The SPX is at an all-time record high at 3329.88 and all-time closing high at 3329.62 from Friday, 1/17/20. Sing Along to the joyous upside parade. A parabolic melt-up in price continues created by the Federal Reserve and other central banker easy money, the US-China trade deal hype, the Kudlow promise for middle-class tax-cuts, the positive economic data, the pre-holiday bullishness and the big rally in utilities. US Markets are closed on Monday, 1/20/20, for Dr Martin Luther King Jr Day, MLK Day, the champion of human and social rights.
Interestingly, Martin Luther was, and will always be, on the mountaintop. Perhaps the mountaintop is a symbol of our destiny; is the stock market at its mountaintop?
The current top is rhyming with the January 2018 top. The sentiment is very similar with everyone believing in more fun ahead and even if stocks pull back there is universal agreement that it will be a great buying opportunity. Everybody is on one side of the boat drinking Fed wine. If you look real close you can see Chairman Powell rearranging the deck chairs to accommodate more bulls.
The previous fractals may indicate the path forward (brown rectangles). The blow-off top in late January 2018, which occurred right as Davos wrapped up, is exactly two years ago. The Davos, Switzerland, conference for the wealthy is this week where the billionaires go to impress the millionaires. Noses are required to be displayed high in the air and pinky fingers must extend each time a crystal glass is raised to toast themselves, the elite privileged class.
In late 2017, price bounced off the 20-week and ran higher for 23 weeks into the top. The last 4 weeks were a parabolic thrust higher. Price hugged the upper standard deviation band the whole way. For the current top, price bounced off the 20-week and runs higher for 15 weeks currently but as seen by the chart, the SPX has gone parabolic and is hugging, now overtop, the upper band. Perhaps the bulls will try to create two more up candlesticks like early 2018, however, back then the neggie d was not in place like it is now.
The red lines show universal negative divergence with all indicators over the last couple years. The RSI, stochastics and money flow are all overbot desiring a pullback on this weekly basis. The RSI and MACD have some near-term momo due to the never-ending Fed pump, trade deal hype and now tax-cut hype, so that may be able to create a jog move and a couple more weeks of prices at these elevated levels, but the long-term neggie d can spank it down at anytime.The SPX appears very ripe for the fall probably anytime over the next week or two. Considering that the top has been a long time coming, the thought is that it all can fall apart at anytime, any hour, any minute, any day ahead.
The week ahead is only four trading days. Friday is the peak in the new moon at 4:42 PM EST after the week of trading ends. Stocks are soggy moving through the new moon so late this coming week, next weekend, and into early the following week (1/27/20) may be very susceptible to market weakness. Plus, if stocks continue higher all month long, they will typically sell off the last couple days or so of the month. The new moon is the darkest time overnight so if there are any covert raids planned against Iran or others, they will likely take place around the new moon this Friday. In complete pitch darkness, the side with the state of the art night vision technology wins. Earthquake activity may increase next weekend into next week due to the gravitational inflection point of the Earth in play; keep an eye on the Taal Volcano in the Philippines.
The end came swiftly in January 2018 so the same outcome may be in store for the current market top. In only two weeks time, the SPX fell from 2875 to 2533 a massive 342 point crash; -12%. The stock market fell into a correction (more than -10% down) and the fear was rampant that the end was near but, stocks recovered, as would be expected once everyone becomes negative. The SPX came down to tag the 50-week MA, almost, in early 2018 to mark the bottom. Price did not bottom until the 200-week MA after the Q4 2018 waterfall crash.
From the historic S&P 500 stock market all-time high at 3330, a -12% drop would be a collapse to 2934. If price came back to the 20-week at 3100, that would be a -7% drop. If price retreats to the 50-week MA at 2967, that would be a -11% crash into correction territory. The 2934 and 2967 targets gel together. If the SPX fell to the 200-week MA at 2596, that would be a -22% crash into a bear market which is sub -20%. Well, none of those scenarios are any good if you are long the market. Choose your poison.
The SPX violates the upper band so the middle band and 20-week MA at 3100, and the lower band at 2875, are on the table. A confluence of magnetic support may be forming at 2875-2967. The ADX shows that the last strong trend was the uptrend during late 2017 into early 2018. Despite this present-day multi-week melt-up into the stock market record books, which is a shameful display of central banker lust and Wall Street incest so obscene that Caligula would blush, the ADX is down at 18 unimpressed. This behavior hints that the bigtime rally is simply built on central banker hot air and easy money. The Aroon green line is at 100 with nowhere to go but down and the red line is oversold with nowhere to go but up both are set to move in the bearish direction.
These are strange times especially vulnerable to a significant market event such as the start of a crash or a flash crash event that may occur out of left field. Do not take these markets for granted; you will have your head handed to you on a platter if you do. The stock market top is at hand. All it needs to kick into gear is a downside news catalyst or simply, a day or two without non-stop happy Fed and trade talk news. Perhaps all you have to do is blow on it and the stock market will roll over. The rampant complacency and fearlessness continues in the stock market as verified by the CPC and CPCE put/call ratios, the low VIX and the elevated SPXA150R and SPXA200R indexes. Shorts are mandatory.
Aunt Tillie, such a kind soul, lost one-half of her life savings during the Great Recession in 2008-2009 and continues to wonder why the banksters are richer than ever but common folks never saw their money again. She swore off the stock market calling it a corrupt casino and said she would never place a dime back in there if her life depended on it. However, after the last 11 years and the stock indexes going, up, and up, and up, and.... up, she decides to jump back into the game. Aunt Tillie took her life savings down to the broker next to the laundromat in the town's strip mall and bot AAPL stock on Friday. She is bragging to the other blue-haired gals at the Ladies Guild meeting today that she never has to worry about her finances ever again. She is glad that nasty long period after the Great Recession is over and now she can safely put her life savings back in the stock market without any fear or worry whatsoever. The nice young man in the suit and tie at the financial office said they have plenty of shares to distribute, er, provide, to her so she can meet her goals. Poor Aunt Tillie. She may be eating cat food by Independence Day.
Proceed with caution. We have lots of fun days coming. Strap yourself in. 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.
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