Wheeee! Whoopie! The euphoric bull party refuses to end. Fed Chairman Powell staggers over to the punch bowl and adds more easy money juice. The crowd goes wild guzzling down Fed punch and buying stocks enthusiastically. The SPX prints a new all-time high at 3509.23 and new all-time closing high at 3508.01 both on Friday, 8/21/20. This is wild stuff right now. Truly historic and few seem to realize it.
The US dollar drop a couple weeks ago to present is what has fueled much of the upside in stocks. On Friday, the euro jumps above 1.19 as the dollar dropped like a rock pumping US stocks higher.
The Federal Reserve announcement about maintaining easy money for as far as the eye can see is a green light for equities. The wealthy class dance with glee as Powell performs their bidding. One-half of Americans do not own a single share of stock.
Price tags that upper standard deviation band without coming back to the middle band after the last high touch early in the month. The middle band at 3386 and lower band at 3274 are on the table. Powell may want a do-over since the only indicator that received joy was the RSI. Even the RSI, however, is negatively diverged over the 2-1/2 year period. All other indicators are neggie d and the RSI and stochatics are overbot. The money flow is coming off overbot levels. After all that Fed pumping last week, the RSI would like to see a jog move in the SPX (down-up) which would likely turn it neggie d. A top would be in on Tuesday or Wednesday in this scenario, or, as has been the case for a month, at anytime.
The red rising wedge remains extremely ominous. The Aroon lines are a sight; you do not see that often. The green line pegged at max one hundo while the red line is at the lowest possible zero level. The stock market cannot get anymore euphorically bullish. The meters are pegged. The bulls are 100% sure that stocks will go up and the bears are 100% sure that stocks will go up. Price is extended above the moving averages requiring a mean reversion lower.
The ADX pushes into a strong trend above 30 (pink box). The Fed goosing creates the strong uptrend after the easy money forever announcement last week. The last strong trend was the downtrend during March. The chart remains topped-out despite the Powell Rally joy.
When a month is all in one direction, like August all up, the last few days usually finish down. But tomorrow (Monday) is the last day, 8/31/20. Powell has a lot to do with the pump higher. The expectation would surely be for a down day on Monday. Humorously, the S&P futures have ramped steadily higher up +19 points from 6 PM EST to now, at 8:40 PM EST. Wheee! Whhooopie! Keystone's 80/20 Rule says 8's lead to 2's so 3480 leads to 3520. The 3508 leads to 3512. The 3518 would lead to 3522. The bulls are likely gunning for the SPX 3520's, or at least giving that impression currently. It would not be surprising to see the stock market fall apart at anytime and collapse big. A flash crash or Black Monday, Tuesday, etc.. remain on the table and become more likely the higher this parabolic puppy moves.
The full moon peaks on Wednesday at 1:22 AM EST before the US stock market opens. Stocks are usually bullish through the full moon. The Labor Day holiday is Monday, 9/7. Stocks are typically bullish the two days in front of a three-day weekend which would be Thursday and Friday. Thus, the bears have the background current of the markets in their favor early in the week but from Wednesday to Friday the bulls have more wind at their backs. The US Monthly Jobs Report is released on Friday morning. Markets could fall into a sideways chop until those numbers are revealed.
As the previous post explains, watch the utilities closely. UTIL must be above 807 by Friday at 4 PM EST, otherwise there will be Hell to pay. The ongoing multi-year record lows in the CPC and CPCE put/calls continue signaling off-the-charts bullishness and a serious correction on tap.
The Keybot the Quant algorithm remains bullish but is champing at the bit to go short. If the S&P 500 drops below 3484 moving lower, Keybot the Quant will likely flip short. So this week may be when the bell tolls. S&P futures are up +20. Wheeee! Whhoooopie! With the help of the Fed, the bulls are Stayin' Alive, ahh, ahh, ahh, ahh, stayin' aliiiiiiiiiive. 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 9:02 PM EST: S&P +19. Dow +169. Nazzy +89. Commodities are higher including oil, gold at 1971, silver, copper, aluminum, platinum, etc.. US Treasury yields are; 2-year 0.13%, 5-year 0.28%, 10-year 0.73%, 30-year 1.51%. The 2-10 spread is 60 bips. The 5-30 spread is out to 123 bips. Watch the banks. The XLF ETF includes insurance companies and other financial tickers in addition to the large money-center banks. The KRE ETF is the regional banks that would benefit more from a steeper yield curve since lending is how they make their money. The large investment banks have floors of professional traders making lots of money for those institutions via trading. Thus, KRE would be expected to receive more joy but that was not the case last week. See if this disconnect continues, or not.
Note Added 9:08 PM EST: China Mfg PMI misses the 51.2 estimate at 51.0 but the Non-Mfg PMI beats the 54.2 estimate with 55.2. You can never trust the numbers from the filthy communists. S&P +16. Euro 1.1901. USD, or DXY, 92.33. Dollar/yen 105.53.
Note Added Monday Morning, 8/31/20, at 5:55 AM EST: S&P +11. Dow +80. Nazzy +47. Russell +8. VIX 24.02. Futures and volatility are higher so one of them is wrong. Euro is pumped to 1.1915. US dollar 92.34. The dollar is not any weaker since last evening but the euro is higher. Dollar/yen 105.91. Oil is up over +1%. Gold flat. Ohter metals are higher. Soft commodities mixed. Treasury yields are; 2-year 0.13%, 5-year 0.27%, 10-year 0.72%, 30-year 1.49%. The 2-10 spread is 58.5 bips. The 5-30 spread is at 122 bips.
Note Added Monday Morning, 8/31/20, at 6:18 AM EST: S&P +7. VIX 24.17.
Note Added Monday Morning, 8/31/20, at 8:16 AM EST: S&P +4. VIX 24.44. Euro 1.1937. USD 92.20. The euro is jammed higher and dollar lower but futures are soggy. Volatility moves up so futures move down.
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