Send the children out of the room. This information is too worrisome for young eyes and ears. The stock market continues to play out its denouement, climax, crescendo, whatever word best describes the top of the mountain. As previously explained, the SPX weekly chart may be able to squeeze out a week or so more of upside, this can be determined over the coming days and week.
The SPX daily chart above says down now on the daily basis. If the downside has legs, which it should considering the month-plus of uber complacency which signals a substantive stock market top, the weekly chart may become irrelevant in its needing to come back up once more.
The chart is cooked, stick a fork in it, just like US bars and restaurants amid the coronavirus (COVID-19) pandemic. The RSI and stochatics are overbot agreeable to a pullback. The red rising wedge is ominous. This pattern ends with price being pushed off the cliff at the apex of the wedge, where it is now. The collapse from a rising wedge can be catastrophic.
The chart indicators are universally negatively diverged (red lines) so price should receive a spankdown now on the daily basis. Price is extended above the 20, 50 and 100-day MA's but the other moving averages are mixed. Nonetheless, price is agreeable to a pullback from a mean reversion perspective. The upper band is violated as the tight bands force price higher up along the upper band. The middle band at 3256, and rising, and lower band at 3157, are in play.
The 150 and 200-day MA's form that strong support/resistance gauntlet across the 3032-3057 range that price respects. A move lower to touch and test these MA's could easily happen. The 150-day MA slope indicates a cyclical bull versus cyclical bear market (this holds true for any stock you own). The 150-day MA was sloping higher into this year in a cyclical bull. On 3/10/20, the 150 was flat, and turned down ushering in a cyclical bear market. You can see that pink 150-day is flat but if you look close she is starting to move higher. This would place the stock market back into a cyclical bull, on the 150-day MA slope basis, and indicate that stocks will finish the year happy. By definition, the SPX price would need to go sub 3032 to curl the 150 lower and bring the cyclical bear back to town.
Considering the importance of the 150 and 200, and the ongoing uber complacency that needs rectified, a 300-point down move to test 3032 is easily believable for this month. Perhaps price targets the 3000-3030 area and then decides if it wants to go lower.
The ADX is not in a strong trend despite the big rally. This tells you the rally is on easy money. The Aroon green line is at one hundo with nowhere to go but down which is bearish and the red line is oversold with nowhere to go but up which is bearish. Everything on the chart is bearish. For the several-day rally, the buying volume candlesticks are modest. That tall green one a few days back on 7/31/20 was actually that big sell day where the market then rallied in the final hour to turn positive and receive a green candle. The big volumes were in late June so price really wants to retest these levels to see if the bears can flush the SPX lower on higher volume, or, if the S&P 500 rallies proving its strength. The price levels corresponding to those two large selling volume candlesticks are the 3000-3020 area. Perhaps a confluence of factors are lining up at 3K which may act as a magnet for price.
The political baby games are in full swing for the corrupt Republican and Democrat Tribes with 85 days remaining until the election. Each side points a finger at the other while each have three fingers pointing back at themselves. The political rhetoric and dirty tricks will become worse each day into the election. There is always an October surprise so Sleepy Joe will produce something damaging on Trump and King Donnie will produce something negative on Biden, probably something from the Ukraine involving Biden's son. Both will try to destroy the other with negative news and ads.
Trump signed some executive order garbage on the weekend that will likely create more chaos and confusion. Perhaps he should have been up on Capitol Hill stating his case and working towards a resolution rather than golfing each weekend; exactly what he pledged not to do. After he signed the executive orders on Saturday, it was off to the Hamptons, the playground of the rich and famous, for two different parties where wealthy donors shower Trumpster with adoration and money. Isn't the crony capitalism system a complete joke at this stage? The US futures are open for trading this Sunday evening with the S&P's down -7. They have been flat to down about -8.
The futures tell you that stock traders are not too impressed with Donnie's sleight of hand executive orders. Monday will be damage control for republicans and democrats and each side will be assessing the aftermath of the executive orders and the impact on further stimulus negotiations. The polls show Biden maintaining a steady lead against Trump although over the last couple weeks, a couple polls are showing a hair lower move for Sleepy Joe. That is likely due to the Benghazi stink. The more that Susan "Benghazi Blood" Rice is around Biden and mentioned as the potential vice president pick, the more that Biden's poll numbers fall. Biden's pick will occur at anytime, probably timed for when some negative news occurs against him; the veep news will drown that news out. This is how the corrupt game of politics is played. The vice president candidates will likely be somewhat safe picks across the board although a couple have some baggage.
The only pick that would be a disaster for Biden is Benghazi Rice. If Biden picks her, it's over, he will lose the election. Trump will be up all night partying if Hairplug's Joe picks disgraced Rice. Hillary Clinton and Rice have blood on their hands over the Benghazi terror attack that left four Americans dead; no one came to help them and then it was lied about. Independent voters do not like this garbage and every time Rice is shown next to Biden or her name is mentioned are more votes that will disappear for Biden and go to Trump. Donnie is kneeling next to the bed each evening in his bunny slippers asking the Lord to tell Biden to pick Rice.
Val Demings may be a good choice for the democrats. She is smart, has charisma, a beautiful smile and is very personable. She has the police background and some say that is a detriment but Biden may want to go this route and say she has ideas on how to fix the problems. There are consistently four or five ladies mentioned for the top job but Demings is not. Sometimes the picks are surprising. The main one that matters is Benghazi Rice; she should not be anywhere in the US government. Biden will completely harpoon the democrat party if he picks Rice; it will be hilarious if it happens.
We are at the top of the fire tower at the top of the mountain. We may see something historic occur this month that will be talked about for decades to come. The bulls refuse to hear any negative talk about their beloved market. 'My Beloved' is 'Cara Mia' in Italian, the bulls will ask, Cara Mia, why must we say goodbye? Well, because of the technicals and the uber complacency, that's why. 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 8:30 PM EST: S&P -2. Dow -9. Nasdaq -11. Euro 1.1791. Dollar/yen 105.80. USD 93.35. Oil +1%. Gold 2032. Silver 28.32. Copper is up +0.2% to 2.798. Treasury yields are; 2-year 0.13%, 5-year 0.23%, 10-year 0.56%, 30-year 1.23%. The 2-10 spread is 43.3 basis points. The table is set. Let the festivities begin.
Note Added Monday Morning at 6:42 AM EST: S&P +5. VIX 22.80. Both futures and volatility are higher so one of them is wrong. The bulls want to party again. On Bloomberg, MKM Partners strategist Michael Darda is Mister Risk-On proclaiming more bullish fun ahead for stocks. He says the walls of worry on Wall Street are tangible. Huh? It is the opposite. Investors and traders are giddy, drinking Fed wine each day and buying stocks without a care in the world. The descending VIX and uber low multi-year record lows for the put/call ratios verify the rampant fearlessness in markets. The few-month rally off the March lows is reminiscent of the rally after the initial 1929 stock market crash. Of course that led to the 1930's Great Depression.
Note Added Monday Morning at 8:00 AM EST: S&P +3. VIX 22.82. Both futures and volatility are higher so one of them is wrong. The bears got nothing unless the VIX moves above the 200-day MA at 27.23. 10-year yield is 0.55%. Bloomberg verifies a narrowing of Biden's lead in the polls over Trump. As explained above, it is due to Benghazi Rice's stink permeating the media.
Note Added Monday Morning at 8:48 AM EST: The Fed becomes concerned about the flat action in the futures. Chairman Powell runs to the closet in his office at the Eccles Building. Powell retrieves his shiny jackboots; fortunately, Evans spent the weekend shining them. Powell immediately tackles Uncle Vix and holds a jackboot on his throat; volatility moves lower. The Fed must keep volatility low which elevates the stock market to protect America's wealthy class at all costs! The privileged class owns the large stock portfolios and have become insanely wealthy over the last 11 years while the huddled massed eat gruel. One-half of Americans do not own one single share of stock. Fed members maintain dovishness and easy money accomodation since once they leave public life they are rewarded with lucrative speaking engagements, a quid pro quo, sponsored by the Wall Street investment banks. Don't you love the crony capitalism system? The VIX remains positive but drops to the 22.50-22.70 area now at 22.666, how appropriate. S&P +4. The Fed is not getting much bang for its buck. Powell better place both jackboots on the throat of volatility.
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