Stock chart patterns and technical analysis (TA) explained simply. Disclaimer: This blog and all its contents are for educational and entertainment purposes only. Do not trade or invest based on any information seen on this blog. Please read Terms of Service. The K E Stone blog sites (Keybot the Quant) are blacklisted by Google, so enjoy the ad-free experience, and only use the Donate button when supporting the sites.
One of Keystone's fave short-term signals is the 200 EMA cross on the SPX 60-minute chart. As seen above, the bulls were partying well above this critical bull-bear line in the sand but today, the SPX fails below the 200 EMA. On Monday, the S&P 500 teased failure at the 200 EMA. Do you remember that excitement? You can scroll back and relive the drama. If the SPX remains below the 200 EMA on the SPX 60-minute chart at 3055, the stock market is toast. Typically, a big flush lower would be expected now. The chips (SOX) failed a short time ago. The coronavirus may have spread from person-to-person in the US. And now the 200 EMA fails. As they say at the baseball game, one, two, three strikes and yer out. A big flush lower would be expected especially each minute the SPX remains below 3255. 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 1:35 PM EST: The SPX is at 3252 perhaps coming up for another back kiss of the pivotal 3254-3255 level. The LOD is 3242.80. If this back kiss is successful for the bears, and she fails, we may see the big flush lower. The 3242 support would be tested and if that fails, there would be market carnage ahead. It is hilarious to see traders running for their lives worried about losing their money. That's humans. The coronavirus news is casting a darkening pall across the stock market. Note Added 1:42 PM EST: The back test at 3254-3255 is in progress. Price is at 3253. The S&P 500 is deciding to bounce, or die, right now. Which will it be? SOX is at 1828 below the critical 1830.45 bull-bear line in the sand identified by Keybot the Quant algorithm so the expectation would be for a spankdown from this critical back test. SPX is at 3253.... it's deciding....... will price jump up above 3255 and rally into the closing bell with the bulls slapping each other's backs bragging that they bot the dip, or, will price collapse from here, fall through the LOD at 3242, and then deteriorate from there? Note Added 1:46 PM EST: SPX 3253. VIX 17.46. SOX 1830. The bulls are goosing the chips to try and save the stock market today. Note Added 1:48 PM EST: Here is the back kiss. Smoochie, smooch. SPX is at 3254. Bounce or die. Come on stock market, make a decision already. Are you going to live, or die?.. Note Added 1:51 PM EST: SPX 3251. VIX 17.60. SOX 1828.65. The bulls cannot push the SOX fat man up the ladder. The bears have the market in their paws and may begin slashing. It is a given that you are already strapped into your seat with your helmet on. Bulls must push the SOX above 1830.45 or they are toast. Note Added 2:01 PM EST: The SPX is back up again at 3253 continuing the back test. The stock market cannot decide which side it owes allegiance to, the bulls or the bears. Each minute the SPX remains below 3255, is another nail in the bull's coffin. We may have an exciting end to the day in store. The SPX does not want to give up the ghost, therefore, if she does, it may get quite ugly quite fast. Hell hath no fury like a woman scorned. Note Added 2:09 PM EST: This is it. SPX is above 3254.12 with the 200 EMA at 32354.80. This price action and pivot decides the stock market direction into the closing bell. Bounce or die. It is time for the stock market to make its decision. Note Added 2:11 PM EST: The bulls are puffing their chest out with the SPX at 3256. The bulls are emboldened and think they can overcome all the negativity today. SPX 3256.66. Ho, whoa, ho, those rascals! The bulls goosed the chips with the SOX jammed higher to 1833.50 and climbing, hence the SPX is at 3257 overtaking the 200 EMA at 3255. This battle is likely not over. The bulls are happy with the chips back in their camp. Note Added 3:28 PM EST: Wheeee. Whoopie. The bulls are not only goosing the chips, with the SOX up to 1846, but also the financials, pumping XLF higher to 30.44 creating stock market joy. The SPX teases positive on the day now at 3272 far away from the 3255 line in the sand. The bulls dodge a bullet again like on Monday. VIX 16.38. Looks like choppy slop may be the order of the day going forward. The chips, banks and retail stocks are being poked and prodded enough to keep the stock market elevated while the VIX remains above its critical 200-day MA at 14.97, which says the stock market bears are in charge going forward. Choose your poison. Scamazon reports earnings after the bell. Traders do not appear concerned about the coronavirus. WHO seems laissez-faire about the situation. Coronavirus, schmoravirus. Not even a pandemic-level disease can stop the stock market buying. Note Added 3:43 PM EST: The SPX is up to 3278 coming up to test the 20-day MA at 3280-3281. This is another bounce or die level.If the bulls can punch up through 3281, the stock exchanges will erupt into an obscene orgy party of bullish upside pleasure. However, if price hits its head on the ceiling here and fails to overcome 3280-3281, the SPX would likely be spanked down lower probably to the 3255 support again. These two levels may be very telling going forward, 3255 and 3280, and the bulls may punch up through 3280 as this is typed. Bulls win big above 3280. Bears win big below 3255.It's a knife-fight between 3255 and 3280 with the bulls and bears slicing each other up. Note Added 3:49 PM EST: Woohoo. Wheeee. Here's the test. SPX is at 3280. Price is testing resistance at the 20-day MA at 3280 to see if it has the strength to push up through, or, if it will crumble into the closing bell. Note Added 3:52 PM EST: The bulls are walking around with thier chests puffed-out figuring the day is a slam-dunk in their favor. The SPX is at 3281 and the bulls are already counting their chickens before the eggs hatch. The test of the 20-day resistance is in progress. Note Added 3:55 PM EST:SPX 3282. VIX 15.97. SOX 1854. XLF 30.56. The banks are being pumped hard. The chorus line dances out from behind the curtain by the snack bar at the NYSE. The lovely long-legged ladies hypnotically kick their legs in sync with traders executing large-block buy orders; such is the rhythm of Wall Street. SPX 3284. The bulls are happy. Virus, schmirus.
The Keystone Speculator's proprietary trading algorithm, Keybot the Quant, whipsaws back to the short side at SPX 3250 before munch time today. The chips failed,then recovered, but over the last few minutes are falling apart again causing the flush lower in the stock market. SOX 1830.45 is the key bull-bear line in the sand; watch it like a hawk. More information is at Keybot's site;
Tesla surprises to the upside with earnings and is currently trading in the pre-market up 52 points, +9%, to 633 which is a record high. Dear Lord, TSLA tagged 650 a couple hours ago (pre-market). Elon Musk performs a victory lap. Investors are believing in those glorified electric golf carts. Humorously, in the US, one-half of these silent movers are sold in California, the land of fruits and nuts. Folks living in rural areas would be stupid to buy an electric car when a gas station is on every corner. Tesla is selling cars hand over fist in China. CEO Musk dances like a rigid fool on stage celebrating the communist car sales. Like Stuart Smalley, Musk boosts his inner self esteem whispering to himself that doggone it, people like me. The Chinese are simply using Tesla for its technology. Musk would be better served to study history of the textile industry, auto industry, steel, etc... It is guaranteed that China has built a duplicate factory to the Tesla factory and is sucking every bit of technology it can from the auto maker. China has several fledgling electric car manufacturers and dollars to doughnuts they will serve Tesla's technology to their electric car manufacturers on a silver platter. Is Musk really that stupid not to know how the communists are playing him? Perhaps he does know and is playing dumb planning to skate away from Tesla while the gittin' is good and before all the trouble hits the fan down the road. Time will tell. Tesla produced 360K vehicles last year but Musk brags that the electric car maker will build over 500K vehicles this year 42K vehicles per month. This number impressed analysts and strategists so TSLA stock is bought with reckless abandon. Interestingly, at the same time, the stock is receiving the mother of all short squeezes. It is quite phenomenal price action. The shorts are running for their lives creating massive upside rocket fuel. The higher price shot up, the more the shorts panicked, and more shares needed covered, creating more panic buying. What a sight. Shorts probably curse the day they got involved with Tesla. Musk has the last laugh for now. TSLA is conceived in 2010. It begins with a couple-year ascending triangle pattern which pops price towards one hundo. TSLA never looked back. Price is parabolic so by definition, has major momentum, so it takes a little bit of rail or runway to slow the freight train or airliner down. The RSI and stochastics are overbot agreeable to a pull back in the monthly time frame. Ditto the long-term neggie d. Those short green lines show the momo and juice still available due to the parabolic move higher. Thus, price will likely want to jog going forward as it tops out. So one month down and then the next month up to matching highs again, 600+, that will probably create negative divergence on the RSI and stochastics, but then one more jog is probably needed to roll the MACD line over with neggie d. So it can take 3 or 4 months for Tesla to top out and then die, however, that long-term neggie d must be respected which can shorten this time frame. A major top would be likely in TSLA in the Feb-April time frame. The big up had a lot to do with short covering so it makes sense that it should not have a lasting fundamental impact on stock price. TSLA short interest is almost cut in half from about 25% down to about 14%. Open interest moves from 7% to 2%. A lot of the shorts have been wiped out and expunged from the stock. The chart has the feel of a two-leg bull flag pattern but it obviously is not an official pattern because the middle consolidation zone should have a slight downward bias. Instead, TSLA has moved dead sideways for 6 years until the upside breakout now. Nonetheless, since symmetry is something to be respected and we can call it a pseudo-bull flag, the starting point is down at that 5-point gap at 38.4 to 43.4. If the first leg is to 280.4 (orange), that is 237 points difference so if price begins the second leg from 187, that targets 424 which is achieved. If you look at the light blue bull flag, price goes from 43.4 to 367 a difference of 324 points and if the second leg begins at 187, the target is 511 which is also achieved satisfying the pseudo-bull flags. Price has extended far above the upper standard deviation band, that is quite a sight. The middle band at 307 and rising is on the table for the months ahead. Keystone does not plan on trading TSLA but will take a look at shorting it when it tops out in February-April. Interestingly, Peloton may forge a similar path ahead. Anyone that spends thousands on a bedroom clothes hanger (stationary bicycle) and then $60 bucks a month for a talking head on a screen to tell you to pedal faster, needs their heads examined. So the shorts will pile into PTON since the business plan does not seem viable, especially when a recession is about to begin. However, these short sellers may experience a similar fate ahead as the TSLA short-sellers experienced, death by a thousand cuts and then your head is lopped off in the end anyway. Go Peloton girl! As Queen would sing, get on your bike and ride! 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 9:38 AM EST: TSLA jumps 62 points, +11%, to 643.18. HOD 643.70. Elon Musk raises a glass of PBOC rice wine with the Chinese communists toasting the record stock price. Note Added 12:49 PM EST:TSLA is at 643 and prints a HOD at 650.88, the highest number ever printed by Tesla in history. The last bear lays flat on the ground bleeding with a bull hoof print in the back of his skull.
Boeing soars across the clear blue skies. Psszt. Sputter. Pffsszzt. Sputter. Mayday! Mayday! Two of the new BA planes killed nearly 400 people with their faulty landing software and hardware and inadequate pilot training. Boeing has been in a tailspin ever since. A once iconic company lessened itself to cheaper production costs to squeeze that bottom line, and now there are human graves to show for it. This behavior is commonplace in the engineering industry ever since globalization took hold from the 1980's to present. The companies of all those employees that perished have already moved on. To this day, folks will opine about the tragedy, and pledge to never forget ole what's-his-name? Adding more headaches, Boeing's Starliner's mission is aborted after it may have been traveling in the wrong direction as it broke into space. It was supposed to deliver supplies to the space station. Humans are supposed to go up in that bucket-o-bolts this year. Good luck to them. Thus, Boeing has hit a soft patch and is sliding off the runway as Keystone continues the campy metaphors. The chart looks like a bunch of spaghetti up there in the right corner, but, you have to go where the action is at if you want to have fun. A diamond pattern is shown in blue where price is chopping sideways and now resolving to the downside out of the diamond. That's not good. The purple lines show a head and shoulders (H&S) pattern. Pulling the numbers from the weekly chart, the head is at 440 and neckline at 330, which is a difference of 110, so the downside target is 220 if the 330 neckline fails, and it did. The bulls better do something fast or they are about to go down in a ball of flames. Boeing needs some good news to stabilize prices and adjust the chart, otherwise, BA is in trouble. The red lines show the neggie d spankdown on the monthly basis indicating that this is a very long term top that has occurred. The money flow is feeling love as all those BA dip-buyers, worried that they are missing out on a buying opportunity, jump back into the stock. They will likely have their heads handed to them on a platter. The red lines show the indicators remaining weak and bleak wanting more lower lows in price even if BA bounces a little bit during the month. The RSI has just dipped into bear territory at 49%. The pink arrows show the tight bands that squeeze inwards and squirt price wildly in one direction or the other. Think of a tube of toothpaste with the cap on. You squeeze it with all your might and whammo, the cap flies open and toothpaste flies out but you don't know if it will hit the sink mirror, or the toilet, or your honey between the eyes. The bands tell you a big move is coming but do not predict direction. The move in 2013 was straight higher. The move in 2016 was straight higher, through 2017 and into 2018. Will it be three times for the bulls? Or is the end game now? You will not have to wait too long. A couple candlesticks will tell you the answer which is a couple months, a few weeks. Keystone does not own any position in BA long or short. BA appears to be chopping sideways but it is not a tradeable chop it is instead a sloppy erratic chop. You can clearly see price bouncing on the daily chart due to the possie d. That would have been the trade a few days ago going long for a quickie pop. Price does not seem to have much juice and appears very weak. A failure at 309-310 will lead to 295 which likely opens the door to 283 in quick order then 270-275. Boeing bulls had better push price above 330 pronto, otherwise, they may be smart to strap on a parachute, grab their money, and jump out of this airplane. 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 9:51 AM EST: BA is dead flat sitting at 322 wondering what to do; soar to the heavens or spiral into H*ll.
Is there a doctor in the house? Yes, but Dr Copper is laying on a gurney in the emergency room with Nurse Cratchett applying the paddles. Everyone clear! Zap. Unfortunately, Dr Copper is still lacking a pulse. The other yellow metal drops for 10 consecutive days a losing streak not seen in five years; it is one for the record books. America, China and the world are so excited about the trade deals that Doctor Copper jumped from a skyscraper into a small children's wading pool of water.Copper should be on a bigtime rally now since the trade barriers are removed and the global economy is supposed to be in go mode, unless, it's not. Copper, that has a PhD in economics, says the economy is ill. The red lines show the neggie d spankdown that was expected in this daily basis. The tight band squeeze (pink arrows) show an initial move higher but that was a fake-out, then whammo, a bludgeoning with a baseball bat pushing copper down the basement stairs. It is ugly. The lower band is violated so the middle band at 2.77 and falling fast, is on the table. The RSI and stochastics are oversold so price will bounce on this daily basis, however, the indicators are all sloping lower, weak and bleak, wanting to see further lows in copper after any day or few-day bounce occurs. Copper should place a stronger bottom, on this daily basis, in a few days once the indicators positively diverge. Nurse Cratchett is calling for help. Copper is tarnished and soiled; that ain't no patina. 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 9:58 AM EST: Copper is down -1.90, 0.7%, to 2.535, with an 11-day losing streak in progress. Will the streak expand to 11 days or will it end today at 10?
The BPSPX issues a market sell signal this week. The six percentage-point reversals are key for the BPSPX as well as the 70% level. The bulls were on a double-whammy buy signal during Q4as the Federal Reserve sends stocks higher with QE to make the wealthy class more rich. Isn't crony capitalism great? The BPSPX peaks at 83 so taking away 6 is 77. Price slips through 77 a couple days ago issuing the market sell signal.If the BPSPX crumbles down through the 70 level, that will be a double-whammy sell signal and the stock market will be quickly deteriorating. From this current 76 level, adding 6, is 82. The bulls need to push the BPSPX back above 82 to regain a market buy signal; that appears to be a tall order. Stocks may need to be punished for a while so the bulls can then step in at a lower level and more easily send price back up. For now, the bears rule the stock market starting on Monday according to the BPSPX tool.Watch that 70% level to see if it develops into a more serious double-whammy sell signal, or not. 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 9:54 AM EST: The BPSPX is at 75.0. The bears are winning.
The stock market bulls are keeping equities elevated by goosing the retail stocks and banks. These two sectors remain key. At the same time, volatility is playing a big part in determining stock market direction ahead. The VIX 200-day MA at 14.97 is a key bull-bear demarcation line that dictates a near-term positive or negative trend. In addition, the Keybot the Quant algorithm, that is currently long, is tracking 13.60 with great interest as the key bull-bear line in the sand. The VIX is at 15.68. Thus, if the VIX remains above 14.97, the bulls got buptkis and the bears will win going forward. It will not matter today if stocks rally if the VIX remains above 14.97; equities will roll back over to the downside and become sick and weak again.If the VIX drops below 14.97 but remains above 13.60, the relief rally has a few days of legs, but it has a shelf life and will not continue; the stock market would be expected to become sick again after a day or few of rallying.If the VIX drops below 13.60, the bulls will throw a confetti parade as stocks would then be on their way higher and the sky is the limit. 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 9:36 AM EST: Bingo. The VIX comes down to tap on the 200-day at a LOD at 14.94. SPX 3290. Banks pop higher. The VIX bounces off this critical level on the first try. The stage is set. Watch VIX 14.94-14.97 like a hawk; it tells you who wins going forward. Note Added Thursday Morning, 4:30 AM EST: The Fed flaps its dovish wings yesterday afternoon, to no surprise, and the VIX trades choppy. The VIX teased that 14.94-14.97 support, and bounced, and ends the day up at 16.39. Bears win. It is interesting that S&P futures are down -18, they were down -28 a couple hours ago,despite the Fed dovishness. That is a change. Typically a 25 to 30 point rally will occur in the SPX after every dovish proclamation by the Fed. Is the jig up for the Federal Reserve and other global central bankers exposing them as the Wizard's of Financial Oz pulling levers and pushing buttons behind the curtains? This 11-year Keynesian financial experiment only continues if traders and investors trust that the Fed can always save the day. If that trust wavers and confidence is lost, it's ovah, as they say in Brooklyn. The financial future of America rests on Chairman Powell's thin shoulders.The game continues.
It's been a sloppy topping process that continues. Stocks finally take a much-needed retreat off the parabolic highs but the dip-buyers immediately begin tripping over each other to buy stocks. Moral hazard has arrived. Everyone believes the Federal Reserve and other global central banks will print money forever to always save the stock market, and protect the wealthy class, so there is never any need to worry anymore about a big selloff in stocks. One day is brighter and more joyous than the prior. The Fed and Chairman Powell show is on tap today. Alas, the dip-buyers are likely premature. For a tradeable bottom to appear, when there is sufficient fear and panic, doom and gloom, blood in the streets, and all that rot, the CPC should be above 1.20. Back in November there was that cheesy bottom with the lightest tap of 1.20 which then the bulls took advantage of and pumped the stock market higher through the end of the year. The CPCE should print above 0.80 for a nice tradeable bottom to appear. You want to wait to see the traders running past you with their heads on fire, screaming bloody murder, swearing that they will never buy a stock again; it's hilarious to watch. That is when you want to buy. Stocks are buoyant this week moving into a Fed meeting which occurs about 80%of the time and note the weakness in the market around the new moon that peaked last Friday. A couple of major quakes occur as well as the Earth and Moon were at an inflection point. A relief rally, helped by the Fed meeting positive joy, started but the two put/call charts above tell you it will have a shelf life whether today, a couple days, or a few days; the put/call ratios likely have to dance far higher for a respectable and tradeable bottom to present itself (more fear must appear). 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 Thursday Morning, 4:40 AM EST: The CPC is at 0.83, remaining subdued. Ditto the CPCE is at 0.50 printing a low. Traders and investors continue to believe that the Fed and other global central banks will always pat their behinds and save the day. There is no reason to ever worry about stocks selling off. In fact, the universal consensus anxiously awaits a pullback in equities so they can jump in with both feet on the long side. There are no bears remaining. The party continues. Conoravirus, shamoravirus. Trade, schmade. Impeachment, schmeachment. Selloff, schmelloff. Everyday is a par-tay.Fill that glass with more Fed whiskey, BOJ sake, ECB champagne and PBOC rice wine and buy stocks with reckless abandon. It's another day at Itchycoo Parkwhere it's all too beautiful. What epic times they are.
The financials are a key driver of stock market direction currently. Bulls win and the relief rally will gather strong steam if the XLF moves above 30.32. Bears will win going forward if they keep the banks weak and the XLF below 30.32 trending lower. The Keybot the Quant algorithm, which is long,identifies XLF 30.32 as a key market metric currently. Keystone looks for a purple crayon to draw a line; they are hard to find since they taste so good, here it is. You can see the to's and fro's with price crossing the purple line at 30.32 during yesterday's session. That represents the bulls and bears slapping at each other and eventually, one side or the other will grow tired and lose. XLF is not trading in the pre-market. JPM is up a smidgeon, GS is up +2.2%, BAC up a smidge, ditto C up a smidgeon. So it looks like XLF will float a few pennies higher to retest the 30.32. Bulls must push XLF above 30.32 or they got buptkis.Bears will win going forward if the XLF remains sub 30.32. As the banks go, so goes the stock market. 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 8:53 AM EST: XLF is trading up a smidge at 30.31 tapping at that 30.32 door. Note Added Thursday Morning, 4:45 AM EST: The XLF popped higher out of the gate yesterday to 30.44 then 30.46 when the Federal Reserve flapped its dovish wings again in the afternoon. However, the battle at 30.32 continues and the bears win as the day ends, sticking a shiv into the bull's stomach during the last hour of trading. XLF ends the session at 30.22 creating bearishness in the stock market.
Keystone's proprietary trading algorithm, Keybot the Quant, flips back to the bull side yesterday afternoon at SPX 3283. Watch the banks. As the banks go, so goes the stock market. XLF 30.32 is the key bull-bear line in the sand (starting the day at 30.27 in the bear camp). Stay alert for a potential whipsaw back to the short side. Banks, retail stocks and volatility are the three key drivers of stock market direction currently. As always, more information is on Keybot's site; Keybot the Quant
Here are two of Keystone's key short term signals. There is no point to talk about the signals much anymore since the Federal Reserve keeps goosing the stock market higher for all their wealthy friends (knowing that they will also be wealthy once they leave public life). The crony capitalism system is great if you are part of the club. The SPX prints a new all-time record high last week at 3337.77 before falling on its sword. Remember the triple 3's and 7's? Interestingly, the S&P 500 bottomed in March 2009 at the infamous triple six's; 666. The Fed is printing money like crazy using the Golden Printing Press in the basement of the Eccles Building. The rally has been one joyous day of fun after the other for the bulls. The Fed and markets play the part of Major Kong in Dr Strangelove. The stock market ride is a blast it is only the sudden stop at the end that proves somewhat uncomfortable. You can clearly see the roll over in the stock market during the mid-September liquidity event when the overnight lending market blew up. Fed Chairman Powell and his partners in crime panicked and started printing money like madmen flooding the market with liquidity in a world already awash in liquidity. Pope Powell was worried about a liquidity event at the end of the year so he comically pumped the stock market higher during the whole fourth quarter. Powell is simply pleasing his investment bank masters and the elite class (one-half of Americans do not own a single share of stock). The stock market takes off like a rocket on the Fed money-printing. The central bankers are the market. Do you understand this simple fact, as clearly illustrated in the chart above, or are you stupid? The SPX 30-minute chart shows the 8 MA finally stabbing down through the 34 MA so the bears are in control of the stock market in this VST. There were a few fake-out moves where the 8 MA wanted to create a negative cross, but the Fed andhappy trade talk would send stocks higher saving the day.Bears win going forward until the bulls can push the 8 MA back above the 34 MA. Now that the 30-minute has given up the ghost, how about the 60-minute? The SPX 60-minute chart shows the SPX price above the 200 EMA at 3251 so the bulls remain in control of the stock market over the VST. The signals between the 30-minute and 60-minute charts are conflicting and both cannot be right; one of them will flinch. Thus, watch to see if the SPX can push down through the 200 EMA on the SPX 60-minute chart at 3251 which ushers in serious stock market negativity. Look for a 25 to 30-handle flush in the S&P 500 if SPX 3521 fails. The bulls must focus on the 30-minute chart and pushing the 8 back above the 34; it is the only way the bulls can regain their upside momentum. Bulls win going forward if they can push the 8 MA above the 34 MA on the SPX 30-minute chart. Bears win going forward if the 8 MA remains below the 34 MA on the SPX 30-minute chart. Bears win big going forward, with blood, chaos and mayhem in play, if the SPX loses the 200 EMA on the 60-minute at 3521. The coronavirus continues to expand around the world with the US cases rising to five. Futures will be slapped in the face, punched in the stomach and perhaps taken to the woodshed out back. 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. At 6:19 PM EST, Sunday Evening in the States: Futures are falling like a rock. S&P -35. Dow -277. Nasdaq -118. Russell -18. WTIC oil loses -2.8% to 52.69. Brent oil drops -2.5% to 59.22. The coronavirus will hurt oil demand. Gold rises to 1585. Silver pops to 18.31.Copper tanks -1.5% to 2.643. Euro 1.1032. Euro/yen 120.05. Dollar/yen 108.82. US Treasury yields are; 2-year 1.49%, 5-year 1.50%, 10-year 1.68%, 30-year 2.13%. The 2-10 spread is 18.5 bips. At 7:24 PM EST: Futures remain weak. S&P -28. Dow -233. Nasdaq -117. Japan's NIKK and Topix are each down about -2%. WTIC oil 52.89. Brent 59.36. Gold 1578. Silver 18.21. Copper collapses -1.9%. Euro 1.1034. Dollar/yen 108.98. US Treasury yields are; 2-year 1.45%, 5-year 1.46%, 10-year 1.64%, 30-year 2.09%. The 2-10 spread is 18.8 bips. Yields drop about 4 basis points across all durations but interestingly, the yield curve (2-10 spread) remains about the same.
Note Added 8:20 PM EST: Futures remain in the crapper. S&P -26. Dow -221. Nasdaq -105. WTIC oil 52.97. Brent 59.49. Gold 1580. Silver 18.25. Copper is down -1.6% to 2.60. Euro 1.1032. Dollar/yen 108.98. Pound 1.30666. Dollar/yuan 6.9109. US Treasury yields are; 2-year 1.45%, 5-year 1.46%, 10-year 1.64%, 30-year 2.09%. The 2-10 spread is 18.8 bips. Yields drop about 4 basis points across all durations but interestingly, the yield curve (2-10 spread) remains about the same. A huge earnings week is on tap. Note Added Monday Morning, 1/27/20, at 3:10 AM EST: The VIX begins trading above 17 at 17.17 with the new trading week underway, well above the critical bull-bear 200-day MA at 14.93, so the bears rule the stock market. S&P futures tank -31. Dow -285. Nazzy -104. Russell -14. Much of Asia trading was closed. China extends the lunar holiday period. Japan's NIKK and Topix each dump -2%. European stocks begin trading minutes ago and collapse lower. The DAX (Germany), CAC (France) and FTSE (UK) are each down from -1.5% to -1.8%. The stock market will remain sick and trend lower and lower as long as the VIX is above the 200-day MA at 14.93. Bulls will not shine again until the VIX goes sub 14.93. Global fear increases over the spread of the coronavirus.Every time that you look at news on the internet, the virus death count and infections keep rising. Scientists now believe the coronavirus is very contagious during a two-week incubation period when you cannot even tell that you are sick. Hence, the virus is starting to spread like wild fire with 80 deaths and close to 3,000 now infected. The filthy communists drop the ball as usual lying about the virus that began in China probably due to close human habitation with animals. Do not discount the possibility that Xi and the gang are culling their own population that is 1.4 billion on its way to 1.5 billion. If you kill off one-third of the elderly population with a pandemic, the same goes for the United States, voila, all your worries about funding government programs (think Social Security, Medicare, etc...) vanish. The world is not a pretty place.Meanwhile, at the President Trump impeachment trial, the two corrupt political parties, the demopublicans and republocrats, battle for media attention and talking points.Crony capitalism is not experiencing a pretty ending and this is only the start of the next few years of trouble. According to the New York Times, former Security Adviser Bolton's book manuscript is provided to the Whitehosue for review. This is standard practice to make sure there isn't any information that will impact national security. Bolton supposedly identifies Trump as asking Ukraine for the favor of investigating his political rival, democrat Joe Biden, in return for military aid. The aid was already approved by Congress and the president should not be playing such games, but it looks like Donny's hand is caught in the cookie jar. No doubt that King Donny will try to bury Bolton's book; this is how the crony capitalism system works. All politicians inside the beltway are corrupt. Of course, Trumpster is getting out in front of this latest problem the president already refuting everything that Bolton has written; of course he does. Donny will probably be busy tweeting his innocence this morning. If you were ever in, or visited, the county lock-up near you, they all say they're innocent. The reality television show presidency, the never-ending daily baby drama, is getting old.The week is beginning with a risk-off day. WTIC oil 52.91. Brent 59.35. Gold is up 7 bucks at 1579. Silver gains +0.4% to 18.18. Copper collapses -1.7%. Euro 1.1035. Euro/yen 120.36. Dollar/yen 109.07. Pound 1.3083. US Treasury yields are; 2-year 1.46%, 5-year 1.46%, 10-year 1.64%, 30-year 2.10%. The 2-10 spread is 18.7 bips. Note Added Monday Morning, 1/27/20, at 3:54 AM EST: S&P -31. Dow -285. Nazzy -104. Russell -14. VIX 17.17. WTIC oil is down -2.666%. Brent oil slips -2.5%. Gold 1579. Silver 18.21. Copper tanks -1.8% to 2.637. Euro 1.1032. Euro/yen 120.29. Dollar/yen 109.03. Pound 1.3073. Dollar/yuan 6.9109. USD is at 97.87 moving slightly higher. US Treasury yields are; 2-year 1.45%, 5-year 1.46%, 10-year 1.64%, 30-year 2.09%. The 2-10 spread is 18.4 bips. Nifty (India) is trading down -0.666%. Soybeans are down -6% this month. Soybean Donny better get on the horn to Dictator Xi and ask the communist why he is not buying the ag goods he promised. The ink on the paper of the so-called Phase One trade deal is not even dry yet and US farmers ask, "Where's the beef?". Traders on the US East Coast wake up from slumber, those that were not up all night, and begin monitoring computer screens. Note Added Monday Morning, 1/27/20, at 4:35 AM EST: S&P -40. Dow -340. Nazzy -135. Russell -18. VIX 17.78. Dollar/yen 108.85. USD 97.89. Copper -1.9%.US Treasury yields are; 2-year 1.44%, 5-year 1.43%, 10-year 1.61%, 30-year 2.07%. The 2-10 spread is 17.6 bips.The ugliness festers. Perhaps we see traders and investors start running for the exits from those massive ETF positions?It will be a hoot watching everyone try to squeeze out the ETF door at once; that never seems to end well and can obviously bring on a potential crash scenario. The massive recent outflows from hedge funds, and corresponding inflows into ETF's, are very telling. Since the stock market goes up non-stop for 11 years due to the Federal Reserve's and other central bank's money-printing, investors are asking themselves 'why pay someone to manage money?' (Moral hazard.) All these folks figure they can squeeze a couple more percentage points of upside out by just managing their own money and buying ETF's. Most of the money managers have been doing a lot of this anyway. It's hilarious. All these armchair Einstein's, thinking they are the next Jesse Livermore, step up to the plate expecting to hit non-stop homeruns in the ETF ball game. It will be entertaining to watch them all run for that same exit, you know, the one where the double doors swing inside not outside.S&P -41. Note Added Monday Morning, 1/27/20, at 5:04 AM EST: S&P -43. Dow -362. Nazzy -150. Russell -20. VIX 17.98. Note Added Monday Morning, 1/27/20, at 5:19 AM EST: S&P -45. Dow -375. Nazzy -160. Russell -21. VIX 18.06. India's Nifty ends the day down -1.1%.DAX -2.0%. CAC -2.1%. FTSE -2.2%. The coronavirus news only becomes more confusing and disjointed. Humans tend to panic when they have a fear of the unknown; they are wired that way. Note Added Monday Morning, 1/27/20, at 5:26 AM EST: S&P -47. Dow -400. Considering fair value and the joyous Friday, the Dow is set to drop about five hundo at the opening bell in about four hours.Nazzy -173. Russell -22. VIX 18.28. Copper -1.9%. Note Added Monday Morning, 1/27/20, at 5:45 AM EST: S&P -50. Dow -430. Nazzy -176. Russell -23. VIX 18.34. The stock market is slip slidin' away, as Paul would sing.
Note Added Monday Morning, 1/27/20, at 7:18 AM EST: S&P -45. Dow -406. Nasdaq -162. Russell -19. VIX 18.00. The bulls are not discouraged. The investment houses such as Pimco, GS, JPM and others are calling the stock market pull back a great buying opportunity. Fear and panic creates a tradeable bottom but folks looking forward to buying the dip are not panicking or in fear; they want to keep partying like its 1999. This behavior hints that weakness may persist. 81 are dead from the coronavirus. Note Added Monday Morning, 1/27/20, at 8:03 AM EST: S&P -48. Dow -430. Nasdaq -163. Russell -21. VIX 18.14; an 18-handle. Copper -2.1%. WTIC oil -2.8%. DAX -2.2%. CAC -2.2%. FTSE -2.1%.Dollar/yen 108.96. US Treasury yields are; 2-year 1.44%, 5-year 1.44%, 10-year 1.61%, 30-year 2.07%. The 2-10 spread is 17 bips. Note Added Monday Morning, 1/27/20, at 9:26 AM EST: The opening bell is four minutes away. S&P -56. Dow -473. Nasdaq -191. Russell -24. VIX 18.62. DAX -2.7%.Dollar/yen 108.93. US Treasury yields are; 2-year 1.44%, 5-year 1.43%, 10-year 1.61%, 30-year 2.07%. The 2-10 spread is 16.66 bips. Note Added Monday Morning, 1/27/20, at 9:31 AM EST: The SPX collapses 60 points, -1.8%, to 3235 stumbling out of the gate. The Dow falls down the cellar steps collapsing 523 points, -1.8%, to 28463. The Nasdaq Composite sinks 218 points, -2.3%, to 9097. VIX 18.90. Hotels, airlines, travel agents and commodities are slapped silly. Tech stocks are in retreat.Dollar/yen 108.95.WTIC oil -2.5%. Brent oil -2.666%.Gold 1584. Silver 18.24.Copper is punished -2.5%. Dr Copper is in the emergency room and the doctors have the paddles on his chest. Note Added Monday Morning, 1/27/20, at 9:51 AM EST: Bringing this post around full circle, take a look at the SPX 60-minute chart, the 200 EMA is at 3252. SPX price is at.... wait for it .... wait a bit longer for it ....... you really need to wait a bit longer for it so you appreciate it more........ 3252. The 200 EMA failsbut price quickly bouncesfor the back kiss. This bull-bear fight at SPX 3252 is for all the marbles.Bulls will be okay and stocks will recover going forward if the SPX moves back above 3252 and trends higher. Bears will rule the stock market going forward if price fails here from the200 EMA on the SPX 60-minute chart at 3252as this back test occurs. Stocks would then collapse down the rabbit hole. Which one will occur? It is bounce or die time from 3252. Note Added 9:55 AM EST: SPX 3252. VIX 17.59. The battle line is drawn at 3252. Who will win?..
The VIX pierced the 200-day MA at 14.93 last Friday tanking the stock marketbut it could not remain above so stocks recovered off the lows. The red circles show a soggy, sick, weak and bearish stock market while the green circles show a relaxed, complacent market kicking back and watching stocks float higher. When the VIX runs above 20, 23, 30, maybe 50, that is real palpable fear and panic with all stocks getting thrown overboard in a frenzy of fear and mayhem. Of course, that is when you want to go long at those huge upside spikes in the VIX; exactly when fear, blood, panic and chaos is at a maximum; those are tradeable bottoms. The bullish market calls continue in the business media arena. INTC catapults a comical +15% last week on earnings. Cowen immediately upgrades Intel. Investors are calling for huge gains in bitcoin and other digital currencies. Coronavirus, schmonavirus. No one cares. Traders figure that viruses are problems that other humans have to deal with and besides, they are too busy buying stocks to worry about a virus. CNBC analyst Mike Santoli refutes the idea that the current market is like the 1999 stock market top (dotcom bubble). Santoli says the markets now are not valued as high and the fears about a big top occurring are overblown. The WSJ publishes an article telling readers to not fight momentum and stocks will print more gains ahead. There isn't any bears remaining on Wall Street and yet no one points out this simple observation. Keybot the Quant is on the short side currently and is tracking VIX 13.58 as the key metric impacting stock market direction. It begins trading at 3 AM EST and will point the path forward for Monday. In addition, the quant is tracking RTH 119.93 and XLF 30.31 as important parameters dictating market direction. Both are bullishso if their prices fall before those respective levels, Katy bar the door, the wheels will be falling off the stock market wagon. Summing up all this mumbo-jumbo, Bulls will ride to victory if the VIX drops below 13.58 Stocks chop sideways with a downward bias if the VIX remains above 13.58 but below 14.93. Stocks fall apart if either RTH loses 119.93 and/or if XLF loses 30.31. If both fail into the bear camp, stocks will be accelerating downward. Bears will ride to victory if the VIX pops above 14.93. The stock market will be bleeding profusely if the VIX moves above 16.3-ish. Panic selling will occur above VIX 18. Somewhere above VIX 18 a tradeable bottom will appear, exactly when everyone is yelling bloody murder. 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 Monday Morning, 1/27/20, at 3:58 AM EST: The VIX is trading above 17 at 17.17 with the new trading week underway. S&P futures tank -31. Dow -285. Nazzy -104. Russell -14. Much of Asia was closed. Japan's NIKK and Topix each dump -2%. European stocks sink lower. Global fears grow over the spread of the coronavirus. The stock market will remain sick and trend lower and lower as long as the VIX is above the 200-day MA at 14.93. Bulls will not shine again until the VIX goes sub 14.93.
Whoopsies, daisies. The Russell 2000 (RUT; the small caps) slips negative on the year. RUT begins 2020 at 1668.47 and price is now at 1662.23 a loss of 6 points. The Russell 2000 Small Cap Index is down -0.4% thus far in 2020. Small caps are moving inversely to the dollar as seen in the charts above. Analysts and strategists continue to call for the demise of the dollar but alas, paraphrasing Twain, 'rumors of the dollar's demise are greatly exaggerated'. The greenback rallies out of the gate this year and does not take a breath until 1/9/20 and 1/10/20. The dollar retreats for five days, which is reflected by that bump higher in the RUT chart above, but then the dollar gaps higher resuming the uptrend with USD, or DXY, dixie, now up to 97.65. The Russell pukes 23 points on Friday, -1.4%, to 1662. Another reason for the disappointing performance in small caps is the drop in IPO's this week. ZM zooms lower down -3.4% this week. APRN continues to be a bloody apron crashing -12%. CRWD is crushed -7%. RVLV is shot with a revolver crashing -16%. MDLA is awarded a bear medallion after dropping -3.6%. WORK is punished -8.3%; it's slacking off instead of working. PTON loses -4% so Peloton Wife needs to start pedaling faster. The bull market party rages on with traders singing songs and buying stocks without a care in the world. Friday is a pullback but the Fed will likely be active next week and the dip-buyers may nibble. No matter what happens in the markets, traders, strategists and analysts view things optimistically. The glass is always half-full. Of course they are wired that way since funds do not attract new money if the analysts are Gloomy Gus's and Negative Nancy's. People want to hear optimistic happy talk so they give them what they want to hear to attract more money into the fund. Same for the business channels. They steer clear of bearish talk since that is a downer. Advertisers paying big fees for commercial time want to hear the talking head news commentators spout happy upbeat talk and that is what the business channels shell out. The new moon peaked at 4:42 PM EST yesterday afternoon after the market close so it makes sense that stocks were soggy; they usually are moving through the new moon, the darkest time of the month. In the coming days, we shall see if any covert raids are carried out around the world or if the quakes or volcanos become more active. The RUT needs a weaker dollar to move higher. 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: The upper chart is provided by Yahoo Finance and the lower chart by StockCharts and both are annotated by Keystone.
The curl develops. No, not the curl in pretty Meghan's hair, nor the curl of Harry the Hog's tail at the Brown's farm down the road, this curl is in the conference board's leading economic indicators chart. The chart is provided courtesy of Advisor Perspectives and annotated by Keystone. Advisor Perspectives provides great insight into the data. But looking down from the 30,000 foot (9,144 m) level at the chart, something jumps out at you quickly. Do you see it? Note that when the conference board's data rolls over, and the chart curls over to the downside, a recession follows from 8 months to 2 years hence. The data peaked last July so we are 6 months beyond that. The recession is likely far closer than anyone realizes. And do not forget the potential impact of the 11 years of obscene money-printing by the Federal Reserve and other global central bankers, all acting in collusion, to keep the world's stock markets elevated protecting the wealthy privileged class. No one yet knows the impact of such long-term financial intervention. The destruction of price discovery and the business cycles by the Fed and other central bankers over the last decade may mask the data and the recession may appear far faster this time around. It is fascinating that the universal consensus on Wall Street is that there is no chance of a recession this year. And there are not all that many calling for a recession in 2021. Everyone is looking through rose-colored glasses these days. Folks perceive blue skies and rainbows in these bread and circus days of entertainment. However, when the rose-colored glasses are removed, an ugly economic and market landscape emerges. It is the same as the house lights coming up at the end of a fun evening at the nightclub, bar, concert or movie theater. The bomp-bomp-bomp of the techno music fills your ears at the club, the girls are shaking their money-makers, glitz and glamour is everywhere, sparkling colors fill the air, but when the music ends, and the lights come up, you see the dirty floor, the stained sofa, the walls that need painted and the ugly duct work above. At the darkened movie theater with your honey, you are delighted with the sights and sounds, the experience is magical, you are in a wonderful fantasy world far away from your own mundane existence, but the movie ends and the lights come up exposing the popcorn and spilled soda on the dirty cement floor, the gum stuck to the ragged seat to your side, and the dust-laden curtains on each side of the stage. Reality always returns as it will in the markets and economy. There is only one false signal back in 1994 when the data curled over but a recession did not occur. The tech industry joy was taking off like wildfire in the 90's and likely helped to paper-over the weakness in the mid-90's until the dotcom bubble popped in 2000, followed by recession. If you are a young person, prepare for the coming recession. Once you lose your job, it will be too late. One in four of you under 30 years old will likely lose your job over the next year or two. Recessions begin when the times are happy and joyous. A recession does not begin months after a stock market crash; by then the country will already be neck-deep in a world of sh*t. For those of you that have not read K E Stone's (The Keystone Speculator, Keybot the Quant and Keystone the Scribe) internationally-popular and highly-rated article on recession and its societal impact, here is a link; Clueless Millennials Must Prepare Financially, Mentally and Emotionally for the Coming Recession; A PSA (Public Service Announcement) for Millennials Explaining the Ugly Realities of Economic Recession 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.
Keystone's proprietary trading algorithm, Keybot the Quant, flips to the short side this morning at SPX 3304.Copper and commodities are in the bear camp creating a pall on the stock market. The VIX pops above the key 13.58 level, identified by the quant, which creates more stock market sickness. As always, stay alert for a whipsaw. Bulls need lower volatility and stronger commodities and copper. Watch the VIX 13.58 bull-bear line in the sand today.The stock market beatings will continue until these three parameters move back into the bull camp. More information is found at Keybot's site; Keybot the Quant
One of Keystone's important intermediate and long-term forecasting tools is the 20/50-week MA cross for UPS. United Parcel Service is a key shipping company and directly reflects the health of the global economy. Parts, raw materials, business contracts, documents and consumer products are delivered by the brown trucks and the guys and gals in the brown short pants. The UPS 20/50 cross is positive currently reflecting the joyous stock market. Humorously, three or four decades ago, it was exciting to see a delivery truck in a neighborhood. It meant that someone was receiving something special or important. Nowadays, the UPS truck is in neighborhoods two or three times per day as well as the FedEx trucks and others. Toddlers now utter "ups" as their first word spoken instead of "dada." The 20/50 crosses are whipsaw-y over the last couple years.Curse the central bankers. Those sicko's have financial markets twisted into knots. The wheels of the world's financial system are grinding, screeching and smoking. The signal crosses typically happen at longer intervals but nowadays the Federal Reserve will goose markets at the first sign of trouble which creates the long-term choppy pattern. The central bankers are the market. Do you understand this or are you stupid? The bears will need the 20-week MA to cross down through the 50-week MA to project doom and gloom ahead for the US economy and markets. By definition, the 20 can only curl over lower if price is lower and UPS is at 117.26 below the 20-week MA at 118.41.Bears need to sink UPS lower to move that 20 down to where it can stab the 50. Bulls need to move UPS back above 118.41 and they will not have any worries at all. United Parcel and FedEx are getting beaten up by Amazon that wants to start using more of its own airplanes, trucks and so forth to delivery its packages; the Amazonification of the shipping industry if you will. Thus, to paraphrase Keynes, 'when the facts change, I change my mind, what do you do?', Keystone may need to use AMZN as a new tool here on out instead of, or to supplement, the UPS tool. Amazon is an important indicator of economic health due to the the products it sells and now as it diversifies into many industries, such as shipping, perhaps the 20/50 cross will be an important guideline and it is worthwhile to keep an eye on King Bezos and company. Look at that; the Scamazon weekly chart. Very interesting; its intermediate and long-term 20-week MA is below its 50-week MA. Keep an eye on that going forward. Stock market bulls must move the AMZN 20-week MA back above the 50 as soon as possible. Price is up at 1887 pulling the moving averages higher. If AMZN goes sub 1800, there will be H*ll to pay going forward.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.
