The S&P 500 prints a new all-time high at 3399.96 and new all-time closing high at 3397.16 both on Friday, 8/21/20. The bullish euphoria is off the charts. Grandma Whitaker, that typically gives Keystone a box of homemade chocolate chip cookies every couple weeks, pushed him to the ground as she hurried by making a beeline to the broker's office in town. She said she had no time for cookies and instead is taking her entire life savings to the financial manager to buy AMZN, AAPL and TSLA stock.
The above chart is negative in every aspect. Overbot conditions, the rising wedge pattern, neggie d across all indicators, an upper band violation and price is extended above the moving averages requiring a mean reversion. It is all bearish. The chart is cooked. Stick a fork in it. That said, S&P futures are up +30 with the Monday morning opening bell on Wall Street only 45 minutes away. The only thing that can cause a chart to readjust is happy talk news.
President Trump proclaims a plasma breakthrough last evening for the coronavirus. The bulls jump up and applaud. At the same time, the president tosses out AstraZeneca hats to the fans and journalists providing adoration. AZN pops +4% in the pre-market. It is nice to have rich friends, that control the news, that tell you ahead of time what the news will be. Such is the crony capitalism system.
The chart will have to price in the pop out of the gate. Do not be surprised if it fades. The bulls likely have the idea that they can keep stocks elevated until Thursday when the virtual Jackson Hole Symposium begins. Federal Reserve Chairman Powell and others will speak which will move markets. The reaction would be quick if the event is going to be on the internet. Poor eggheads. They do not get to explore the natural grandeur of Wyoming. Their loss.
The middle band is in play at 3330 and lower band at 3219. However, the futures say up big at the open so the SPX should pop from 3397 to 3430-ish. The "SPX 3.4K" hats will be distributed after the bell. The upper band is at 3442, this may relax downward, so the bulls may be able to keep the SPX floating along at 3410-3440 for a couple days into the Jackson Hole meeting, then again, maybe not. The pullback and collapse is long overdue.
Two big distribution days (brown circles) occur over the last couple weeks where the smart money is handing off shares to the bag holdin' sucka's. That may be the pattern, pump on Monday and distribute on Tuesday when Joe Sixpack and Ma and Pa Kettle come running back into the stock market with their birthday money.
The same story is played over and over each day over the last month or so. The CPC and CPCE put/call ratios are at multi-year record lows signaling rampant complacency and a significant stock market top at hand. Valuations are at record levels; tech stocks are higher valuations than the dotcom bubble. AAPL stock is bigger than the FTSE 100 index which is comical. Apple is larger than many countries on earth which is hilarious, and yet extremely disturbing. The FAANG stocks, as well as MSFT, TSLA, and a few others, drive the stock market to the current nosebleed levels.
It is historic stock market action we are witnessing in real-time. The wait for the Godot Top continues; it should occur any minute. 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 9:50 AM EST: Whheee! Whooopie! The SPX prints a new all-time record high at 3426.00. Comically, that top tick occurs right on the exact dollar amount. So now you watch to see if this high can be taken out. XLF +0.6%. Keybot the Quant remains long and is tracking financials as the key driver of market direction currently. The quant says bears need XLF below 24.08 to wreak havoc on the stock market. XLF is at 24.44. Thus, if stocks roll over today, it may be in concert with the banks dropping. ALL is puking -1.3%.
Note Added 10:19 AM EST: The bulls are pumping the banks. XLF +1.3%. Whheee! Whooopie!
Note Added 10:20 AM EST: Woo-hoo!. The SPX prints a new all-time record high at 3426.99 now exactly topping at the 99-cent print. VIX 22.56. The VIX is up marginally but nonetheless both stocks and volatility are higher so one of them is wrong.
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