The fun continues. The bulls are fully committed to the stock market going up and up with the non-stop central bank-fueled party. The bulls do not think the market will ever let them down. The SPX daily and hourly charts do not get any uglier. Universal neggie d, rising wedges, overbot conditions, price violating the upper bands and price extended above the moving averages, requiring a mean reversion, are displayed on both charts. Price is ready for a smackdown in the hourly and daily time frames.
The upper band violations will send price lower, in the case of the 2-hour, the middle band at 3332 and lower band at 3292 are in play and in the case of the daily, the middle band at 3266 and lower band at 3169 are on the table.
On the daily, price will seek the 20-day MA at 3266, which is always the same as the middle band, for starters. The 50-day MA is at 3177 and moving up at the same slope as the lower standard deviation band so that confluence may act as a magnet to pull price down to test this support at 3169-3200. The daily chart shows a hanging man candlestick for yesterday hinting at a trend change.
The rampant complacency has been highlighted for the last month. It is very rare for the put/call ratios to print such record multi-year lows for this long without resolution lower for the stock market. You can see the stars are all aligned for the bears. The daily and hourly charts are cooked and the rampant complacency, fearlessness and euphoric bullishness hints that the move lower will be significant.
It will not be surprising to see the S&P 500 dump from 200 to 500 points this month starting now. The SPX weekly chart is playing coy, definitely setting up with negative divergence although it is trying to eek out another week or two or buoyancy. The price action over the next few days will resolve this direction (the chart will be able to tell which path ahead for the weekly chart).
The SPX should begin tumbling lower right now and a significant pullback will begin. The other scenario would be a quick drop now, say one or two hundo points on the SPX, but then a quick pop straight back up that same amount for a matching high say a week or two out, and then the collapse begins from there. This can be pinpointed this week. The only thing that can extend the top for another day or two would be happy talk from the Fed, other central bankers, the Whitehouse or from the vaccine makers.
The SPX all-time record high is 3393.52 and all-time closing high is 3386.15 both on 2/19/20. The S&P 500 is only a whisker away from new record highs. Interestingly, if they print, the SPX weekly chart will likely be in negative divergence immediately. The only question, if a new record high prints, will be if the market is sold off hard by the robots or if the algorithms embrace the breakout and begin executing large block buy programs. Monday's high is 3363 so the SPX was only 23 points from a new closing high and 31 points from a new all-time high. The close proximity to this lofty perch may create buying interest in the futures.
The bulls remain in party mode. S&P futures are up +15 about seven hours before the opening bell on Wall Street for the Tuesday, 8/11/20, trading session. Wheeee! Whooppie! President Trump floats the idea of a capital tax gains cut so the wealthy class dance with glee and buy more stocks. The US coronavirus (COVID-19) news is viewed more positively creating buoyancy in futures. Take another swig of Fed wine! Pass that bottle over here. The bulls are laughing and having fun. This month, bulls will find that they have an empty bottle, a broken heart and the rally still on their mind.
European indexes and the VIX begin trading in about a half hour. This is great fun to watch if you are a student of the markets. Few realize how important this moment is in stock market history. The party is in full swing. Partier Powell just spiked the punch bowl with more Fed wine. Inebriated traders buy any stock with a heartbeat while singing songs of praise for the world's central bankers, out modern-day Money God's. 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 3:12 AM EST: European indexes are up +1% or more to begin the trading day. The ECB champagne is flowing like water so drunken investors buy stocks with reckless abandon. S&P +8. VIX 21.73. Fed Chairman Powell is up early this morning sipping coffee in the kitchen wearing nothing but a bath robe and jackboots. Powell has a jackboot on the throat of Uncle Vix laying on the dirty linoleum floor under the kitchen table. Pope Powell is suppressing volatility to begin the day to keep the stock market party going to protect America's wealthy class. Oil is marginally higher. Commodities are slipping away over the last half hour. Gold is down -1.2% to 2003. Silver loses -3.3% to 28.31. Copper slips -0.4% after yesterday's big rally that kept the stock market buoyant. US dollar index, the dixie, DXY or USD, is at 93.65. Euro 1.1735. The euro is down a smidgeon so the dollar is up a smidge. Dollar/yen 106.20. Treasury yields are; 2-year 0.13%, 5-year 0.24%, 10-year 0.58%, 30-year 1.25%. The 2-10 spread is 44.6 bips.
Note Added 3:24 AM EST: S&P +15. Copper is being pumped to float futures higher the red metal moving back to the flat line. VIX 21.666. DAX (Germany) and CAC (France) are up over +1.7%. ECB President Lagarde is at the stock exchange handing out bottles of easy money champagne. What glorious times we live in!.
Note Added 3:41 AM EST: S&P +15. VIX 21.62.
Note Added 4:16 AM EST: S&P +16. VIX 21.62.
Note Added 4:31 AM EST: S&P +18. VIX 21.666. Oil +1%. Gold loses -2.1% to 1985 under 2K. Silver loses -4.4% to 27.96. Copper -0.2%. 10-year yield 0.59%.
Note Added 4:33 AM EST: S&P +19. VIX 21.47. Dow +229. Nazzy +61. Russell +12. Euro moves higher to 1.1768 so US dollar moves lower to 93.44. DAX +2.1%. CAC +2.2%. FTSE (UK) +1.9%.
Note Added 4:43 AM EST: S&P +21. VIX 21.37. Gold 1987. Silver 28.11. Copper -0.2%. 10-year yield 0.59%.
Note Added 4:51 AM EST: S&P +24. VIX 21.20. Powell just threw Uncle Vix down the cellar steps. The Fed must protect the wealthy class at all costs. Euro creeps higher to 1.1771 sending dollar lower and commodities and stocks higher.
Note Added 5:07 AM EST: S&P +22. VIX 21.18. Copper -0.2%. Europe is on fire to the upside. DAX and CAC are up over +2.4%. The US dollar drops below the 93.39 palindrome. 10-year yield 0.59%..
Note Added 5:33AM EST: S&P +26. Whhheeeee! Whooopie! Every day is a par-tay. How Blessed we are to live in such times! VIX 21.13. The VIX keeps teasing towards the 21.12 palindrome but has not yet touched it. Gold 1998. Copper -0.2%. Euro 1.1781. The weaker dollar and lower volatility goose the futures higher. CAC +2.666%. DAX +2.5%. Minutes later the VIX taps on the 21.12 palindrome. The bulls cheer. The US dollar drops to 93.36. 10-year yield 0.60%..
Note Added 6:11 AM EST: S&P +24. The VIX is sticky at the 21.12 palindrome. Euro prints 1.1798 only a hair from 1.18. Uncle Sam slumps over in his chair. USD 93.27. Copper -0.3%.
Note Added Wednesday Morning, 8/12/20, at 1:58 AM EST: Whoopsies, daisies. The SPX enjoys a happy session until 2 PM EST when the neggie d spandown kicks into gear. The S&P 500 ends the Tuesday session down 27 points, -0.8%, to 3333. The SPX was good for 55 points to the downside top to bottom intraday. The SPX HOD was 3381 so price was only 5 points from a new all-time record closing high. The 3381, 3386 and 3394 numbers are very important overhead resistance. Who knows? Maybe we never see those numbers again. The VIX wrestles free from Powell's jackboot and moves a touch above 24. Gold went sub 2K and now sub 1900. Euro popped to 1.18 then retreated. Copper now trading down -2%. S&P futures are ramping higher up +12 and climbing. The neggie d smackdown just started for the daily and hourly charts so even if stocks rally today they should keep rolling over lower in these short term time frames. Democrat presidential challenger Joe Biden picks Kamala Harris as his vice president running mate. That was the safe pick. So the stage is set for the 11/3/20 election. Two silver-haired white republican guys face off against two democrats; a silver-haired white guy and a female Jamaican Indian. Some news outlets call her African American, which does not make sense, so who knows what is the politically correct way to describe her heritage? It is likely most correct to say she is Asian American. What a stupid society it is to get caught up in endless meaningless labels. She will likely help with the Indian vote. The US and India are forging stronger ties as communist China releases viruses on the world. America needs to stay strong in Asia and South Asia with India, Japan, Taiwan, etc.., to keep China, Russia, North Korea and Pakistan in check. It would be nice if dirtbag Dictator Duterte moved on and someone else more US-friendly takes control of the Philippines.
Note Added Wednesday Morning, 8/12/20, at 2:40 AM EST: S&P +14. Dow +165. Nazzy +65. Gold loses -0.666% to 1899. Silver dumps -4.3%. Copper slips -1.5%. Treasury yields are; 2-year 0.15%, 5-year 0.28%, 10-year 0.666%, 30-year 1.35%. Stocks sold off yesterday but instead of a flight to safety into US Treasuries (which would be note and bond prices higher yields lower), the yields climb higher. There is a slight whiff of stagflation in the air where unemployment would be high over the coming year while inflation inches higher.
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