XLY Consumer Discretionary Monthly Chart; Overbot; Rising Wedge; Negative Divergence

The M&A (merger and acquisition) talk has gone bonkers in the luxury goods sector in recent days. TIF is on the buyout block and this morning in Europe, Moncler catapults +8% higher on takeover chatter. Life is fantastic for the elite wealthy class. The central bankers have goosed the stock market since March 2009 rewarding the rich (that own large stock portfolios) at the expense of the stupid huddled masses.

The stock market is at an epic top. It is the silly season. The tribal warfare in politics, the social media craze with everyone seeking their 15 minutes of Andy Warhol fame, the public treating each day as entertainment with a care-free attitude about taking on debt, are all hallmarks of the bread and circus days, the topping of a long-term Kondratieff Cycle. America, and the world, has many ugly days ahead over the coming couple years.

XLY is the consumer discretionary ETF. AMZN qualifies under this umbrella since many of the Amazon purchases are frivolous; worthless bobbles and trinkets that are thrown to the curb the following year. Luxury spending is by definition, discretionary.

A $2,000 used Ford Taurus with rusted doors and a smelly interior gets you to the same destination as the $80,000 Mercedez-Benz with leather seats and a wood-paneled dashboard. The winter coat from the Thrift store keeps you just as warm as the $5,000 mink fur coat. The $20 Timex keeps the same time as the $10,000 Rolex.

Alas, the wealthy's pockets are overflowing with money, thanks to the global central bankers, and they spend that money on the latest bobbles and trinkets to flaunt their fortune. XLY is a moonshot once former Federal Reserve Chairman Bernanke started QE 1 to save the US stock market in March 2009 and protect the wealthy class. The Fed and other public officials perform the bidding of the Wall Street investment banks since they are rewarded with lucrative speaking engagements at token luncheons once they leave office. This is the way the crony capitalism system works. It is crooked and rigged.

But all good things do come to an end. After all, your credit card has a limit on it, right? The same thing occurs with the global central bankers that have colluded to save the world's markets daily during the last decade. The only difference is that the limit on the Keynesian money printing is an unknown. Markets go up and the wealthy dance with glee, since they own the large stock portfolios, but the game only continues as long as everyone has full faith and confidence in the central bankers. When that is lost, all is lost.

The XLY monthly chart says the denouement is here. Godot has arrived. The epic multi-month and multi-year top is in. If you are young, run, don't walk, from the stock market. Otherwise, you will lose your money. The brown circles show the distribution taking place over the last few years. Those are the exact months the smart Wall Street money is distributing shares to the dumb money, a.k.a., Joe Sucka, Frank Fool and Bertha Bagholder. The M&A news and talking heads on business television cheerlead the stock market higher encouraging the sucka's to come on in and buy or risk losing out on the fun. The pump and dump is a staple money-maker on Wall Street.

The RSI was overbot for several years and now off those levels but the stochastics remain overbot both agreeable to price pulling back. The red rising wedge is ominous since the collapses from these patterns can be quite fast and dramatic. The red lines show universal negative divergence across all indicators. The top is in on the long-term monthly basis. Git outta Dodge now or you will be the bagholder.

The purple box for the ADX shows how the move higher in the SPX was a strong trend higher so you expect more highs. However, the May 2015 top occurs; remember how Keystone described and explained that topping process in real-time? The stock market had no business to move higher from 2015 on, but the central bankers are always ready to pump stocks higher to please their wealthy masters. One-half of Americans do not own one single share of stock! The coming class war will likely be violent and last for many years probably a decade or two. The gap between rich and poor is the widest in 50 years.

Note the famous Tweezer Bottom in early 2016. Stocks were toast but the Fed stepped in to save the day creating the obscene gains in stocks in 2016 and 2017. Structural unemployment and high debt remains for the huddled masses but the wealthy dance with glee as the central bankers goose equities higher. The day of reckoning came again in Q4 2018 but as Keystone described this year, on 1/3/19, the global central banks panicked again and goosed stocks +25% this year on more Keynesian money-printing. It is sickening and nauseating to watch. Crony capitalism is gasping its last breaths over the coming months and few years.

The ADX shows a strong trend again, due to the central banker goosing, in 2018 but this trend petered out after the Q4 2018 crash. Interestingly, note that despite the obscene money-printing this year by over 20 global central banks, the ADX is down at 19 and indicates that this big upside rally this year is NOT a strong trend higher. The Aroon green line is overbot with nowhere to go but down and the red line is at zero with nowhere to go but up both indications are bearish going forward.

Remember, the chart above is a monthly chart. We are not talking some neggie d that spanks prices back a few days on a daily chart or a few weeks on a weekly chart. The chart above indicates that a major historic top is occurring on a multi-month and multi-year basis in XLY as well as the broad stock market. Watch your wallet going forward. As Eric would sing and play, "Goodnight Irene, Irene Goodnight." 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.