In honor of the stock market that has now topped-out, it is fitting that Keystone retrieves his trumpet from its leather case. A mute is removed from the horn end and a somber rendition of Taps is played for the stock market. Equities must now take their medicine. We are at the top of the stock market mountain. As Dr Martin Luther King would say, "I've been to the mountaintop." The SPX prints a new all-time record high today, Tuesday, 11/12/19, at 3102.61. Well, the party has to end sometime. As King said, "There are difficult days ahead."
For a week or so, it has been fun to watch the stock market top play out. The uber low CPC and CPCE put/call ratios tell you that the market complacency and fearlessness is out of hand which means a stock market top is about to occur. The low put/calls should shave off from 40 to 150 handles off the SPX perhaps a lot more. Traders and investors are drunk as skunks off Fed whiskey, BOJ sake, PBOC rice wine and ECB champagne buying stocks with reckless abandon. The Federal Reserve and other global central bankers act in collusion to keep the easy money punch bowl full. Traders are buying calls to play more upside while completely ignoring puts and protection. Investors are not selling stock and in fact are more concerned that they will miss out on big year-end gains. That's funny. When the bullish euphoria rules the market and the bears have all left town, that is when stocks are slapped lower.
Thus, knowing a stock market top is at hand in the short-term time frame, think hours and days, any day ahead, the SPX daily and hourly charts are useful in identifying where the top is at. Of course any news hitting the tape will push stocks either way and the happy trade talk sent stocks higher to the current record highs. Humorously, that was all bull sh*t, as was explained at the time, and President Trump says today that tariffs remain on the table indefinitely. Note how the stock market did not give back the gains over the last week or so which tells you that a lot of happiness is likely priced-in to equities.
The previous post shows the SPX 2-hour chart and technical analysis. The 2-hour is in neggie d so the top is in. On the daily chart above, remember Keystone has been commenting on the oddity with the multi-month time frame all in negative divergence (red lines) but the shorter term RSI and MACD still had some upside juice for price. Well, look at that. The VST is now in neggie d as well as the multi-month period. The S&P 500 is toast. Enjoy the view from the mountaintop because it is now crumbling under your feet.
The rising wedge pattern is ominous since the downfall can be quite serious, dramatic and fast. The RSI and stochastics are overbot agreeable to a pullback. Price tapped the upper band so the middle band at 3041, also the 20-day MA, will be a first target of support. The lower band at 2967, and rising is also on the table. Price is extended above the moving average ribbon and needs a mean reversion lower.
The candlestick today is an inverted hammer which, like the hanging man and doji's over the last few days, all indicate a trend change likely. The recent trend is all up so a trend change would be down. All the indicators mentioned above are negative and bearish. Nothing in the daily chart is bullish. Perhaps price has one more high into the apex of the wedge if Federal Reserve Chairman Powell opines dovishly at 11 AM EST tomorrow morning. Powell appears before a Congressional panel tomorrow and before the House Budget Committee on Thursday morning. The essence of Powell's comments for this week will be known tomorrow morning with Thursday only serving as another regurgitation.
The President Trump Impeachment Hearings begin tomorrow so the idiot Democrat Tribe will be batting the foolish Republican Tribe for all of America to see on television. Both parties are simply two sides of the same corrupt coin. The first witness that will dispute Trump's account of the Ukraine quid pro quo saga, now called a bribery case by the democrats, may have cried during her closed-door testimony. Therefore, democrats are likely placing her as the first witness hoping she cries for the tv cameras which would make big ole orange-headed Trump look bad. This is the way the baby games are played in crony America, folks.
The impeachment stuff is a moot point like most other political drama nowadays. America's crony capitalism system is on its last legs with the final months and years now clearly playing out. After a couple decades of unrest ahead, the United States will likely resurface as a socialism-light-type government. The rich got too greedy over the last five decades and outright annihilated America's middle class by shipping jobs overseas.
America's jobs were sent overseas so stock prices would catapult higher (lower labor costs create huge company profits) greatly rewarding the wealthy that own large equity portfolios. It's a rigged game. The damage is structural. The wealthy class make the rules that benefit themselves.
Once the recession begins in the weeks ahead, a class war will quickly be triggered in the US that will linger for many years forward. If you are rich, it is best to be low key, not flaunt your wealth and perhaps increase your charity endeavors in the local community, otherwise, you will have a target on your back in the coming years.
It is comical to see the two corrupt political parties pointing fingers at one another. The Democrat Tribe is dirty because of the Joe and Hunter Biden alleged nefarious dealings in Ukraine and the Republican Tribe is filthy because of the alleged withholding of military aid to Ukraine until the government said bad things about Biden, who is currently Trump's main political rival. Republican Trump may face democrat Biden in the presidential election 51 weeks from now.
Humorously, the deep state, which is not solely only a liberal/democrat cabal, but instead a joint democrat/republican union, may be orchestrating a brilliant chess maneuver to checkmate both men simultaneously with one move. Biden's reputation is sullied and he is dropping in the polls (the democrats may be pushing him out of the race) while the impeachment hearings may damage Trump's hopes for re-election (the republicans may be okay with the Tweeter-in-Chief disappearing).
Politics is a dirty game and Washington, DC, is a cesspool of filth. You never know the whole story of any situation so there is no point to hitch your wagon to either of the corrupt tribes. Be an independent thinker instead. Another possible outcome is that the two corrupt parties may come to an agreement in a cigar-filled back room and sweep the whole Ukraine matter under the rug, agreeing instead to fight it out in the November 2020 election. All these folks are sicko's. This is America's crony capitalism system on full display.
The CPI (Consumer Price Index) inflation data hits at 8:30 AM EST as well so there are lots of sidebars to monitor. The daily chart above, the 2-hour chart and the uber low put/call ratios all conspire to call the top right here right now, today, tonight. It will be interesting to see what the futures do overnight. Keystone has talked about potential 'black' market days recently and we are smack-dab exactly in the window of one now. In other words, for example, it would not be surprising to see the S&P futures or SPX cash index tomorrow drop 50 or 60 points. Powell holds the keys to the car.
For the all-time record high today, look at the putrid volume. The only investors buying the stock market at the highs today are Joe Retail, Jane Bagholder, Frank Fool and Amy Sucka; the usual bagholding dolts. Keystone is giving Last Rights to the S&P 500 this evening. The SPX is on life support and only has a few more hours to live. Good bye my friend, we hardly knew ye.
The bulls are touting more stock market highs ahead. Evercore ISI Chairman Ed Hyman is on Bloomberg telling everyone to buy stocks through year end. Animated Wharton economics professor Jeremy Siegel appears on CNBC proclaiming that stocks will pop +10% on the phase one US-China trade deal; he is looking for a "global bull market." President Trump speaks at the Economic Club in New York and boasts about the economy for 45 minutes. Of course he should, its the best economy that central banker easy money and tax cuts for the wealthy can buy. Comically, after stocks drop, all the same money managers will then proclaim that they were exiting the market for several months. Wall Street is a parade of liars and thieves. That's what makes the world go 'round.
Obviously, Keystone expects a stock market top right now, which may prove to be a historic and very significant top, and he has climbed completely out on the end of a long limb. Do you think Keystone is correct in calling for a stock market top here and big drop going forward or is the universal consensus on Wall Street correct that expects a rally through year-end correct? Who's side are you on?
Keybot the Quant, Keystone's proprietary trading algorithm, remains long but note how copper is slip-sliding away; watch the red metal closely. This price action may place the quant in position to go short. There is likely lots of drama ahead to finish the week. Tomorrow may be an epic day in stock market history. Let the festivities begin. The overnight futures markets and Asian and European trading may be very interesting in the coming hours. Chairman Powell is likely the only thing that can save the day. 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 6:35 PM EST: S&P futures -4. Dow -25. Nazzy -11. Russell -2. There is no big drop as yet but the bears are walking around stretching their jaws and snapping getting ready for some slashing ahead.
Note Added 7:17 PM EST: S&P futures -5. Dow -40. Nazzy -16. The markets begin to stir. Powell is pacing the floors this evening unable to sleep. He knows the entire future of the world's so-called free market system rests on his thin shoulders.
Note Added 7:48 PM EST: S&P futures -6. Dow -49. Nazzy -21. The bears slowly turn, step by step, inch by inch.......
Note Added 7:59 PM EST: S&P futures -7. Dow -50. Nazzy -21. The 10-year yield is at 1.92%.
Note Added 9:09 PM EST: S&P futures -9. Dow futures are down an ominous -66.60. Nazzy -28. NIKK (Japan) drops -1.0%. Topix (Japan) loses -0.5%. HSI (Hong Kong) drops -1.9%. Copper +0.1%. US Treasury yields are; 2-year 1.66%, 5-year 1.73%, 10-year 1.92%, 30-year 2.40%. The 2-10 spread is an ominous 25.666 basis points.
Note Added 9:22 PM EST: S&P futures -9. Dow -69. Nazzy -28. NIKK -1.0%. Topix -0.5%. HSI -1.9%. WTIC oil is at the 56.65 palindrome. Brent oil 61.86. Gold 1458. Silver 16.79. Copper turns negative down -0.1%.
Note Added Wednesday Morning, 11/13/19, at 3:12 AM EST: S&P futures -5. Dow -37. Nazzy -14. Russell -3. VIX 12.92. DAX (Germany) -0.2%. CAC (France) -0.1%. FTSE -0.4%. NIKK -0.9%. HSI -1.8%. SSEC (China) -0.3%. Gold 1460. Silver 16.86. Copper -0.3%. US Treasury yields are; 2-year 1.66%, 5-year 1.72%, 10-year 1.92%, 30-year 2.39%. The 2-10 spread is 26 bips.
Note Added Wednesday Morning, 11/13/19, at 4:00 AM EST: S&P futures -8. Dow futures are down an ominous -66.60. Nazzy -25. Russell -6. The VIX climbs above 13 to 13.02. Euro 1.101. Dollar/yen 109.12. DAX is down an ominous -0.666%. CAC -0.3%. FTSE -0.5%.
Note Added Wednesday Morning, 11/13/19, at 4:27 AM EST: S&P futures -12. Dow -104. Nazzy -37. Russell -10. VIX 13.22. DAX -0.9%. CAC -0.6%. FTSE -0.5%. Euro 1.1012. Dollar/yen 109.05. Gold is up +0.5% to 1464. Silver gains +1.3% to 16.91. Copper slips -0.2%. The fate of world markets are in the shaky hands of Emperor Powell preparing for his speech and Q&A before Congress in six hours. Powell strokes his purple cape and places his crown, encrusted with Fed jewels, on his skinny head. He stands in front of the mirror and stealing an affirmation from Stuart Smalley (SNL; Saturday Night Live comedy show), Powell repeats, "I'm going to do a terrific show today, and I'm going to help people, because I'm good enough, I'm smart enough, and doggone it, people like me."
Note Added 4:49 AM EST: S&P futures -16. Dow -130. Nazzy -51. Russell -12. Futures are at the overnight lows. VIX 13.48.
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