Whheeeee! Whooppie! La, la, la. The stock market continues higher with the SPX printing a new all-time high at 3275.58 and new all-time closing high at 3264.70 on Thursday, 1/9/20. The bulls are having a blast, guzzling-down Fed wine and buying stocks with reckless abandon. Traders are tripping over each other buying stocks afraid they are missing out. The Friday, 1/10/20, trading session is set to begin after the US Monthly Jobs Report is released.
So the party continues. Trixie Trader, known for her sometimes-revealing outfits that test the trading floor's dress code limits, performs a strip-tease as she buys the FAANG stocks for clients unconcerned about the entry prices. A human in a white dove costume appears on the balcony of the NYSE flapping its wings wildly, and, upon removing the head, reveals Fed Chairman Powell himself. The adoring crowd of floor traders applaud Pope Powell throwing confetti in his honor and singing for he's a jolly good fellow. Jolly Jerome tosses easy money from the balcony; the cash was printed this morning in the basement of the Eccles Building. Trixie grabs a bunch of the cash stuffing it into her bra, sashaying over to the Apple counter and buying huge blocks of AAPL stock with the easy money. The piggish greed and lustful upside orgy in stocks is enough to make Caligula blush.
The CPC put/call drops down to another uber low at 0.66 following the ongoing lows in the CPCE. The market complacency is at record levels. The short interest on SPY is down to 1.1% the lowest on record!! SPXA150R and SPXA200R, charts that show the percent of stocks above their 150 and 200-day MA's, respectively, are at record levels where stock market tops occur such as January 2018. This is fun. Many people blindly long the market are going to likely have their faces ripped off going forward. For now, the party is in full swing with everyone waiting for a blow-out jobs report.
The US Monthly Jobs Report is on tap at 8:30 AM EST, about one hour away, and a wild card this morning. S&P +8. VIX 12.51. The chart above is negative but charts can only price in all the news known up to the moment. The jobs number is an unknown currently.
The stock market appears to have much of the Fed's Q4 QE program priced-in to equities although the money pump continues through next week. Ditto the US-China trade war Phase One deal although it may be hyped more next week. King Donny says Phase Two discussions will begin immediately but in the next sentence says he may wait until after the election for the deal. Our Donny is always winging-it and making it up as he goes along, just like the Federal Reserve. Comically, these figureheads must exude that stature of competence and resolve while chaos and confusion reigns in the background. The US-Iran-Iraq drama has temporarily cooled so that creates calm and buoyancy in equities.
Yesterday, Fed Vice Chairman Clarida, Chairman Powell's number one man, is jawboning the economy saying all is fine and dandy while opining about low inflation. This is code for the Fed panning to remain accomodative with easy money forever. Former Chairman Bernanke, Helicopter Ben, that began this shameful Keynesian financial experiment in March 2009, says negative rates will be okay in the future. It tells you that central bankers think they can inflate global stock markets forever without consequence. If the economy falters, however, there is not enough room to cut rates and a prolonged recession nightmare occurs. Is this our future?
The stochastics are overbot wanting a pull back. The rising wedge says down is the direction ahead. The red lines show universal neggie d wanting price to receive a spankdown. SPX tagged the upper band so the middle band at 3247 and lower band at 3218 are firmly on the table. Price is extended above the moving average ribbon requiring a mean reversion lower. Wow, with all that bearish stuff, SPX will head down going forward. Well, if the jobs report does not pump it.
The MACD line is trying to squeeze out a sliver of energy but that would likely last only a candlestick or two, thus, if the jobs report was not on tap, this would be a near-term stock market top. We will know the job numbers shortly. If the report is happy, stocks may have subdued upside available, however, a sad report may act as a catalyst to kick in strong downside that has tanks of negative divergence fuel it wants to spend. Due to the erratic price action in markets, do not be surprised if a flash crash or a Black Monday scenario appears out of nowhere going forward.
The consensus for the jobs report is 158K versus the prior month at 266K (GM employees went back to work). The unemployment rate is expected to stay level at 3.5%. The all-important wage data, that Keystone has said is more important than the headline numbers for the last couple years, is expected to be +0.3% on-month and +3.1% on-year.
It is comical to hear folks say for over a year now how wages are going up like gangbusters and all is well. No, it is not, they talk of things they do not understand. The +3.1% number is paltry, nothing. When was the last time you received a raise? Three decades ago, everyone would receive a minimum of a +5% raise per year even if you were the worst employee in the office; many received higher percentages. The dirty little secret the Federal Reserve will not tell you is that you need from +4.0% to +4.5% wage growth to create sustainable inflation. The +3.1% does not cut the mustard so it will be interesting to see if this number jumps big, or if it descends into the 2's again over the next few months.
The Federal Reserve has succeeded in making America's wealthy class filthy rich beyond their wildest dreams. After 11 years of money-printing, the privileged class has humongous gains in their stock portfolios; effortless profits while the huddled masses struggle with high-debt and limited employment opportunities. If wages never hit the +4% level, the Fed's grand 11-year financial experiment, which has tried to create inflation, would be a proven failure. Inflation will never exist without wage inflation occurring.
A butterfly flapped its wings when Iran General Soleimani, a terrorist sympathizer, was taken out by a drone assassination ordered by President Trump. The thing that folks likely do not yet comprehend is how the world changed and from now on any country can order the drone assassination of any high-ranking military or political figure, or any public figure or individual for that matter. The sick, technological world develops like a mutant weed; an ever-expanding technocracy. That butterfly flap then leads to the 35 trampling deaths in the Iranian funeral march with another 1000 people injured. The winds from the butterfly flap then fire an anti-aircraft missile battery that takes down an airplane with 176 souls on board a couple days ago. The butterfly flaps its wings and the wave changes to the air continue to ripple round the world.
Many Canadians (dual Canada-Iran citizenship) die in the Boeing (BA sold off on the original news but rallies +1.3% on news that the crash was not mechanical) airplane crash along with Ukrainians, Iranians and some other nationalities. Condolences to our friends up north and all the families around the world. Iran continues to refute that a missile has taken down the plane. Iran says 'this is a big lie'. Of course they do. It opens a can of worms. The US is pressing the matter perhaps to increase the unrest within Iran, however, there may be many consequences. Ukraine and Canada will not be happy with Iran since their citizens' bodies are laying on the ground.
The Iranian people would be livid knowing that their own country shot down an airplane with their own people on it. It would be the same if Americans were told that Flight 93 was shot down by two US military jets on 9-11 and then crash-landed in that Pennsylvania field near Keystone's abode (the jets flew right over Keystone's head that fateful morning directly after the first Twin Tower came down with news reports and the written history continuing to say jets were never in the air that morning; do you believe the government or your own lying eyes?). Governments always hold back the truth from the huddled masses when they believe the news is too much for them to handle. Iraq wants the US troops to leave the country and is now asking for a plan.
The jobs circus is back in town. If you listen real good, you can hear the calliope music in the background. The Fed jugglers have arrived. Here comes the Bearded Lady that provides the envelope with the job numbers inside. The carnival is back in town and the job results are minutes away. The SPX chart above says down but the jobs report has a say in the matter. 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 8:01 AM EST: With one-half hour to the jobs report, S&P futures are up +7. Dow +50. Nasdaq +37. Russell +1. Gold 1555. Silver 17.93. Copper +0.1%. WTIC oil 59.63. Brent oil 65.48. US Treasury yields are; 2-year 1.58%, 5-year 1.65%, 10-year 1.85%, 30-year 2.32%. The 2-10 spread is 27 bips. European indexes trade flat. Euro 1.11. Dollar/yen 109.62. USD 97.49.
Note Added 8:23 AM EST: With the jobs report minutes away, S&P futures are up +5. Dow +31. Nasdaq +20. Russell -1. US Treasury yields are; 2-year 1.57%, 5-year 1.65%, 10-year 1.85%, 30-year 2.32%. The 2-10 spread is 28 bips.
Note Added 8:31 AM EST: The jobs number is a miss at 145K. The unemployment rate is at 3.5% as expected. On the positive side, the U-6 measure of unemployment is at a record low 6.7%. Average hourly earnings are flat at +0.1% on-month and up only +2.9% on-year. Look at that; a 2-handle. Comically, 95% of Wall Street say wages are going nowhere but up and up, well, they were all wrong. That is the smallest increase in wages since July 2018. The two prior months are revised -14K jobs lower. Retail jobs are up 41K, Leisure and Hospitality gains 40K and Healthcare 28K. There's your job opportunities. You can flip burgers at a greasy spoon, sell shoes and smell people's feet all day, turn motel beds ignoring the stains, or clean odorous bedpans at the local senior center. Choose your poison. Life is good, well, er, for the wealthy elite class it is, courtesy of the Fed, not so much for the 300 million huddled masses. One-half of Americans do not own one single share of stock. Manufacturing shreds 12K jobs so the manufacturing recession will probably kick into gear going forward. Transportation loses 10K jobs. Some retail jobs are replaced by warehouse jobs (the Amazon affect) so the retail jobs will likely retreat next month and the tranny jobs will likely move lower (warehousing is with transportation) as well. S&P +7. Dow +40. Nasdaq +36. Russell +1. VIX 12.45. 10-year yield 1.84%. Euro 1.1107. Dollar/yen 109.58. USD 97.39. Gold 1554. Silver 18.04.
Note Added 8:35 AM EST: US Treasury yields are; 2-year 1.57%, 5-year 1.64%, 10-year 1.83%, 30-year 2.31%. The 2-10 spread is 26 bips.
Note Added 8:57 AM EST: S&P +5. VIX 12.42. Powell and Clarida are holding each other up near the office water cooler dejected and depressed that wages are rolling over. They realize the grand 11-year Keynesian financial experiment is failing and there will be H*ll to pay when the huddled masses realize the Federal Reserve only served to make the privileged class filthy rich while screwing everyone else. The coming class war will be ugly. Traders realize that without inflation occurring, the Fed will remain accomodative and stocks will remain well bid, or will they? When does everyone realize the game is simply a Fed pump that gooses stocks and economic data, then the data peters out, so the Fed pumps again. Stocks go continually higher while the economy muddles along in fits and starts. Is the Fed's day of reckoning at hand where stocks do not go up even when everyone knows more money-printing will always occur?.
Note Added 9:45 AM EST: The stock market is off and stumbling in the Friday session. The SPX gains 1 point to 3275.45 and prints a new all-time record high at 3282.21. VIX 12.52. The 2-hour chart above will start a new candlestick in a few minutes at 10 AM EST. The neggie d remains as price is at the record highs so a spankdown should be on tap.
Note Added 10:48 AM EST: Treasury Secretary Mnuchin and Secretary of State Pompeo hold a press conference about adding more sanctions against Iran. S&P 500 is up 6 points, +0.2%, to 3280 and new all-time high at 3282.99. VIX 12.23. Mnuchin and Pompeo don top hats and tails performing a tap-dancing routine singing a song about buying stocks. The Dow prints above 29K for the first time in history with an all-time high at 29009.07. A chorus line of long-legged beauties begin dancing out from the curtains behind the snack bar at the NYSE. Their high kicks are hypnotizing each time the sequined legs reach a peak, traders are buying stock with their hand consoles, the techno-beat, the pretty ladies, the dancing, the buying of stocks, the trading day is another orgy of upside joy pulsing ever-higher to the syncopated rhythum of the beautiful high-stepping legs. Pompeo keeps side-dancing the issue about justifying the Soleimani killing by saying there was imminent danger when the facts are indicating this 'imminent' story, pumped by King Donny and the gang, was likely bogus. The drone assassination, which likely opens the door to future high-ranking heads of state drone killings around the globe, is being justified by saying that Soleimani was a terrorist responsible for hundreds of American deaths. Global citizens will have to decide for themselves what they believe is right or wrong or what helps the planet's society, or hurts it. With killer drones at your disposal, anyone can now be judge, jury and executioner. What a Brave New World.
Note Added 11:08 AM EST: It is quite a view from this perceived permanently-high plateau. The SPX is up 6 points, +0.2%, to 3280. This is a critical level since 8's typically lead to 2's, so 3278 leads to 3282, which occurs, and if a close occurs above 3280, that opens the door to 3320. The bears have to make a stand here. Interesting. The Keybot the Quant algo remains long but wanting to go short all week long. The quant is tracking UTIL 876.46 all week long as a key bull-bear line in the sand. UTIL has come up four times to test this level today. This tells you a lot about the path forward. If utilities rally today, the bulls will be joyous. If utes collapse, the bears are going to start ripping into bull flesh. The jobs number miss and retreating wages means inflation is nowhere in sight which means the Fed will remain accomodative which means asset prices will keep floating higher expanding their bubbles and balloons; this is why stocks are buoyant today. There is UTIL attempting a breakout above 876.46. UTIL then has to remain above 880.50 all of next week so by 4 PM EST today price will need to be at that level.
Note Added 11:15 AM EST: UTIL 877.05. Bulls are jamming utes higher. SPX 3281. VIX 12.16. The stock market will likely move in the direction of the utilities today. This is probably the key decision the market has to make today. The bulls are pushing UTIL up to 877.24 but it is like pushing a fat man up a ladder. UTIL 877.20.
Note Added 11:24 AM EST: UTIL 877.14. Utes are bumping sideways. SPX 3279. VIX 12.29. The SPX 2-hour chart above remains in neggie d. Blow on it and stocks should roll over to the downside. The MACD may try to eek out an hour or two more of sideways chop but it will not be surprising to see stocks simply roll over and die from here.
Note Added 11:29 AM EST: UTIL 876.88. SPX 3277. VIX 12.34. European indexes are closing so the US market may pivot over the next 15 minutes.
Note Added 11:33 AM EST: UTIL 876.77. SPX 3274. VIX 12.47.
Note Added 11:48 AM EST: Democrat House Speaker Pelosi says she will begin the steps to send the articles of impeachment against President Trump to the Senate next week. Humorously, she says, "begin the steps." It is constant double-speak from the dirtbag republocrat and demopublican politicians. Both parties are two sides of the same corrupt coin. SPX is down 1 point at LOD at 3274.02. Whoopsies, daisies. Check that. SPX 3273. Now 3272. Is it time to flush the turd?
Note Added 12:50 PM EST: SPX 3275. VIX 12.28. UTIL 875.66. The market is like a wax museum. You see all the players standing around, and recognize all the faces, but no one's moving or doing anything. Utilities ran out of gas; watch them like a hawk for the next 3 hours.
Note Added Saturday Morning, 1/11/20: The SPX finishes the Friday session down 9 points, -0.3%, to 3265. The all-time record high at 3282.99 printed at 10 AM EST and it was all downhill from there. The S&P 500 prints an outside reversal candlestick on the daily chart where price makes a higher high than compared to the day before but then finishes with a lower low. This portends trouble ahead but lots of times stocks will still rally for a few days or week or so before that negativity bites. Stocks soured today when the impeachment talk ramped-up again. The full moon peaked at 2:21 PM EST and equities are typically buoyant thru the full moon so this was keeping the bears in check. UTIL finishes the week at 874.10 but must be above 880.50 all of next week to keep the stock market rally alive. Watch the utilities closely on Monday morning. If they stall further and are unable to regain 880+ next week, the stock market is in serious trouble going forward. If utes deteriorate it tells you the pullback in stocks will linger and sustain for a long time. If utes recover, the bulls will maintain the upper hand for a while longer. Iran now admits to shooting down the BA passenger plane by mistake. They had no choice since there are multiple videos of the act. Everything is on camera in this sick world nowadays; the nefarious technocracy expands. Iran likely figured that the US would be firing back during their missile attacks of the US-Iraq military bases (but the US did not), and they could blame the US for murdering Iranian citizens with an errant missile. It did not work out that way so instead of the Iranian citizens rallying under the flag, they will be unhappy that their own military shot down the plane murdering their own people. Iran cannot fund a sustained war against the US-Iraq; it would collapse the country. Iran knows this that is why, instead, the smaller terrorist events around the world, orchestrated by Iran, will continue.
Note Added Monday Morning, 1/13/20, at 11:20 AM EST: UTIL comes up to exactly test 880.50 on the dot at 10:45 AM EST and now drifts lower to the 878 palindrome. The drama continues with the new week of trading underway. The SPX is at 3278.VIX 12.75.
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