Monday, May 18, 2020
SPX S&P 500 and CPC Put/Call Ratio Daily Charts; Significant Near-Term Top At Hand; Moderna (MRNA) Rally
The bull party is in full swing. The Fed wine, ECB champagne, BOJ sake and PBOC rice wine are flowing like water. Inebriated traders are buying stocks with reckless abandon not worried about a thing since the central banks will always save the day. The central bankers are the market.
When the CPC goes sub 0.80, you have to start looking for a near-term top that is coming fast due to the complacency. On Monday morning, 5/18/20, about 4 hours before the opening bell, S&P futures are up over +40 handles. Bulls are singing Happy Days Are Here Again. Alfred E. Neuman quips, "What? Me worry?"
It is great to see the big pop coming today since it can be shorted into. The bulls may run stocks higher for a couple or few days but the top is coming soon any day ahead. You can use the SPX 2-hour chart for timing or scale-in to a nice short position say by buying one-third of the total short allotment today, then short another third in a couple days and then short the last third a couple days after that, and then wait, you will likely be a happy camper in a couple weeks.
The sideways channel at 2760-2950 is in play for 6 weeks and price will resolve one way or the other at some point forward. Keybot the Quant is long. The bulls have copper and volatility in their camp and are boosting copper right now to create the additional upside. Watch these three parameters since they control stock market direction currently.
Memorial Day is next Monday, 5/25/20, and US markets will be closed. Stocks are typically bullish the two days in front of a three-day holiday weekend so buoyancy would be expected on Thursday and Friday. However, there is a fly in the ointment since the new moon peaks at 1:38 PM EST on Friday afternoon and stocks are typically weak moving through the new moon. The holiday weekend may not be so cheerful. Perhaps the bulls will play on Thursday and into Friday morning and then the bears will run the show into the weekend.
Housing Starts are released tomorrow and are uber important. Retail Sales earnings are on tap this week. HD and LOW should do well. WMT is strong. Expectations may be high so if the retailers do not deliver they may get whacked. HD is about to go neggie d on the daily chart say in a day or two so it is ready to drop in the near-term. The complacency and fearlessness is high so traders and investors need to be taught a lesson which will begin at any time in the days ahead. It will be interesting to see if there is a big push to sell into today's rally. 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 2:14 AM EST on Tuesday Morning, 5/19/20: The bulls are running. Fed Chairman Powell opines worry all weekend long but this is great for stocks. Powell says he has limitless tools available to help the economy; of course he says that, part of a central banker's job is to lie. The money-printing presses in the basement of the Eccles Building will be running full-tilt forever. Wheeee! Whooopie! Just like the last 11 years, traders and investors hope for bad data since that means the Fed will keep printing money (money supply grows continuously higher) and the stock market will continue higher. The central bankers are the market. Too bad for the one-half of Americans that do not own a single share of stock. The elite class, like Marie, says 'let them eat cake'. So stocks were up 40 or 50 SPX handles in yesterday's pre-market on the ongoing central banker largess and then the afterburners kick in with the news that Moderna is having success with a coronavirus vaccine. This is great news although it makes no difference to Keystone since he will not take the vaccine if it is ever developed. It would be too risky considering the tracers and other fun stuff that can be inserted into the shot. MRNA catapults +20% higher adding on to big gains this year. In less than 3 months, MRNA spikes from 18 to 87, a +383% rocket ride; a 4-bagger. Do you think the insider thieves had non-public information? Of course they did; it's a rigged market. The SPX launches 90 points, +3.2%, to 2954. This is the top of the 2760-2950 sideways channel for the last few weeks so the bulls are threatening a top-side breakout. Price may want to run higher to test the 200-day resistance at 2998. In addition, the most important number in the stock market for identifying the cyclical trend, the SPX 12-month MA cross, is up at 2990. So obviously the SPX price resistance line in the sand is 2990-2998. It is common to see the SPX pop 40 or 50 handles after the put/calls begin registering low numbers but yesterday was quite a launch. The complacency is off the charts after yesterday's party; it is now giddy euphoria. Agnes, a sharp floor trader although she has been warned by the board for her risque clothes, jumps up onto the counter where AAPL and AMZN stock is sold and begins performing a striptease. Timmy the trader uses a butter knife to pry open the liquor cabinet door behind the snack bar and keeps the party going with plenty of central banker booze and crack. Yes, the easy money wine is flowing like water on Wall Street. Same dealio with the charts above. The near-term top is definitely at hand now. The CPC put/call collapses to 0.72 and the CPCE collapses to 0.47 verifying the complete lack of fear in the markets. Everyone is wearing rose-colored glasses buying stocks with reckless abandon. Virus, schmirus, Pandemic, schmandemic. Economy, schimonomy. It is fantastic euphoric stock market happiness in place. There is nothing but shiny happy people everywhere. What glorious times we live in! Of course this is when they will have their heads handed to them on a platter. The stock market will top-out in the near-term any day ahead. Surprisingly, the SPX 2-hour chart is already showing negative divergence for its indicators sans money flow and MACD (a move with yesterday's momentum would be expected to have stronger follow-through). The stochastics are overbot so that will lead to a bit of sogginess, in the 2-hour time frame, but new highs will be expected in the SPX price due to the long and strong money flow and MACD. The 2-hour chart likely needs about 2 to 6 candlesticks to top-out, which, in conjunction with the complacency, will spank stocks south. 2 to 6 candlesticks represents 4 to 12 hours trading time so the top may occur this afternoon, tomorrow, or perhaps first-thing Thursday morning. If not, then it will be an ongoing watch for the top any hour any day forward. As soon as the SPX 2-hour chart indicators go universally neggie d, the top will be in; a drop of 50 to 200 SPX handles would be expected.