight and on Thursday, Thanksgiving Day, morning are hanging around the -5 to -10 area a paltry drop considering the implications of signing the Hong Kong bill. The thinking is that the bill will not have much impact in the near-term, so perhaps a deal can get done, and then worry about the impact of the bill on Hong Kong and China and US relations down the road.
Trump had no choice but to sign the bill since it has huge bipartisan (republican and democrat) support and his veto can be overridden. Donny took his medicine and signed the bill in the cover of darkness. It was odd to not see Trump hold a gala signing event. He usually demands that his loyal cabinet kneel in a semi-circle around him applauding each stroke of his Sharpie.
China does not celebrate Thanksgiving. Perhaps Donny forgot about that. So the signing of the Hong Kong bill is a direct slap in Xi's face in real-time. 'Hey communist Xi, are you going to take that off of Donny? He wants to fight you in the parking lot behind the stock market.' Equities will be on eggshells, probably into the weekend since the US Friday session is a half day, waiting to see how China retaliates.
Watch that RSI that is trying to sneak out a higher high. That would be bullish for another day or two if the bulls can pull it off. Price has gapped-higher for three consecutive days, however, and the MACD line lags, so the expectation would be that the RSI will stall. As always these days, the stock market direction takes its orders from what President Xi and President Trump say about the trade deal. The chart says down but Soybean Donny's tweets say up.
Perhaps Dictator Xi will be the fly in the stock market ointment going forward? Xi cannot afford to look weak and Donny's signing of the Hong Kong bill and the patronizing words afterwards makes Xi look like a little b*tch. The communist dictator plans his retaliation. 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 7:44 PM EST: S&P futures -4. Dow -35. Nazzy -8. Russell -5. WTIC oil flat. Brent oil -0.3%. Gold 1455. Silver 17.01. Copper sinks -0.9%. 10-year yield 1.78%.
Note Added Friday Morning, 11/29/19, EOM, at 4:56 AM EST: S&P futures -7. Dow -57. Nazzy -25. Russell -6. WTIC oil -0.2%. Brent oil -0.3%. VIX 12.35. Gold 1456. Silver 16.98. Copper sinks -1.1% to an ominous 2.666. Treasury yields are; 2-year 1.62%, 5-year 1.62%, 10-year 1.76%, 30-year 2.18%. The 2-10 spread is down to 13 bips. The 2's-5's yield spread is flat or call it inverted if you want.
Happy Thanksgiving to all! The turkeys are running for their lives. The VIX prints down to 11.42 this week thus far matching the prior volatility lows shown by the red circles which identify stock market tops. Can volatility move lower? Of course it can perhaps back to the record lows in late 2017, however, the Federal Reserve's one-decade long sick Keynesian financial experiment is getting long in the tooth. The Fed has failed to deliver inflation for the last 10 years while at the same time making the wealthy class filthy rich. America is now the land of the have's and have not's; a new Gilded Age is upon us.
The blue line shows how the VIX has only succeeded in coming back down for matching lows as the stock market keeps printing higher highs ever few months. Since volatility and the stock market move inversely to each other over 90% of the time, the VIX should be printing lower lows over the last two years and down to the 2017 levels. The SPX was 2860-ish back then and now at 3154 about 3 hundo points higher.
It is extremely important to see if the VIX wants to drop below that blue trend line and trend lower, if so, the analysts calling for SPX 3500 will look like Einstein's. However, if the VIX spikes higher from here forward, as it did to place the prior tops, the stock market is likely susceptible to a major downside event. The rising wedge pattern on the SPX chart is very ominous and bearish.
The green circles show the panic and fear in markets. During the turmoil of a stock market selloff, folks are wringing their hands regretting they ever bot stocks. The baby is getting thrown out with the bath water. You know all the old cliches. People, unable to deal with the losses in the stock portfolio, jump out of windows, hopefully, they are on the ground floor. When all this blood is flowing in the streets, the VIX spikes to those green circles and you want to buy, buy, buy for the relief rally.
The VIX is a huge beachball that is difficult to keep underwater. The central bankers, the Fed, ECB, BOJ, PBOC and over 20 other global sicko's, all have their filthy hands on the beach ball holding it below the surface. Once in a while, their slimy hands slip and the beach ball pops up and out of the water in an explosive fashion (as the VIX chart above shows) which sends the stock market sharply lower. Once the corrupt central bankers corral the VIX beachball and push it back underwater again, all is calm and fine again with a steadily rising stock market.
The Fed and other central bankers maintain their jackboots on the throat of volatility to reward the wealthy class with higher stock prices. The central bank officials perform the bidding of the wealthy since they are rewarded with lucrative speaking engagements at the large investment banks once they leave public office. Such is the crony capitalism system.
The short VIX positions in the market are at historic record-setting highs. The bears have all left town for the holidays. No one expects the stock market to ever go down again and if it does, the central banks will step in to save the day. For the last two weeks, Keystone has been talking about the rampant market complacency evidenced by the low put/calls, low VIX and other parameters.
What a sick world the Federal Reserve and other central banks have created all for the purpose of lining the wealthy's pockets with easy money stock gains. True human greed on full display for the last decade. The upper middle and wealthy class in America, about 20 million of them, screwed the other 300 million huddled masses. Pay back will be a b*tch and begins when the recession starts. There will be a lot of unhappy Americans that have struggled for 10 years since the Great Recession in 2008-2009, and now give up all hope as another recession begins. Desperate people will do desperate things.
Watch to see if the VIX moves above that 14-ish level where you see the spike high from the prior week. Keybot the Quant identifies VIX 15.04 as the bull-bear line in the sand so bears need to be above 15 if they want to send stocks sharply lower. The 200-day MA, a key short-term stock market signal, is at 15.14. Thus, bulls are whistlin' Dixie and comfy and cozy in this holiday season enjoying elevated stock markets if the VIX remains below 15.04. They sing and dance each day while sipping Fed eggnog and ECB champagne buying stocks without a care in the world. Blood, carnage, mayhem and misery will visit the holiday table if the VIX moves above 15.14. The bears will be slashing the bulls destroying all holiday joy. 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 SPX prints a new all-time record high at 3138.80 on Tuesday, 11/26/19.
The charts are absorbing the latest US-China trade news into the price. There is lots of talk since Sunday afternoon that the US and China are working towards resolving the major trade issues such as IP theft and enforcement of rules. In reality, it is likely the communists dangling carrots with extending time their main goal. Soybean Donny may not be in office this time next year but Xi has appointed himself as dictator for life.
The Hong Kong unrest is complicating the US-China trade negotiations. China tells America to bud-out but the US Congress approved a resolution condemning China's treatment of Hong Kong. President Trump has to decide to sign the bill to remain on the side of human rights, or, not sign the bill and instead lay in bed with the communists.
Soybean Donny is trying to separate the two issues placing Hong Kong in one box and the US-China trade negotiations in another box, however, this will not fly. China has already said many times if the US intervenes in Hong Kong politics (which it will if Trump signs the Hong Kong bill), tariffs will be imposed.
What creates even more palace intrigue around the Trump reality television show, is that there is a date-certain time line playing out. Donny must decide whether or not to sign the Hong Kong bill in the days ahead by early December. Then, on 12/15/19, additional US tariffs against China are set to occur. Thus, President Trump must pull a rabbit out of the hat in the coming 18 days, a couple of weeks, to tie all these events up in a pretty little bow. If the deal gets pushed into the new year, that may disappoint investors that were already promised that a phase one deal would be finished by now capped off with a Trump-Xi signing ceremony.
Tax-loss selling hits its peak in early December. When a month is all upside, like November, it typically finishes weak. The new moon is peaking for the month right now and stocks are typically weak through the new moon. Stocks are typically buoyant around the Thanksgiving Day holiday in thin trading. Mix all that together and what do you get? Three negatives and one positive.
The 2-hour chart is in neggie d just like the prior top a week ago. Price did not have the strength to come back up again but it was given the extra energy from the happy trade talk. The stoch's are overbot agreeable to a pullback. Price has violated the upper band so the middle band at 3116 and lower band at 3090 are on the table. Price is extended requiring a mean reversion. Copper futures are up +0.2%. Bears cannot growl until copper turns negative.
The stock market would be expected to top out sometime today but always remains subject to more happy trade talk or Thanksgiving Day joy. A negative catalyst would likely spank stocks down very sharply and quickly in dramatic fashion. Watch the money flow which is one-tick behind the price candlesticks; see if it rolls over with neggie d which will identify the top. The all-important monthly Consumer Confidence data misses expectations, now lower for four consecutive months, but no one cares since they are too busy buying stocks. 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 10:46 AM EST: The SPX is up 3 points, +0.1%, to 3137. Copper +0.2%. VIX 11.81. 10-year yield 1.73%. Gold 1458. Silver 16.97. Oil +0.5%. All the happy trade deal hype from the overnight phone call to now results in a paltry 3 points of upside for the S&P 500. The US politicians and Chinese communists did not get much bang for their jawboning buck. Watch to see if the bulls can take out the all-time record high at 3138.80. Copper is key.
Note Added 4:40 PM EST: The top level phone call did not provide much juice for stocks so Soybean Donny and Dictator Xi talk on the phone today; a tippy-top level phone call. Both the US and China say progress is made in the trade deal and President Trump proclaims the trade agreement is "in the final throes." That is a funny choice of words since final throes typically denotes something gasping its final breath before it kills over and dies. Obviously, the president meant that the US and China are dotting the i's and crossing the t's on the trade deal. Stocks jump higher and melt-up in the final half-hour of trading on the happiest of all trade talk hype. If the trade deal is in the final throes, that means in a day or two they should be announcing the final details. Don't hold your breath. The bulls goose copper that went from flat to up +1.3% in a heartbeat which guaranteed elevated equities today. The SPX gains 7 points, +0.2%, to 3140.52, a new all-time closing high. A new all-time high prints at 3142.69. Price went though the 3138 to 3142-3143. The trade talk is at a climax, a denouement, since the two leaders, Trump and Xi, talked today. It does not get any higher than that. So now is the time to sh*t or get off the pot. Perhaps they were discussing where an official signing of the deal will take place? The bulls are hoping the daily happy trade news joy pops stocks into Turkey Day and through the Friday short session. Trading volume is higher today than would be expected. There must be real belief that that the trade deal is about to happen. The charts keep saying down but the trade news hype keeps saying up.
Treasury yields have been on a roller coaster ride since the August turmoil. For the last few years, Treasury yields have moved lower with the never-ending Federal Reserve money-printing policies. Keystone has described the ongoing disinflation and deflation back drop the last few years and finally the broad street consensus agrees that low and no inflation is here to stay (as Keystone now thinks the three-decade bond rally is coming to an end). Remember a few years ago, Keystone told you that in a few years, everyone would be on the bandwagon that inflation will not occur (giving up the thinking that inflation was coming any day) and that is when it will actually begin to occur.
The Fed started this sick Keynesian financial experiment in March 2009 to save the US stock market and protect America's wealthy class (that own large stock portfolios). This is the way the rigged crony capitalism system works. Ever since late 2009, there had been a steady drumbeat of analysts promising that inflation was around the corner. A decade later and inflation remains Godot. Sure, the central banks are printing money like madmen but the global economy continues to weaken and overall demand moves slowly and steadily lower.
Since many folks had been calling for inflation over the years, of course it never came. Now that everyone and his brother, even Aunt Ethel that rarely follows the bond market, say low inflation is here to stay for many years forward, that triggers your radar that the long three-decade bond rally may finally be at its end. There is likely an ongoing sideways chop that will occur in Treasury yields, with a very slight upward bias, for the weeks and months ahead, even a year or three forward.
The drop in global yields was dramatic in August as stock markets tanked. The 2-10 yield spread inverted joining the 3-month to 10-year yield spread that had already inverted for many weeks. The chart above is the 2-10 yield curve spread. The yield curve dramatically resteepened since September just as sharp as it flattened retracing 100% of the move towards inversion. In the last few days, the yield curve flattens again.
Keystone has talked about the hook pattern which brings on recession (in and out of inversion). Analysts say it will be 18 months before the recession appears after an inversion occurs so that places the recession at February 2021. This is one of the reasons traders remain bullish on the markets and economy and say all is clear and smooth sailing until 2021. However, no one has factored in the one-decade of obscene Keynesian money-printing. Perhaps the recession is here, standing next to you at the party, breathing on your neck, spilling smelly Fed punch on your sleeve, and you do not even realize it.
The yield curve above is reflattening in recent days and now at the important 38% Fibonacci retracement. In addition, this is the key 50-day MA support. Further, there is lots of support in this area from August and October. It is time to bounce, or die. If the yield curve further flattens, the 50% Fib and perhaps 62% Fib are on tap (further flattening). A bounce will likely take price to the 20 or 200-day and then spank it back down again. There is likely lots of sideways in Treasury yields going forward. Yields are likely at an inflection point today as the yield curve makes a decision at the 38% Fib retracement. 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.
Whoopie. Wheee. Bullilsh traders sing, "Happy days are here again." The couple-week topping saga continues. The happy trade news hype is fed to markets each day via an intravenous drip. As expected, happy US-China trade news occurs on Sunday afternoon, US time, right before the futures markets open. The communists say they are making progress with the US in addressing IP (intellectual property) theft. This is a big issue in the negotiations so global stocks and futures rally higher.
Of course it is likely more bluster being blown up trader's butts but like Grandpa Jones would say when he sat under the elderberry tree sipping whiskey, "it'll cure what ails ya." By introducing the IP news, that takes the trade talks to a new level. Remember, the so-called phase one deal was supposed to be done and dusted by now and not include the IP and enforcement stuff. So perhaps the two sides are talking big picture again.
China has a demand that the tariffs be lifted or reduced in some fashion for any deal to take place. Soybean Donny is realizing that if he agreed to this, that would place a firm ceiling in his negotiating leverage going forward. China is succeeding in its goal to keep pushing things forward since the US presidential election will be dominating the news coverage from January on. Dirtbag President Xi is dictator for life. Soybean Donny may be selling used cars at 5th and Vine a year from now.
So the happy trade deal news where the United States and China may be pushing forwards to solve the IP theft problem sends the stock market to new all-time record highs. Sound the Seven Trumpets!! This time the communists provide the upside energy and the charts are pricing-in the joy. The S&P 500, the US stock market, prints 3133.83, the highest number in history, and also a new all-time closing high at 3133.64, on Monday, 11/25/19.
More happy trade talk news overnight. There was a phone call between the top Chinese and US negotiators. This happy talk pumps US futures higher on Monday evening, however, the luster comes off the rose and overnight, the futures drift back to the flatline. Global traders realize what is missing in all the trade news hype since Sunday evening is the US side commenting. Treasury Secretary Mnuchin and Trade Representative Lighthizer (chief negotiator) are quiet.
The Fed receives the football toss from the happy trade talks and Chairman Powell runs for a bullish touchdown proclaiming that he sees "the (economic and market) glass as much more than half full." The consensus remains bullish and complacent. A handful of analysts now call for a slight pullback in the stock market but they are telling everyone to buy any dip. There are no bears in the market.
The CPC spiked higher last week to tap 1.20, the start of the panic and fear zone, which helped stocks recover and rally. However, the CPC drops again and the CPCE remains subdued and the uber low put/call ratios have not been resolved. Complacency continues to signal a stock market top at hand. Stocks are saved by the daily happy trade deal news and Fed easy money policies. Equities are typically buoyant around the Thanksgiving Day holiday. The new moon peaks in about 3 hours and stocks are usually weak moving through the new moon so that will be interesting to watch. The new moon negativity may be offset by holiday joy.
The SPX daily candlestick chart above shows the gap-up glory yesterday and new all-time record highs (neon green boxes). The bulls channel their inner Zoolander and proclaim, "It's beautiful!" This type of momentum move you need to give a day or so to digest but you can see how the higher high in price (due to the new trade deal news that was unknown) comes with universal negative divergence across all indicators. As long as any of the indicators do not go above those thin red lines in the right margin, the top is in.
Those three big selling volume days are solid distribution the smart money passing off shares to Zach the Fool, Carl Clueless and Sally Sucka. The investment banks count on the dumb money coming in to buy right now on all the new record high hype; it makes it easy to slough off shares to the bagholding dolts. It's fun. It's sport for many professional traders. Joe Sixpack and Amy Retail are afraid they are missing the stock market train leaving the station so it is easy to capitalize on their novice greed.
The ADX surprisingly flatlines. It was headed higher and about to identify the long rally as a strong uptrend (high 20's and higher) but alas, it bumps sideways and continues to refuse to call the big rally a strong trend. The last strong trend was down during the August crash but the happy trade deal talk and the Fed and other global central bankers colluding and riding to the rescue saved the day, as always.
The Aroon green line is pegged at one hundo with nowhere to go but down which is bearish and the red line is in the cellar with nowhere to go but up which is bearish. Watch for the potential negative cross. On balance volume is also in neggie d. As mentioned several times over the last couple weeks, the rising wedge pattern is ominous since the failures can be quick and devastating; huge cliff-like collapses. Price has not come back to kiss the 20-day MA at 3089 (which is also the center band) in 7 weeks which is a long time. A mean reversion is needed with price extended above its moving averages.
Price has lightly tapped the upper standard deviation band but considering the momentum spurt yesterday, the upper band at 3143 must be respected. That would be 9 more points of upside. If the SPX closes above 3138, then 3142 would be in play. On the downside, the middle band at 3089, and rising, is on the table as well as the lower band at 3035, and rising.
Keybot the Quant flipped long yesterday but the stock market direction is essentially a coin-flip right now. The quant is fixated on copper so 'as copper goes, so goes the market'. Copper futures are currently trading down -0.2%. S&P futures -1. VIX 11.95. The 11-handle on the VIX verifies the relaxed nature of traders currently. Investors do not have a care in the world since a trade deal is likely and central banks will always support the stock market forever. In the immortal words of Alfred E. Neuman, "What? Me Worry?" What can possibly go wrong especially with the joyous holiday season beginning? As Irving Fisher would say, 'it feels like we are on a permanent plateau."
Some of the sogginess in futures is due to traders realizing that the window for a Trump-Xi summit to sign a phase one trade deal is quickly closing. December begins on Sunday. Of course the communists will be content with kicking the can down the road. The Chinese have done an end-around President Trump increasing their soybean and other ag imports from Brazil and Argentina to the detriment of US farmers. Ironically, some farmers that touted King Trump as the greatest thing since sliced bread voting and electing him in 2016, have lost their farms in 2019. Such is life, and crony capitalism.
There are only three trading days remaining in November; today, tomorrow and a half-day Friday (EOM). When a month is trending up from start to finish, like now, there is usually give-back during the last couple days or so of the month. The Godot Top remains elusive as the daily happy US-China trade deal soundbites hit the tape. You are watching epic stock market history unfold in real-time. 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 7:48 AM EST: S&P futures flat. VIX 11.88. Copper flat. The hourly charts will be key today to identify the top. The Whitehouse and the Chinese commmunists, however, may paint the stock tape green into the weekend with cleverly-timed happy trade talk news bites. Note that the happy news bite on the overnight phone call ends in bupkis for the futures. The trade news hype is getting old. Traders are getting antsy to see some actual details instead of listening to bloviating US and Chinese politicians promising wine and roses.
Note Added 9:54 AM EST: Happy days are truly here again as the SPX prints another new all-time record high at 3136.80. Whoa. Check that. Price jumps parabolic to 3137.51 the highest number in stock market history. Traders are intoxicated off the trade deal brownies, washing them down with Fed wine, then buying stocks with reckless abandon. The record highs keep on coming; now 3137.72. Comically, utilities and real estate stocks lead higher. That's hilarious. The S&P 500 prints 3137.97, almost at 3138, the all-time record high. As per above, 3138+ is a key level since it would open the door to 3142+. The indicators on the SPX daily chart remain in neggie d as price prints new record highs.
Keystone's trading algorithm, Keybot the Quant, flips back to the bull side yesterday afternoon at SPX 3133. Doctor Copper is moving the stock market to and fro. The SPX prints a new all-time record high, the highest number in stock market history, at 3133.83 and a new all-time closing high at 3133.64 on Monday, 11/25/19. If copper weakens, stay alert for a whipsaw back to the short side.
As always, Keybot's site has more information;
Keybot the Quant
The S&P 500 prints an all-time record high, the highest number in history, at 3127.64 on 11/19/19 and all-time closing high at 3122.03 on 11/18/19. Sound the Seven Trumpets!
Stocks rose last week on the happy US-China trade talk and of course the global central banks collude daily in the background always guaranteeing that the globe remains flush with liquidity. The uber low put/call ratios, subdued VIX, massive short volatility positions and universal consensus that stocks will rally through year-end may conspire to create stock market sadness. A lot of the negative energy, however, is getting burned up on the daily trade news happy hype; the bears cannot get any traction to the downside and in the process lose a few of their magic beans.
The SPX weekly chart has overbot stochastics and near-overbot money flow which are agreeable to a pullback. The red rising wedge pattern is ominous since the collapses can be dramatic and considering the longer-term nature of the chart, the drop from this wedge could easily be epic. The chart indicators are in neggie d (red lines) as price printed the record high last week. The MACD and money flow are trying to squeeze out some more upside juice on this weekly basis (tiny green lines) but even if they succeed, it would only be a week or so of sideways stuff. With the Thanksgiving holiday upon us, perhaps that is the idea.
The US stock market is closed on Thursday for the Thanksgiving Day holiday. Keystone needs his figgy pudding. Friday is an early close for the stock market. Stocks are usually buoyant around the holiday in thin trading, however, with markets printing epic history, anything can happen. The new moon peaks on Tuesday morning at 10:05 AM EST East Coast time, the darkest time of the month, and stocks are usually weak moving through the new moon. Covert military raids will be conducted under the protection of this darkened blanket.
The black night could lead to a Black Monday or Black Tuesday a la the market crashes of yesteryear. The stock market is poised to perform this type of negative deed if the trade deal happy talk would stop and/or confidence would be lost in the central bankers.
Speaking of black days, the day after Thanksgiving is Black Friday. This is one of the largest shopping days in America and when many folks begin their Christmas and end-of-year holiday shopping. Black Friday used to consistently be the top retail sales day each year but starting a couple decades ago, buying patterns shifted and consumers tend to now buy more on the Saturday and Sunday before Christmas.
The big US shopping day is called Black Friday because that is when 80% of the US retailers go from red ink on their balance sheets to black ink. When you are "in the red" or "bleeding red ink" that means your company's numbers do not look good and the place is headed for bankruptcy. "In the black" means you are a profitable and successful company selling products and services and making payroll with a little bit left over to keep expanding and growing the business. Companies are relieved when they "get into the black" and greatly depend on the American consumer coming out to spend a lot of money at this time of year. Will they spend this year? Or is it a holiday season where everyone receives homemade cookies in a tin? Ebeneezer Scrooge mutters, "Bahh, humbug."
The ADX shows the strong upward trend in place during 2017 into 2018 but it petered out. Price printed another high in September last year but that only served as the jumping-off point for the waterfall crash. At the start of this year, the ADX was just turning higher above 30 to verify that the big selloff was a strong downside trend but the central banks would have none of that. The central bankers step in to save the day acting in collusion for at least the last 7 years. On 1/3/19, the stock market was toast. Keystone described the carnage at the time. Price was going to take out the Christmas Eve low and when that happened, it was ovah, as they say in Brooklyn.
The 1/3/19 panic caused the four horseman of the central banker cabal, the Fed, BOJ, ECB and PBOC, to intervene in markets. The central bankers orchestrated the non-stop easy-money jaw-boning and policies in January and February to save the day and create the orgasmic rally in global stocks this year. Note that for the historic new highs in the stock market, the ADX is down in the cellar with an 11-handle telling you that the upside is NOT a strong trend. Central banker money-printing and financial engineering are the life-blood of global stock markets.
One thing is for certain, it is a parabolic rocket ship ride for the first 6 of the last 7 weeks from 2850 to 3128, a big 278 point rally, +9.8%. Wow. That's big-time. The trade deal happy talk and most importantly, the power of the central bankers, overcome all negativity.
The Aroon red line is pushed into the ceiling at one hundo with nowhere to go but down which is bearish while the green line is down in the basement with nowhere to go but up which is bearish. Watch for the potential negative Aroon cross which will tell you it is game-on for the bears and game-over for bulls.
Price is extended above the moving averages needing a mean reversion lower. The S&P 500 has tagged the upper standard deviation band (pink) so the middle band and 20-week MA at 2990, and rising, is on the table and the lower band at 2850. The weeks and months ahead will be interesting.
Keybot the Quant is on the short side but champing at the bit to go long. Copper is the key to market direction these days so 'as copper goes, so goes the market'. Copper futures will tell you the market story ahead. The US or China may release happy trade talk news between 4 PM and 6 PM EST today to pump the Asian and US stock futures higher.
The SPX weekly chart is poised to roll over and collapse. The tiny bit of juice with the money flow and MACD may squeeze out a week or so of sideways, which will get us through the Thanksgiving holiday into the first week of December. A top would be expected then, or sooner, like now. Tax-loss selling usually hits its maximum the first and second week of December so this may create a slight negative tail wind favoring the bears. 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.
One of Keystone's fave short-term market signals is the 200 EMA cross on the SPX 60-minute chart. You can immediately see how price respects this key moving average by the action in early October. The SPX failed through the 200 EMA, then came up for the back kiss, and failed, so it was doom and gloom ahead. However, as usual, happy US-China trade talk and dovish central bank chatter sends stocks higher the bullish orgy taking the S&P 500 to its record high at 3127.64.
The bulls are okay as long as the SPX remains above the 200 EMA at 3057. Serious stock market trouble occurs sub 3057.
The Impeachment Hearings against President Trump continue in the House. Ambassador Sondland appears to provide damaging testimony for the president but after the spinmeisters are done twirling everyone around, you don't know what to think or believe, so no one cares. The impeachment stuff is not currently impacting the stock market. Trade news does. Overnight, the communist head negotiator Liu says he is "cautiously optimistic" about a deal.
The Chinese have learned how to manipulate their markets from the US playbook. Asian indexes were tanking overnight but after Liu's happy comment deep losses turn into marginal pull backs on the day. Then, minutes ago, news reports say Liu invited the US trade negotiating team to China for more talks. S&P futures were down about -14 and improved to -8 on the optimistic comment, then came back to up +3 on the invite comment.
Comically, it turns out that Liu invited the team last week; this was not new news, it was yesterday's news. When you think about it, the US team is probably not yet willing for a China meeting since they do not feel adequate progress is being made in the talks. S&P futures are down -2. Dow -15. Nazzy -8. VIX 13.19. 10-year yield 1.75%. The trade deal hype fizzles. Copper is down -1.0%. Copper was down -0.9% when the happy trade talk comments occurred a couple hours ago and it did not improve so traders knew the trade comments were nothing special. Copper is actually worsening and it will drag the broad stock market lower if the trend continues.
The epic stock market times and history-making price action continues. It is hilarious. Once again, China says it wants to buy more ag products from the US. Soybean Donny will be happy to hear that. It is the same stuff over and over. Humorously, both sides probably do not want a trade deal since they can keep goosing their respective stock markets with little news bites of positivity every few days. Why would you want to buy the cow when you receive the milk each day? Watch that 3057 level. 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 8:10 AM EST: The US may delay the 12/15/19 tariffs if a trade deal is not reached. Soybean Donny is in retreat. Futures love the non-stop happy trade talk. S&P +4. Dow +32. Nasdaq +9. Russell +3. VIX 12.84. Copper -0.4%. USD 97.76. The bulls are not receiving as much bang for the buck from the trade news hype.
Note Added 8:14 AM EST: S&P +5. Dow +37. Nazzy +12. Russell +4. VIX 12.79. Copper -0.6%. Copper traders are not impressed with the trade deal news.
Note Added 8:35 AM EST: Philly Fed is a beat but New Orders data are weak. Jobless Claims are unchanged on-month but 10K higher than forecast. 10-year yield 1.76%. The USD is at the 97.79 palindrome. Futures are steady after the trade deal hype and economic data. Existing Home Sales are released at 10 AM EST. S&P +5.
Note Added 8:42 AM EST: Dictator Xi or Soybean Donny need to run to a microphone and tout some more trade deal news since the latest soundbites are not creating much upside. S&P +2. Dow +7. Nazzy +2. Russell +3. VIX 12.90. Copper slips lower down -0.7%.
Note Added 9:01 AM EST: S&P +1. Dow +4. Nazzy -1. Russell +4. VIX 12.96. Copper -0.8%. 10-year yield 1.75%. Look at that. The bulls are jamming volatility lower to save the day. VIX 12.52.
Note Added 9:05 AM EST: Bloop. The VIX pops to 12.92; the bulls cannot keep the VIX beachball underwater. S&P +1. 10-year yield 1.76%. Copper -0.8%.
Keystone's proprietary trading robot, Keybot the Quant, flips short at SPX 3113 this morning. Bears need weaker commodities and copper, and higher volatiity, to prove that down is the direction ahead. As always, stay alert for a potential whipsaw. More information is found at Keybot's site;
Keybot the Quant
Note Added 1:23 PM EST: The stock market is falling apart on news that the US-China trade deal hits a snag. The SPX is down 26 points, -0.8%, to 3094. The Dow collapses 240 points, -0.9%, to 27694. COMPQ -1.0%. NDX -1.2%. RUT -0.8%. The VIX is 13.97 and was above 14 minutes ago. Copper -0.4%.
Note Added 3:38 PM EST: There is about 20 minutes remaining in the trading day with the SPX down 17 points, -0.5%, to 3103. LOD 3091. 20-day MA 3075. The Dow loses 148 points, -0.5%, to 27786. VIX 13.17. Copper -0.4%.
Note Added Thursday Morning, 11/21/19, at 5:15 AM EST: The SPX finishes hump day down 12 points, -0.4%, to 3108. The Dow loses 112 points, -0.4%, to 27821. The bulls fight back during the day yesterday since copper and commodities are holding in the bull camp as well as volatility. The Sondland testimony is damaging to President Trump but markets do not care. The Rorschach impeachment test continues with the democrats and republicans seeing things along party lines. Markets did react negatively to the news that the trade deal hits a snag. Overnight, however, the communist head negotiator Liu says he is "cautiously optimistic" so that brought S&P futures back from about -14 to -8 overnight. Copper -0.9%. As this message is typed, China's Liu now invites the US negotiating team to China for more talks. The bulls celebrate the trade deal hype like Pavlov's dog celebrates a biscuit and begin tripping over each other buying the long side. S&P futures are up +3. Dow futures +25. Nazzy +6. Russell +3. VIX 13.03. Teflon Don has appeared to weather the Sondland and impeachment storm, for now. Most Americans are likely resigned to the fact that all the politicians are corrupt. Copper -0.8%. Interesting. Copper does not yet recover like the futures do on the happy trade deal talk.
The stock market carnage will not begin until the VIX climbs above the 200-day MA now at 15.21. Interestingly, Keybot the Quant identifies the 15.11 level as a key bull-bear line in the sand for the stock market. The green circles show stock market bullish joy and positivity while the red circles show bearish sorrow and worry.
Thus, the stock market direction story is told at VIX 15.11-15.21. The bulls are okay going forward as long as the VIX remains sub 15.11. The bears will create market mayhem if the VIX moves above 15.21. Stocks will be falling like rocks. The VIX is at 12.84 with a HOD today at 13.68. Watch to see if price can take out this high, or not, 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.
Note Added 12:11 PM EST: SPX 3115. VIX 12.84.
Note Added 1:23 PM EST: The stock market is falling apart on news that the US-China trade deal hits a snag. The SPX is down 26 points, -0.8%, to 3094. The Dow collapses 240 points, -0.9%, to 27694. COMPQ -1.0%. NDX -1.2%. RUT -0.8%. The VIX is 13.97 and was above 14 minutes ago. Copper -0.4%. The bearish shorts on volatility are at record levels never seen in history (expecting stocks to go up forever). That's funny. In other words, the low VIX behavior and ongoing uber low CPC and CPCE put/call ratios verify the rampant complacency and fearlessness in markets when typically a significant top occurs.
Note Added 3:38 PM EST: There is about 20 minutes remaining in the trading day with the SPX down 17 points, -0.5%, to 3103. LOD 3091. 20-day MA 3075. The Dow loses 148 points, -0.5%, to 27786. VIX 13.17. Copper -0.4%.
Note Added Thursday Morning, 11/21/19, at 5:15 AM EST: The SPX finishes hump day down 12 points, -0.4%, to 3108. The Dow loses 112 points, -0.4%, to 27821. The bulls fight back during the day yesterday since copper and commodities are holding in the bull camp as well as volatility. The Sondland testimony is damaging to President Trump but markets do not care. The Rorschach impeachment test continues with the democrats and republicans seeing things along party lines. Markets did react negatively to the news that the trade deal hits a snag. Overnight, however, the communist head negotiator Liu says he is "cautiously optimistic" so that brought S&P futures back from about -14 to -8 overnight. Copper -0.9%. As this message is typed, China's Liu now invites the US negotiating team to China for more talks. The bulls celebrate the trade deal hype like Pavlov's dog celebrates a biscuit and begin tripping over each other buying the long side. S&P futures are up +3. Dow futures +25. Nazzy +6. Russell +3. VIX 13.03. Teflon Don has appeared to weather the Sondland and impeachment storm, for now. Most Americans are likely resigned to the fact that all the politicians are corrupt. Copper -0.8%. Interesting. Copper does not yet recover like the futures do on the happy trade deal talk.
Boom. One of Keystone's key short-term indicators, the 8/34 MA cross on the SPX 30-minute chart, turns bearish. The 8 MA is now 25 cents below the 34 MA ushering bearish negativity for the hours perhaps few-days ahead.
Comically, however, is that each time the 8 threatens to cross below the 34 and create negativity, happy trade talk news or central bank chatter occurs to save the day. Look at all those times the 8 threatened over the last couple weeks. The 8 MA is Charlie Brown and Lucy keeps pulling the football away as soon as he tries to kick it. So, is this time for real for the bears? 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 11:36 AM EST: The SPX is at 3116. The 8 MA is down to 3117.96 remaining below the 34 MA at 3119.40.
Note Added 12:11 PM EST: The SPX is at 3115. The 8 MA is down to 3116.90 remaining below the 34 MA at 3119.32.
Note Added 1:23 PM EST: The stock market is falling apart on news that the US-China trade deal hits a snag. The SPX is down 26 points, -0.8%, to 3094. The Dow collapses 240 points, -0.9%, to 27694. COMPQ -1.0%. NDX -1.2%. RUT -0.8%. The VIX is 13.97 and was above 14 minutes ago. Copper -0.4%.
Note Added 1:31 PM EST: The SPX is at 3093. The 8 MA is down to 3108 remaining below the 34 MA at 3117. The 8 has stabbed down through the 34.
Note Added 3:38 PM EST: There is about 20 minutes remaining in the trading day with the SPX down 17 points, -0.5%, to 3103. LOD 3091. 20-day MA 3075. The Dow loses 148 points, -0.5%, to 27786. VIX 13.17. Copper -0.4%.
Note Added Thursday Morning, 11/21/19, at 5:15 AM EST: The SPX finishes hump day down 12 points, -0.4%, to 3108. The Dow loses 112 points, -0.4%, to 27821. The bulls fight back during the day yesterday since copper and commodities are holding in the bull camp as well as volatility. The Sondland testimony is damaging to President Trump but markets do not care. The Rorschach impeachment test continues with the democrats and republicans seeing things along party lines. Markets did react negatively to the news that the trade deal hits a snag. Overnight, however, the communist head negotiator Liu says he is "cautiously optimistic" so that brought S&P futures back from about -14 to -8 overnight. Copper -0.9%. As this message is typed, China's Liu now invites the US negotiating team to China for more talks. The bulls celebrate the trade deal hype like Pavlov's dog celebrates a biscuit and begin tripping over each other buying the long side. S&P futures are up +3. Dow futures +25. Nazzy +6. Russell +3. VIX 13.03. Teflon Don has appeared to weather the Sondland and impeachment storm, for now. Most Americans are likely resigned to the fact that all the politicians are corrupt. Copper -0.8%. Interesting. Copper does not yet recover like the futures do on the happy trade deal talk.
Note Added Thursday Morning, 11/21/19, at 5:30 AM EST: The 8 MA on the SPX 30-minute chart is 3104 and the 34 MA is 3116. Price is at 3108 so, by definition, this will curl the 8 MA upwards. Bears would need the SPX to be below 3104 and falling to keep dragging the 8 MA lower.
