The stock market bulls are singing a happy song today. Dip-buyers are waving buy tickets jumping into the long side on big block trades. Investors toast good cheer to the central bankers while swigging down PBOC rice wine. China's central bank injects billions into its financial system this week. Of course the steady supply of Fed easy money whiskey keeps everyone inebriated and buying stocks without care or worry as well.
The SPX is up 56 huge points, +1.7%, to 3506 today. However, the bullish trading volume does not appear as strong as the selling volume during that negative 60-plus point drop the other day. The bears are sad and dejected like Charlie Brown when Lucy always pulls the football away before he can kick it and become the hero. However, the furry folks have reason for hope. The previous charts show the low put/call ratios and with this obscene up day today, those numbers should drop further into complacency and fearlessness. The euphoria is off the charts which only sets the stock market up for the next top.
Keybot the Quant is long but the algo is tracking VIX 13.93 as a key bull-bear lien in the sand. Bears are fine as long as they keep the VIX above 13.93 since stocks will roll back over to the downside. Bulls will be in clover with stocks printing new record highs if the VIX drops below 13.93. The brown circle shows a gap left behind on the way down. Bears should be happy that price went back up to fill this gap today. The bears are buttoning things up as they head lower and not leaving gaps behind will pave the way for stock market misery ahead.
For today, however, the global stock markets rally. China's SSEC Index finally rallied a hair so everyone believes the bottom is in. The bleeding stopped today because of the PBOC injecting money into the system. The central bankers are the market. Do yinz understand this or are you stupid? The red lines show the negative divergence top that created the spankdown. Remember when Keystone explained this the other day as it formed? The rising red wedge is an ominous pattern and that played out to some extent, although the collapses from rising wedges are typically far more dramatic.
The SPX drops off the top and note that on the big sell day two days ago, there is strong downside volume, and the chart indicators are all weak and bleak. There was no reason for price to bounce; the stochastics are not even oversold. The reason for the bounce is more central banker largess and perhaps some relaxation on Wall Street after seeing that the Democrat Party could not conduct a clean Iowa election last evening. Most of the wealthy and privileged elite class want King Donny to win reelection so he can cut more taxes for them and relax banking regulations so they can gamble easier.
Price lightly tagged the lower standard deviation band so the middle band and 20-day MA at 3283 was in play and it occurs today. The 3283 is now important support. The SPX did not touch the 50-day MA at 3218, however, it was a hair away. Price should really show the 50 respect since it was in the neighborhood. The chart was on the negative side but the news flow creates the bounce and the chart is now pricing in the latest developments.
The purple lines show a potential H&S in play. Price came up today to print the right shoulder. If the SPX fails at the neckline at 3220, the 3100 level would be targeted. There is a big gap down at 3200-3220 that needs filled. Note how price came down during the big selloff and that is exactly where the bulls bounced price. They had to; it was do it or die. Either price would have kept moving lower to fill that gap, or, the SPX would have fell through the gap immediately to 3200 and then lower creating an island reversal pattern. The S&P 500 remains on an island above 3220.
Conoravirus, schmirus. No one cares. As long as it is not in their own backyard, humans turn a blind eye. Investors do not appear worried about the pandemic. Economists are already touting a huge recovery in markets and stocks once the virus blows over.
The Iowa caucus debacle is hilarious. Last night, the democrats were supposed to shine but instead fell flat on their face. There is a glitch in the app that is used to tally votes which delays the results of the Iowa primary. Wall Street wanted to know the breakdown of Sanders, Biden, Warren, Buttigieg and Klobuchar to assess future economic and market impacts. It is the next day and no one knows the results. The DNC (Democratic National Committee) says results will be out by 4 PM central time which is 5 PM EST (7 AM Wednesday morning Tokyo; 6 AM Wednesday Shanghai; 10 PM London this evening). Comically, the democrats follow-up with an announcement that 'most' of the results will be known at 5 PM EST. The democrats blew it. No one will trust the numbers.
Buttigieg was the only candidate flat-out claiming victory in Iowa last evening. The others were talking a good story but were smart enough to not declare all-out victory. Buttigieg better hope he did win because that will be a negative mark on him if he did not (bragging about something that did not happen). If the democrats were smart, or perhaps sly Leader Pelosi is that smart, they would announce another delay at 5 PM EST for a couple hours and then release the results right before President Trump's State of the Union speech this evening. This is democrat and republican baby games. Both parties are two sides of the same corrupt coin. Releasing the results at 5 PM EST may be enough to cut into the president's mojo. This is the stuff the Washington dirtbags think of instead of how to help struggling American families.
The Iowa results may detract from the president's speech as news outlets assess the democrat presidential candidate ranking. The republicans say the opposite that the president's speech will drown out the Iowa news. The impeachment trial will not end until tomorrow but folks will be interested in how much crowing President Trump will do tonight. Donny wanted to be acquitted by now so he could throw it back into the democrats face during the state of the onion speech, however, Pelosi cut him off at the pass. It will be comical with Pelosi staring into the back of Donny's hair weave for an hour without the president able to claim victory from impeachment (although he will try).
Trump will no doubt comment on the Iowa disaster. Donny tweeted that the incompetent democrats cannot run a simple election let alone the country. The orange-headed showman will probably say that Bernie Sanders was cheated again (like 4 years ago) fanning the flames of discontent in the democrat party. These two corrupt parties play baby games while ignoring the American people. No wonder the ranks of the independents grow month after month as voters shun the baby demopublican and republocrat bickering.
China wants to already implement a clause in the big Phase One trade deal that would relax their quotas on purchasing due to the coronavirus outbreak. The American farmers have been screwed for three years and finally when they have hope that they might be able to get back to where they were back then, whammo, now commodities are hit by the coronavirus pandemic fears.
The beat goes on in markets. Stocks rally on central banker largess. January finished the month a hair negative and as January goes, so goes the year. No one talks about this ole adage now because it did not turn out bullish as it usually does. There is lots of drama on tap; the Iowa democrat presidential primary election results by 5 PM EST, President Trump's State of the Union speech this evening at 9 PM EST, the impeachment vote to acquit tomorrow and the ongoing conoravirus pandemic. 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 3:00 PM EST: The SPX is up 55 points, +1.7%, to 3304. VIX 16.04.
Note Added 3:50 PM EST: The SPX is up 52 points, +1.6%, to 3301. VIX 15.97. TSLA catapults 170 points, +22%, to 950. Tesla is up +75% in only 6 days and a double this year. The Tesla HOD and all-time record occurs at the 969 palindrome.
Note Added Wednesday Morning, 2/5/20, at 4:48 AM EST: The SPX finishes the Tuesday session up a huge 49 points, +1.5%, to 3298. The VIX ended at 16.05 and currently trades hump day morning at 15.666 with S&P futures up +26. The bulls want to continue the fun created by the PBOC. The Iowa results were released with Buttigieg winning the democrat caucuses as he proclaimed. It is a five-person race for the Whitehouse for the democrats with the following results; Buttigieg 27%, Sanders 25%, Warren 18%, Biden 15%, Klobuchar 13%. Biden is trounced; his day has come and gone. Biden appears too slow and forgetful and the Ukraine scandal sinks his ship; he will likely become a footnote in history. Klobuchar almost took Biden out. Warren and Klobuchar had good showings because they were the second and third choices in a majority of caucuses. Perhaps the democrats are subconsciously realizing that the only way they can beat King Donny is with a skirt. Buttigieg and Sanders likely have no chance against President Trump who delivered a strong state of the onion speech last evening. More memorable than the speech is the drama that played out between Trump and democrat House Speaker Pelosi. Trump snubs democrat Leader Pelosi, not shaking her hand, while giving her the hairy eyeball look; that's a divider not a uniter. In response, Pelosi tears up the Trump speech. What childish baby games these two corrupt political parties play each day. The final impeachment vote is on tap today where Trump should be acquitted but he will always have the impeachment stain next to his name. Trump covered up the nefarious deeds in Ukraine by refusing to release any documentation or allow the people directly involved to testify. This is America, baby, this is how we roll. It will be interesting going forward because the truth always comes out over time. If you associate yourself and cheerlead with either of these two corrupt tribes, you need your head examined.
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