The bull-bear battle is raging-on. The VIX 200-day MA cross is key for verifying whether stocks are in a short-term bull market or bear market. Let's see. VIX is at..... wait for it ....... wait a bit longer for it...... you really should wait a bit longer...... yes, price is at 15.03. The VIX is sitting directly on the fence and must make an important decision. The VIX will either overcome the 15.03 resistance jumping higher and sending the stock market lower, or, volatility will receive a spankdown and fall into the low 14's and perhaps 13's again restarting the stock market rally.
Keybot the Quant remains long and is tracking VIX 14.38 (purple line) as the key bull-bear line in the sand. Bears win if they keep the VIX above 14.38 and win big if the VIX moves above the 200-day at 15.03. Bulls win if the VIX stays below 15.03 and then will win big with more new record stock market highs if the VIX crumbles below 14.38. It's not rocket science. 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 10:35 AM EST: Pop. The VIX pops to 15.22. The SPX is down 3 points, -0.1%, to 3218. Copper remains down -0.9% so the trade deal news surprisingly fizzles. King Donny Trumpy used to have the Midas touch sending stocks higher when he yawned and it sounded like he said trade deal; not today. Copper is unimpressed. 10-year yield 1.91%. There will be stock market carnage ahead if the VIX remains above 15.03. There are only about 5 hours remaining in the trading year. Today is EOM, EOQ4, EOH2, EOY2019 (at 4 PM EST).
Note Added 10:44 AM EST: SPX is down 4 points at 3217. VIX 15.22. Copper -1%. Dollar/yen 108.53.
Note Added 11:57 AM EST: At munch time, the SPX is at 3216. VIX 15.24. VIX HOD 15.39. SPX LOD 3212. Obviously, watch VIX 15.39 and SPX 3212 to see if the bears can prove that they have the beans to take stocks lower. Copper -1.2% at session lows. Quick, Donny, talk-up the trade deal with more happy news; copper is fading. The radical Iraqi militia attacking the US Embassy in Baghdad sets fires and breaches the wall of the compound. It is an ugly look as Old Man 2019 succumbs to the scythe and Baby 2020 leads the way forward.
Note Added Wednesday Morning, 1/1/20: Happy New Year. As the Tuesday session played out, the Fed placed its jack boot on the throat of volatility so stocks rally into the end of the year. The SPX gains +29% in 2019 finishing the year at 3231. The VIX fell below the critical 15.03 at about 1 PM EST so the bears were off-balance stumbling backwards, and at about 2 PM EST, the VIX lost the important 14.38 level, so the bulls pushed the bears down the cellar steps. The bears lay bleeding on the basement floor but vow that the battle will continue tomorrow.
One of Keystone's key short-term market indicators is the 8/34 MA cross on the SPX 30-minute chart. The 8 MA stabs down through the 34 MA so the bears are in charge of the stock market in the short-term going forward.
The US-China trade deal drama continues. The Phase One deal was supposed to be signed by the end of the year. Oh well, more lies. Comically, the chief communist negotiator, Vice Premier Liu, says he is will arrive in the US this week to sign the deal. One-half hour later, US Trade Adviser Navarro says the Phase One deal will be signed next week. President Trump must have been unhappy over the miscommunication since Navarro then ran to a microphone and proclaimed that Phase One is "a done deal."
Navarro is speaking on CNBC business television as this is typed and now says he is still waiting for the Chinese translation. Pause for laughter. This is simply a lie and excuse to buy more time. Keystone has been involved in plenty of foreign negotiations and the translations are done in real-time. Navarro says the deal will be signed sometime in January. This stuff is hilarious. Obviously, all the bozo's are still playing around with the contract semantics and the lawyers are likely involved. If the deal is finished where are the details? Remember, President Xi, the head commie, has to bless the deal.
The impeachment drama continues. President Trump is spending the holiday in Florida tweeting like an adolescent child. Twitter is Donny's toy. The president keeps denigrating anyone that disagrees with him on any matter, after all he's King Trump, and he says he did nothing wrong, but will not permit the people in his inner circle, that were involved with the scandal, to testify. Crony America is great. Republican Trump says democrat House Leader Pelosi is an idiot with bad judgement, however, underestimating someone typically leads to peril. Pelosi ate Donny's lunch a year ago in the government shutdown saga.
The articles of impeachment were ratified in the House but Pelosi has not yet sent the information to the Senate where a trial against the president will be conducted. The Senate has a slight republican majority so republican Leader McConnell wants to ramrod the matter through as quickly as possible and said he is taking all his direction from the Whitehouse (which has opened a whole new can of worms; he should at least pretend he is impartial like the judges do across the US).
At the same time, Pelosi extended an invitation for Trump to provide the State of the Union speech before Congress on 2/4/20 (this is standard practice and customary). Satirists such as Keystone call this the 'State of the Onion'. Anyhoo, it was surprising for Donny to instantaneously and quickly jump on the invitation like a monkey grabbing a banana (since he did not strategize about potential democrat traps before accepting the date). King Donny will never turn down a chance for his orange-head to appear on television.
Thus, Trump's speech date is set in concrete for 2/4/20. It is obvious that Pelosi is trying to extend the time it takes for the impeachment trial to occur in the Senate. Each day the trial in the Senate is pushed forward is another day closer to the speech and Pelosi likely wants to see the proceedings and testimony, and potential trouble for Donny, to be occurring in real-time as he provides the evening speech. Who knows, Trump may finally flip his wig for all the world to see. Or, as Teflon Don has proved in the past, he may rise to the occasion and be able to beat back his detractors. Pelosi may have other things up her sleeve as well. Trump would be far wiser to take Pelosi seriously since she knows how the Washington game is played.
At the same time the corrupt republicans stink up the nation, the equally-corrupt democrats are touting the greatness of former Vice President Joe Biden, that is also knee-deep in a Ukraine scandal. Biden and his son were allegedly stuffing dollars into their pockets in return for providing government access. Comically, in November, Americans may go to the polls having to choose between two crooked silver-haired white guys. That is funny. This must be how the crony capitalism system ends. It is entertaining to watch. Donny is the star of this reality television presidency. Today's episode is interesting as Iraqi radicals storm the US embassy in Baghdad. Happy New Year.
Worries continue over an end-of-year liquidity event and is the reason the Federal Reserve has been printing money like madmen, buying assets, and sending stocks to the moon. The wealthy elite class dance with glee as they spit on the huddled masses.
Flash crash concern continues. The market conditions are ripe. There is low-volume trading, perhaps a liquidity squeeze still appearing, many exchanges and markets are closed which can exacerbate an event, such as in the yen currency, so the coming days and next month will be interesting.
Typically, when a month moves in one direction wall-to-wall, like December all up, the last few days finish in the opposite direction, which is occurring. New money typically comes into the market to begin the year creating buoyancy in stocks. The Santa Claus Rally runs from last Thursday to this Friday and Santa is looking skinny and weak instead of robust and strong.
The stock market bears remain in control as long as the 8 MA remains below the 34 MA. By definition, the 8 MA will never curl upwards until the SPX price moves above the 8 MA. Thus, watch that 3223-3225 area as resistance. The bulls will be dancing into year-end if they can push price above here and moving higher. The bears will create further downside damage to equities each minute the 8 MA remains below the 34 MA. 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 9:05 AM EST: The VIX is above 15 to 15.17. Volatility pops, so stocks drop. S&P futures are down -6. Copper -0.9%. 10-year 1.90%. Gold 1524. Bitcoin is at the 7227 palindrome.
Note Added 9:10 AM EST: S&P -7. VIX 15.19. Copper -1.1%. Dollar/yen 108.48.
Note Added 9:18 AM EST: President Trump tweets, of course he does, that the Phase One deal will be signed on 1/15/19. Now the trade deal will not be signed until mid-January. Does anyone believe that? Humorously, King Donny must be having a hard time finding translators. S&P -7. VIX 15.13. Markets are not impressed. Donny plans to go to China for Phase Two talks. Big deal. The orange-one does not say how many phases there are. If there are 18 phases, there is nothing to get excited about. Crony capitalism becomes more of a joke each day. 10-year 1.91%.
Note Added Wednesday Morning, 1/1/20: Happy New Year. The bulls rally stocks higher with the SPX ending the 2019 year up +29% to 3231. The 8 MA is at 3221 curling higher but remains below the 34 MA at 3226 so the bears remain in control of the stock market in the VST. The bears will need to immediately send the SPX below the 3221-3226 range to maintain the negative 8/34 MA cross. Otherwise, the 8 will cross above the 34 and the bulls will be singing, "Happy Days Are Here Again."
XLE, the energy sector, has been a sick pup ever since the 2014 top five years ago. Obviously, oil prices greatly impact the sector but for a global economy that is supposed to be in great shape, XLE would be expected to be far higher. This month's candlestick taps on the 50-month MA resistance at 62.43. The December high thus far, with two days remaining, is 62.44 kissing the key resistance level and then receiving a spankdown.
The 50-month MA is moving dead flat sideways and other moving averages are lining out sideways as well. The theme of the chart is sideways. The 62.43 level tells the story; energy, and stock market bulls, will throw confetti if XLE pops above 62.43 while bears are happy with XLE below 62.43 and falling.
If price takes out the 62.43 to the upside, and you can see momo in the RSI and ROC over the last couple months opening the door to this scenario, watch the 20-month MA resistance at 63.48. Above here, and the bulls will be celebrating.
The moving averages stagger sideways like a drunk in Times Square on Saturday night, ditto the chart indicators, ditto price itself. A major decision is on tap for the energy sector, which would likely move in concert with the oil market, in 2020. The blue sideways triangle could stretch on to 2021 maintaining the flat price action for another couple years but energy will likely make its directional decision in 2020. The outside blue vertical line is about 38 handles tall and the inside vertical line is about 30 points the same as the thick purple line.
If price falls below the blue trend line at 56, that will target 26. This would be the doom and gloom Armageddon story for the US and global markets. Faith and confidence would likely be lost in the Fed and other global central bankers and the whole mess collapses. If price breaks up through the upper blue trend line at 68, that will target 98 and more record highs in the stock market will continue.
Looking at the purple triangle, it has a tighter apex that says the big up or down decision for the energy sector will occur, say, by summertime. If price loses the 58 level, that opens the door to 28. In this doom and gloom scenario, watch the lower blue line at 56-ish and support at the 200-month MA at 53-ish. If these fail, it would be over for markets. Recession would be in play and job losses would be accelerating. You will realize that when the boss told you the company could not survive without you he was lying.
If price takes out the 50-month to the upside, and it has the short-term momo as mentioned above, and then breaks above the 20-month and upper purple trend line both at 63-ish, that will target 93. If the upside breakout occurs watch the upper blue trend line since that will signal the all-clear for non-stop bullish joy in 2020 above 68-ish.
This sideways action does not offer an attractive trade long or short. Using the above guidelines, however, a short trade in XLE is attractive sub 58 and a long trade is attractive above 62-63. Keystone does not hold any positions in the energy sector currently. Each day that XLE does not move back above 62.43 is another nail in its coffin and the Armageddon scenario becomes more likely. 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 Tuesday Morning, 12/31/19, at 7:35 AM EST: US stocks are soggy in the Monday trade. XLE retreats -0.3% to 59.70. The drama and suspense in the energy space continues as a major decision and price direction commitment is on tap.
Note Added Wednesday Morning, 1/1/20: Happy New Year. The XLE is at 60.04.
Obviously, the Federal Reserve's Fall QE program, instituted after the September liquidity crisis, that Chairman Powell says is not QE, pumps the stock market into the stratosphere to end the year. The central bankers are the market.
That long white candlestick in the UTIL chart above 2 weeks ago is a knife that eviscerates and disembowels the bear's belly. The pop in utilities sunk the bear's hope for a sloppy finish to the year for the stock market. That said, when a stock or index rallies continuously during the month, it usually finishes the month weak.
UTIL is placing a potential double-top, or M-top pattern. However, the two-leg bear flag pattern that was looking for a failure from the 20-week MA, which is also the middle band shown in the chart, that Keystone posted a couple weeks ago, did not occur, so that pattern is nullified. Most tickers have momentum into year-end so the bulls have the wind at their backs into 2020. The sellers have given-up.
UTIL price has not quite made a higher high so watch the utes to see if that occurs but it is close enough to assess divergences. The negative divergence (red lines) are on full display wanting to see weakness ahead for price. As mentioned, watch to see if price moves higher to firmly take out the late-September early-October highs. If so, and the indicators remain in neggie d, the top is in.
The Aroon green line is overbot and the red line oversold both indications are bearish going forward but as seen for the last few months, that relationship can be maintained for a while. Price is at the top of the blue sideways channel so it will either break-out in upside glory or receive a spankdown of misery. The upper standard deviation band is at 887 and has to be respected. UTIL may very well jump to there if it breaks out higher this week.
As Keystone has explained many times, the old-time trader's use the UTIL weekly trend and the 50-week MA as key forecasting tools. The weekly trend is identified by the closing price 15 weeks ago. As long as utilities remain in a weekly uptrend, the stock market bulls are joyous and happy. Trouble is afoot when the utes lose the weekly uptrend. Disaster occurs for stocks when the 50-week MA (now at 813) is lost.
Investors continue to jump into utilities, staples and real estate plays, also telecoms to some extent, as defensive plays at any sign of stock market weakness. Many traders believe in the business cycles and are now shifting into the perceived safety of these plays as the economic cycle plays out. However, the Fed and other global central bankers have destroyed all price discovery in markets as well as the business cycle. We are in the longest economic expansion and stock market bull rally in history. Do you understand that it was created by the central bankers or are you a stupid idiot?
The investors flooding into these perceived safety plays such as utes and staples are going to have their head handed to them on a platter over the next year or two. The utes and staples are at the same nose-bleed prices as all other asset classes. The central banker easy money over the last 11 years has forced all asset classes higher including stocks, bonds, real estate, vineyards, art, collectibles, antique cars and yes, utilities and staples. It is a sick world the central bankers have created trying to cover up for the elite class that destroyed America and the middle class over the last five decades. The world is awash in liquidity and in greedy b*stards.
So the next couple weeks tells a huge story for the stock market going forward. The closing price for UTIL 15 weeks ago was 862.90, call it 863, so it is easier to remember. UTIL begins the new week of trading at 876. The 863 bull-bear line in the sand is in play for all of this week and markets are closed on hump day for the New Year's holiday.
Bulls need to keep UTIL above 863 this week and they will be happy with the stock market remaining buoyant. Bears need UTIL below 863 to create stock market negativity.
For the week of 1/6/19, the first full trading week of the year, UTIL 876.46 is the closing price 15 weeks ago and the bull-bear line in the sand for that week. Look at price. UTIL is now sitting at 876. If you are a skilled professional technician, it does not get anymore exciting. The behavior in utilities over the next two weeks will dictate the path ahead for the stock market in early 2020.
For the week of 1/6/19, if UTIL loses the 876.46 level, which it currently is under, there will be H*ll to pay in the stock market. Bulls must keep UTIL above 876.46 for the next two weeks straight to prove that they are in full control and more new record stock market highs are coming.
Thus, the table is set. Watch UTIL 863 this week, if it fails, big trouble is on the way. If UTIL remains above 863, the stock market remains groovy. At 4 PM EST on Friday, 1/3/19, when the week ends, focus on where UTIL ends. If UTIL finishes the week below 876.46, that provides a heads-up to tell you there is big trouble coming going forward. If this scenario begins playing out, and UTIL loses the 50-week now at 813, the stock market can potentially crash or at least drop significantly and sharply very quickly.
The reason the next couple weeks is so key is that if utilities do fail into the bear camp, this indicates that the potential long-term multi-year top in the US stock market is occurring in real-time. Keystone has been giving the play-by-play for the epic stock market top; it is very close and we may be sitting directly on top of it right now depending on what happens to the utes over the coming days.
The bears were stabbed in the face two weeks ago with the big up in utes. Will the bears provide payback over the next couple weeks forcing utilities into the bear camp and creating an extremely negative path for the stock market ahead, or, will UTIL be pumped erect again by Chairman Powell's magical Viagra-for-stocks easy money? We will know in a few days. Keystone remains short the utilities. 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 Tuesday Morning, 12/31/19, at 7:38 AM EST: US stocks are negative in the Monday session. UTIL finishes down -0.1% at 875 and printed a low (LOD) at 871. Remember, the bulls must push UTIL higher, above 876.46 by Friday afternoon, or there will be heck to pay, come Monday.
Note Added Wednesday Morning, 1/1/20: Happy New Year. UTIL is at 879.17.
Sound the Seven Trumpets! Summon the Horsemen! The Nasdaq Composite prints above 9K for the first time in history on 12/27/19. COMPQ prints an all-time high at 9022.46 and an all-time closing high at 9022.39.
Traders and investors are tripping over each other buying tech stocks with reckless abandon. Aunt Harriet invested her entire life savings in semiconductors last week and is smiling from ear to ear. She gathered money from all the blue-haired women at the Ladies Guild meeting this morning and bot FB stock. The ladies are already tipsy into the weekend drinking Fed wine and celebrating their belief that they will be super wealthy come summertime. Harriet is a local hero and now called an investment guru.
Tech stocks are hot. The Nazzy Comp prints the longest daily winning streak in a decade up for 11 straight days; today would be a dozen. COMPQ was up 70 points yesterday, +0.8%, to the 9022 record highs. Apple prints a new record high. AAPL gains +2% to 289.91 with an all-time high at 289.98 only 10 bucks from 3 hundo. AMZN catapults +4.5% higher yesterday to 1869.
The monthly chart drives higher with only three trading days remaining in December. A new candlestick will begin for January. The indicators clearly remain in negative divergence calling for a multi-year top, however, the panic by the Fed and other global central bankers last January led to massive Keynesian money-printing. The world is awash in liquidity that has sent stocks to the moon. The Fed hit the afterburners in September pumping huge liquidity into the financial system to prevent a credit event by year-end, now only days away. The rising wedge pattern is bearish. The stoch's are overbot.
Comically, the Fed is pumping over $100 billion into the financial markets, per month, which is an even greater rate than the $80 billion per month during prior QE periods (although the Fed says it is not QE). Pause for laughter. What a joke of a financial system. Everyone will learn over time.
The central banker largess during the last four months, over and above the global central banker accommodation all year long, creates that near-term momo you see in the RSI and MACD line. This could creates some additional buoyancy going forward for a month or two but the price move, although parabolic and historic, is not supported by the chart indicators and parameters.
The upper band is violated so the middle band at 7813 and lower band at 6765 are on the table. Price is extended above its moving average ribbon requiring a mean reversion. The purple boxes show that the trend higher in price in 2014 and into the May 2015 top was strong and then the rally in 2018 was a strong trend, however, interestingly, considering the parabolic price move higher now, the ADX is not impressed and says the move higher in the Nazzy is NOT a strong trend. The Aroon green line is at one hundo with nowhere to go but down which is bearish.
The May 2015 stock market top was the real deal. Everything since is fantasy land. The Fed saved the day in early 2016 creating the Tweezer Bottom. The Fed goosed again in early 2018. Keep in mind that over 20 other global central banks are creating easy money at the same time over these many years. The Fed saves the day again this year when they panicked after the 1/3/19 price action. The stock market was dropping like a rock and threatening to take out the Christmas Eve 2018 low. This would have triggered sell programs and create a possible crash. The Fed panicked and in collusion with the other central bankers, BOJ, ECB, PBOC, etc..., engineered a massive historic rally this year. The wealthy elite class dance with glee. They light expensive cigars and dab the ashes on the foreheads of the stupid huddled masses.
Volume keeps trailing off each month and has not been able to overtake the volume from spring and summertime. Price will want to retrace to these levels to see what the story is. The party is in full swing. Traders are drunk as skunks on Fed wine, dancing inside an echo chamber, with everyone telling each other that the good times will continue forever.
The Fed is likely disturbed by the end of year stock market thrust. The Federal Reserve is trying to prevent a credit event from crashing markets so they are printing money like madmen which only makes the wealthy more filthy rich. The stock market has gone parabolic. Isn't crony capitalism fun? Well, at least until it morphs into socialism-light as a new form of US government in a decade or two.
Despite the record highs, a multi-year top remains on tap, say now through April, depending on how far this momo push can extend price. The Fed needed to provide liquidity through EOY so once that hurdle is overcome, everyone will look at Powell for guidance. In the late 90's,the Fed provided so-called temporary accomodation but when they took the easy money booze away, the markets fell. Chairman Powell is looking at travel brochures wishing he was laying on the beach of an exotic island instead of dealing with major financial matters and policies that may bring down the entire faux free market crony capitalism system in America. 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 9:50 AM EST: The bullish fun continues. The Nazzy Comp prints a new all-time record high at 9052.00 on the dot. The bulls appear unstoppable.
Note Added 10:02 AM EST: Whoopsies daisies. The Nazzy falls on its sword after the historic high is printed. COMPQ is now red on the day down -0.2% at 9002 losing 50 handles off the high.
Note Added 10:06 AM EST: The COMPQ is at the 8998 palindrome.
Note Added 10:13 AM EST: The COMPQ is at the 9009 palindrome.
Note Added 11:42 AM EST: The COMPQ recovers 10 points to 9032 but remains 20 handles below the all-time high at 9052 that printed a couple hours ago. The VIX popped above 13 this morning now at 12.98.
Note Added Sunday, 12/29/19, at 9:37 AM EST: The bulls finish last week with more joyous all-time record highs although prices deflated as the day played out. The record-setting Nazzy winning streak ends at 11 days. The COMPQ loses 16 points, -0.2%, to 9007. The Nazzy Comp prints a new all-time high at 9052.00. The Nazzy 100, NDX, also prints a new all-time high at 8811.10. AAPL, GOOGL, INTC and MSFT all print record highs. No doubt tech leads the way. This is due to young folks, that work in computer-related industries, making a good buck, buying the tech stocks. To many young people, tech and computers are their religion. It will be comical to watch them all scurry around like ants over the next couple years as the central bankers are exposed for their nefarious ways and stocks experience a drastic repricing. Stocks keep going up as long as a fool keeps buying what another fool is selling. When a fool cannot sell their stock, since there is no longer a bigger fool around, he or she realizes that they truly are the final fool holding the bag.
Note Added Tuesday Morning, 12/31/19, at 7:42 AM EST: US stocks are lower on Monday. COMPQ loses -0.666% to 8946. LOD 8909.
The fate of the US stock market rests on the USD/JPY chart above. When the yen weakens, the USD/JPY pair moves higher and US stocks move higher. When the yen strengthens, USD/JPY moves lower and US stocks move lower.
The US stock market is displaying rampant complacency, fearlessness and euphoria not seen for nearly six years. Market tops occur on rampant complacency. However, the potential top is named the Godot Top since the Fed and other global central bankers keep printing money to continually prop-up the stock market (to protect the wealthy class that own large stock portfolios).
The stock market top will occur when the yen begins strengthening and the dollar/yen pair will be correspondingly drifting lower. The blue symmetrical triangle is a thing of beauty stretching over five long years. 2020 is going to be an epic year in the stock market.
Typically, a fake-out move will occur from a sideways triangle and then price will return inside and truly breakout in the opposite direction. But the chart does not show any fake-out moves. Perhaps late 2018 right when the Q4 2018 stock market crash began. USD/JPY tried to breakout higher back then but was spanked down and kept inside the triangle (which opens the door to a possible failure ahead).
The upcoming move will be historic. And we do not have to wait long. The apex of the triangle is only a few more months at most so dollar/yen has to make a decision on who's bed it wants to sleep in for probably a couple years or more ahead; the bull's or the bear's.
The vertical side of the triangle is 28 handles. Thus, if dollar/yen breaks out to the upside above 110 it will target 138 and the stock market will be printing record highs week after week ahead. Fed Chairman Powell and BOJ Governor Kuroda will be given a ticker-tape parade down Wall Street with shredded money serving as confetti.
If USD/JPY breaks down from 107, that targets 79 and no one will be laughing, except short-sellers of course. Watch dollar/yen. If you are bullish the stock market, you want to see 110+ and you can brag at the office water cooler that you are the next Jesse Livermore.
If you are bearish the stock market, you want to see the dollar/yen lose the 109 level, which is the 50-week MA support, and then it would be lights-out if the 107 was lost. Market mayhem and carnage will appear with folks proclaiming that Armageddon has arrived.
The inside blue vertical line is 20 handles which would target 130 on the upside and 87 on the downside. Sometimes price may only want to venture to those targets rather than the maximum targets indicated by the outer vertical line. The plot thickens. Watch your wallet. 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 Tuesday Morning, 12/31/19, at 7:45 AM EST: US stocks sink lower in the Monday session. The dollar/yen pair is trading at 108.53, a 108-handle. USD/JPY loses the 50-week support, which now becomes resistance, and price sets its eyes on the 200-day MA support at 108.75, which now also fails and becomes overhead resistance. As mentioned above, if 107 is lost, it is lights-out time.
Note Added Wednesday Morning, 1/1/20: Happy New Year. Dollar/yen 108.60.
Keystone got a tattoo yesterday. It appears across the neck and reads, "The Central Bankers Are The Market" with the 's' in bankers on top of the Adam's apple. A weaker yen (XJY) corresponds to a weaker yen against the US dollar which drives the USD/JPY pair number higher. The yen is in the denominator of the USD/JPY ratio so as the yen weakens the USD/JPY moves higher and visa versa; a stronger yen will send USD/JPY lower.
Each time the yen weakens, i.e. the USD/JPY currency pair rallies, the US stock market rallies (green). When the yen strengthens, USD/JPY trails lower and stocks drop (red).
The Federal Reserve and BOJ comingle in bed each evening which guarantees erect markets the following morning. Central bankers make the world go 'round. The central bankers are the market. Kapish?
Thus, as we await the Godot Top to appear for the US stock market due to the rampant complacency and bullish euphoria, a stronger yen (USD/JPY moving lower) will likely occur to pave the bearish path lower. The chart indicators for USD/JPY are mixed. The RSI is in neggie d, ditto the histogram and the stochastics are overbot; all bearish factors. However, the MACD line remains long and strong as well as the stochastics; bullish indications. The MACD may require a jog move in price, down one week, up the next week to the same highs, to create negative divergence and the top in dollar/yen. That would be the top on this weekly basis.
Watch the RSI since it if curves any higher, that will extend the move higher in USD/JPY for a couple more weeks. The purple rising wedge pattern is very bearish for USD/JPY price once it begins dropping. USD/JPY sits exactly at the 100-week MA at 109.61-109.63 and needs to make a bounce or die decision. As this message is typed, the dollar/yen is printing at 109.49 so it is losing its hold on the 100. The 50-week MA support is at 109. If this is lost, the stock market will be in trouble.
Standing back away from the charts, you see that dollar/yen and yen are chopping generally sideways over the last couple years but US stocks are continuously moving higher now in a parabolic melt-up. Equities may be out over their skis.
The direct relationship between yen and stocks is obvious. That is why Governor Kuroda is on speed-dial with Chairman Powell. Note the two purple boxes for the ADX that show that the strong trends over the last couple years correspond to the falling dollar/yen currency pair (stronger yen). It is only the collusion of the Fed, BOJ, ECB and other global central bankers that have saved markets via their Keynesian games.
The dollar/yen chart probably needs two weeks to top out although a move down is needed right now due to the negativity in the indicators. Thus, the stock market may sell off say 50 SPX points as the dollar/yen pulls back for a few days (a week) but USD/JPY should then rally for another week or two after the short pullback to provide time for the MACD line to go neggie d. That will be the top on the weekly basis, that is, unless the whole shooting match collapses before then. 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 Tuesday Morning, 12/31/19, at 7:50 AM EST: US stocks sink lower in the Monday session. The dollar/yen pair is trading at 108.53, a 108-handle. USD/JPY loses the 50-week support, which now becomes resistance, and price sets its eyes on the 200-day MA support at 108.75, which now also fails and becomes overhead resistance. If 107 is lost, it is lights-out time.
Note Added Wednesday Morning, 1/1/20: Happy New Year. Dollar/yen 108.60.
The SKEW Index has skewed higher to levels not seen since the stock market top ahead of the Q4 2018 waterfall crash. Inside the purple bubble on the left, the first two stock market peaks stuttered 50 to 60 points lower each time, and then the end occurred after the September 2018 high. The S&P 500 collapsed about 600 points in Q4 2018.
At the mid-September 2018 peak, the SKEW tops out with the SPX. The SPX, however, only pulls back about 40 points, then rallies for a few more days, then the big crash begins. The SKEW peaked and then about 2 weeks later the stock market peaked and collapsed. If the current price action in SKEW holds, and a peak is at hand, the same fractal behavior may play out (a short initial pull back for a few days, then a rally back to the highs for a few days, then a collapse).
Note that in these examples the SPX pulls back from 40 to 60 points off the top for a few days, then rallies back to matching highs or higher for a few days, then rolls over and dies. Thus, when stocks begin selling off, the dip-buyers may be super anxious to jump back in say after the S&P 500 falls only about 50 points. However, once price recovers higher again, watch that peak since that may be the actual swan dive lower. 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 party continues. The SPX prints another all-time record high at 3240.08 and new all-time closing high at 3239.91 on Thursday, 12/26/19. Comically, one year ago, it was the end of the world for the stock market at the Christmas Eve low. The power of the Federal Reserve, in collusion with other global central bankers, is an astounding and seemingly-unstoppable bullish force. Isn't it humorous that there are idiots that actually think fundamentals and the economic data is improving due to a sustainable recovery?
In reality, it is another few-quarter spurt of happiness brought on by obscene central banker money printing. The Fed has goosed the stock market all year long and fired-up the afterburners in Q4. The financial markets are a joke, however, it is fun to make money effortlessly, well, if you are already rich that is.
The low put/calls over the last month verify the rampant stock market complacency and lack of fear. Investors and traders are 100% convinced that stocks will always go up and if they ever do pull back it will be minor and an excellent buying opportunity. Ditto the low VIX that continues teasing an 11-handle.
Market participants have not been this bullish and euphoric in over 5 years. What do you think will happen?
Mr Foley, that lives in the shanty at the edge of town, dug up 14 coffee cans he had buried in the back yard. He converted the valuable coins inside the cans to cash and invested his entire life savings in AAPL stock. He is bragging to folks at the water cooler in the municipal building lobby that he will be swimming in vast sums of wealth by summertime. He boasts that Apple and the stock market will always rally higher. Mr Foley confidently proclaims that the Fed and other central bankers eliminated any worry that downside will ever occur in stocks again.
Every investor in the stock market currently lays in bed with moral hazard each evening; do you like laying in bed with that significant other? Life is great and wonderful, look at those blue skies and rainbows, at least for now. Considering the erratic and unstable price action over the last month, a potential flash crash has to be placed on the table. 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 SPXA150R is above 80 at levels not seen since the January 2018 top and stock market collapse. The red circles show five significant tops, er, actually four, as we await the Godot Top to show its ugly face. The green circles show the stock market bottoms. What do you think will happen?
Eyeballing the drops from the red circles, the SPX falls 350 points from the first red circle, the big Q4 2018 waterfall crash was 620 points, then 230 points and the fourth drop is 240 points. The average drop from a red circle is 360 points. Throwing out the largest and smallest drop and the average loss is about 3 hundo points.
Thus, it is easily conceivable for the SPX to drop from 300 to 400 points over the next month or two which would be a -9.3% to -12.4% drop, respectively. A -10% selloff is a correction and a -20% drop is a bear market. A lot of fun is ahead for markets which will require 20/20 vision in 2020.
At 9:48 AM EST on Thursday, 12/26/19, the SPX prints a new historic all-time record high at 3231.99. Investors Praise the Power and Glory of the Fed. 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 Friday Morning, 12/27/19, at 5:00 AM EST: The SPXA150R finishes yesterday at 81.16. The S&P 500 prints a new historic all-time record high at 3240.08 and new all-time closing high at 3239.91. Traders sing praise to the Federal Reserve's expanding balance sheet.
The Christmas wrapping paper is at the curb, trader's bellies are churning from ham, chocolate and other treats and the breath stinks of spiked eggnog. The ears are ringing from the rooty-toot-toots and rummy-tum-tums. Children search for batteries for their toys. US stocks reopen for trading today, 12/26/19, the day after Christmas, also Boxing Day and Kwanza. S&P futures are moving sideways at +5 with the VIX at 12.68. The SPX prints an all-time record high at 3227.78 and all-time closing high at 3224.01 both on Monday, 12/23/19. The S&P 500 did not print a new all-time high or new closing high on Christmas Eve.
Trading picks up where it left off. A significant top is expected, which has been the Godot Top during December. The stock market top has been expected for the last month due to multi-year complacency in markets, however, the Federal Reserve keeps pumping stocks higher. Chairman Powell spent his Christmas in the basement of the Eccles Building working the levers and knobs on the Golden Press printing money like a possessed madman.
The uber low CPC and CPCE put/call ratios signal a top in the stock market but the Federal Reserve and other global central bankers easy money continues pumping equities higher. You have to be blind to not see the huge QE (quantitative easing) rally the Fed generated from October to present (that Powell insists is not QE). Open your eyes. Isn't it a hoot that some idiots actually think free market capitalism exists. That's funny. America is best described as a faux free market crony capitalism system. It is a rigged system sure as the day is long. It's not rocket science.
So the idea is to continue to expect the stock market top at anytime. The holiday period has a lot to do with the extension of the upside. You saw the utilities rally big-time last week so you knew the fix was in for upside joy ahead. Keep watching the utes as a major tell on how bad the pending selloff will be.
When a month moves in one direction the whole time, typically the last few days will be in the reverse direction. November had a hiccup after its month of joy. December is all up wall-to-wall on the Fed pump and the happy US-China trade talk. The Whitehouse still needs to provide details on the so-called Phase One deal; as usual, so far, the whole scenario is all hat and no cattle.
The Santa Claus rally period started this week and runs into the first couple days of the New Year. Stocks are typically higher during this period of joy. The new moon peaked for the month about 7 hours ago. Stocks are typically weak moving through the new moon period but as mentioned above but so far green is on the screen.
New money comes into markets to begin a year favoring the bulls. The January stock market guidelines will be bandied about on the business networks over the next couple weeks; if the first day of January trading is up, typically the first week will be up and if the first week is up typically the month of January is up and if that occurs, typically the year is up. Also, humorously, the end of year (EOY) montages will begin on television any day. Of course, the cable news outlets will run the celebrity death montages for 2019 with sentimental piano music playing in the background. Many folks will say, "I thought he was already dead."
Thus, summing up seasonality and other factors, the month was all up so softness would be expected today, tomorrow and Monday and Tuesday to end the trading year. The new moon just peaked which may create negativity in the hours ahead. On the positive side, stocks have wild upside momentum due to the Fed money pump and momo begets momo. The Santa Clause Rally is occurring and new money should come into stocks creating upside buoyancy into next Thursday and Friday, 1/2/20 and 1/3/20. US markets are closed for New Years Day on Wednesday, 1/1/20. The trading factors are battling with each side having ammunition.
The chart remains in the same relative shape over the last month, wanting to pull back but continually nudged higher on trade deal hype and Fed QE money pumping. The RSI and stochastics are overbot agreeable to a pullback. The red rising wedge pattern is ominous since the collapses from rising wedges can be quite dramatic, quick and eye-opening. The chart indicators, RSI, MACD, histogram, money flow and ROC are all in negative divergence signaling that price does not have anymore upside oomph.
Price has violated the upper standard deviation band (yellow) so the middle band at 3161, and rising, which is also the 20-day MA, is on the table as well as the lower band at 3082. The S&P 500 is clearly extended above its moving average ribbon requiring a mean reversion. The Aroon green line is pegged into the overbot ceiling with nowhere to go but down perhaps setting up the negative cross in the days ahead.
The 150-day MA is sloping higher showing that the bulls are in charge. In addition, the ADX sneaks above 30 which begins indicating that the upside rally is a strong trend. It took 3 months of the Fed printing money like madmen to send the SPX high enough for the ADX to only just begin hinting at a strong trend higher ahead. The 3-month rally is bot and paid-for by the Fed. Note the prior moves higher in the ADX indicating a strong trend were for the moves lower in August and late September and early October, right when the Fed panicked as usual and began printing money.
So the beat goes on. Interestingly, the thinking always is that when confidence and trust is lost in the Federal Reserve, all will be lost, which is true, but Chairman Powell already changed course performing a less-than-skillful pirouette during the back-half of last December and early January. The dolt raised rates professing more hikes ahead, only to reverse course a couple weeks later, flapping dovish wings, proclaiming that easy money and rate cuts are on the way. That was the time to lose faith and confidence in the Fed and yet, once they started providing easy money accommodation again after the 1/3/19 panic selling, and in concert and collusion with the other global central banks (BOJ, ECB, PBOC, etc...), the stock market sets record highs. Then the Fed hits the afterburners from October to present worrying about a credit event occurring in markets. What power the Federal Reserve possesses. Kneel and Worship at the feet of the Central Banker God's.
Thus, if traders and investors could not care less about the Fed flip-flopping and moving in the direction the wind is blowing at any given minute, when does the party end? As evidenced clearly in 2019, all that matters is the Fed's easy money ways and an expanding money supply. Do you understand this or are you stupid? The world is awash in liquidity pumping all asset classes, including stocks, bonds, real estate, vineyards, art, collectibles, antique cars, etc..., into bubble territories.
This thought experiment makes one believe that the roll-over and multi-month and multi-year decline in the stock market will only occur once the money printing (expanding money supply) ends. Well, more correctly, it will likely not end only trail off. In fact, right now is similar to the late 1990's path. The Fed stepped into markets providing a money pump and support for stocks (always to protect the wealthy elite class) back then and equities enjoyed a nice rally, like now. But when the Fed tried to take the candy away, the stock market took a hissy fit. The stock market is a drug addict now and can only survive on more and stronger Fed heroin.
The watch for the Godot Top continues. Today we see if the new moon packs enough negative punch to knock Santa Claus off his sleigh. The expectation is for a significant drop in stocks going forward. Keybot the Quant remains long and strong so one of the tells that the down direction is likely to continue and accelerate will be when the quant flips to the bear camp. 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 10:06 AM EST: At 9:48 AM EST on Thursday, 12/26/19, the S&P 500 prints a new all-time record high at 3231.99, the highest number ever recorded in history. Floor traders are carrying Chairman Powell on their shoulders while cheering, singing songs and buying stocks. The wealthy elite class nods approvingly at the Fed members letting them know that a little extra will be in their Christmas cards this year rewarding their dovish path. The beat goes on in crony capitalism America.
Note Added Friday Morning, 12/27/19, at 5:00 AM EST: The S&P 500 prints a new historic all-time record high at 3240.08 and new all-time closing high at 3239.91. Traders sing praise to the Federal Reserve's expanding balance sheet. Humorously, Chairman Powell must be sweating like a pig over the price action. Powell is pumping liquidity into the financial system like a madman worried about an end-of-year credit event. There are three trading days remaining in the year, today, Monday and Tuesday. The fun will begin in early 2020 when the Fed tries to take the easy money punch bowl away. Alcoholics do not respond well when you try to take their booze away.
The SPX is at all-time historic record highs printing 3226 on Friday, 12/20/19. The 18-year stock cycle is the most reliable cycle in the markets at least until the central bankers contaminated global markets over the last decade. You could set your clock by the 18-year cycle; trains ran on time based on the 18-year. Atomic clocks would set their time to the 18-year cycle.
The stock market was in a secular bear from 1964 to 1982. President Ronald Reagan came into office in the early 1980's and broke the unions (which lowered expenses for companies and boosted stock prices for the rich). He cut taxes but starting sending high-paying middle-class jobs overseas (again, to cut business expenses and raise stock prices). The opening of global markets (China, etc..) in the early 1980's coincided with the 18-year secular bull cycle that was beginning so Ronnie Raygun rode the lucky train to Gloryville. The secular bull ran from 1982 to 2000 and that is when the dotcom bubble popped.
The 18-year secular bear market begins in 2000 and runs to 2018. Well, we are in 2019 now and on the verge of 2020, and the 18-year cycle is busted (well, maybe not yet). First of all, the green lines show the strong cyclical bull market rallies within the secular bear. Folks that talk out of their butt about technical analysis will denigrate the 18-year cycle touting the 2003 to 2008 and 2009 to present rallies as proof positive. Actually, very strong cyclical bull rallies are expected to occur in secular bear markets; that behavior is normal.
The stock market and economy is now in the longest rally and expansion in US history. Isn't that something. It's the best markets the central banker money can buy. As we say goodbye to the teens decade and onto the Roaring 20's decade, the stock market has gone through the entire decade (2010 thru 2020) without a recession for the first time in history. Wow.
The Power and Glory of the Global Central Bankers, the modern-day Money God's in charge of the Temple, is phenomenal and worthy of Praise. Kneel and Worship at the feet of Pope Powell, Lady Lagarde, King Kuroda and Gangleader Yi Gang. Show them Honor and Adoration. The Eccles Building is now on Holy and Sacred land. Each morning, Powell and his cohorts kneel and pray at the base of a golden statue. Former Fed heads Greenspan, Bernanke and Yellen also join the sacred ceremony and pray to their Holy Master, yes, it is the Golden Printing Press, their Eternal God.
Cycles routinely perform left and right translations. This is where a cycle may come to its end point a little earlier than expected, a left translation, or a little later than expected, a right translation. The translation amount varies with the cycle. For the 18-year cycle, it would not be uncommon to experience a couple-year left or right translation. Well, the left translation is not on the table since we are in December 2019 already a year beyond the targeted end of the 18-year secular bear from 2000 to 2018.
The game-changer and destroyer of all price discovery and market cycles is the Federal Reserve and its global central banker buddies such as the ECB, BOJ, PBOC, BOE, RBA, RBI and 20 other joker nations. They have pumped liquidity into global markets since March 2009 to prop up the equity markets and protect the wealthy class that own large stock portfolios.
So it is plain as day why the stock market placed its record high on Friday; the Fed and other global central bankers. The world is awash in liquidity and all asset classes including stocks, bonds, real estate, vineyards, antique cars, art, collectibles, etc.. are at bubble prices. Money is so cheap that individuals and businesses have been buying stupid stuff or investing in hair-brain ideas for the last few years; all of these sick chicken's will come home to roost. Easy money encourages loose spending and bonehead business decisions.
Thus, is the 18-year cycle a bust, after decades of excellency, or do we remain in this one-decade central banker fantasyland that comes to an end once the easy money ride stops?
The secular bull market is expected to run from 2018 to 2036. This makes sense since inflation will be kicking in, even hyperinflation, which will be a whole new set of dire problems ahead in the 2020's, and stocks will inflate like all other assets. The tricky part is where does this secular bear end now and the secular bull begin. One would expect a huge selloff period to occur for the secular bear period to finally put its stamp on this cycle.
If stocks crash going forward, the 2000-2018 secular bear market would go out with a bang and end up as a right-translated cycle of about 2 years from 2000 to 2020. All would then be right with the universe. The other outcome is the stock market never pulls back significantly so the reliable 18-year cycle would be deemed an unreliable tool and thrown onto the trash heap of technical analysis. The secular bull would then be underway until 2036.
2020 will be a fascinating year. Will the 18-year secular bear finally growl and go out with a bang, with a stock market crash, or, does the Federal Reserve and its central banker partners in crime keep printing Keynesian cash and prop markets up forever? What do you think the future holds? 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.
