July is in the bag and the dog days of August begin. The monthly charts cast their final print on the last day of each month (Friday, 7/31/20) and the current candlestick remains in progress until Monday, 8/31/20 when the final print will be etched in stone for the month. Wowza. Look at that. Interesting. The monthly closing price is now higher than the closing monthly prices back in February and March during the crash. Not only that, but both the July and August (current) candlesticks are showing closing highs above the prior highs. The intra-month spike highs are higher, but for purposes of assessing negative divergence after a long rally, these higher highs in price are good enough.
Price makes a higher high, on a monthly basis, but the indicators are universally negatively diverged (red lines). Holy smokes; that is ugly. If you are an older person counting on stocks for your retirement, or a young person that thinks stocks will continue rallying and you will be swimming in money this time next year, then both of you are fools. The SPX monthly chart is ugly and showing a face that not even a mother would love.
Ready for some mumbo-jumbo? The chart is bear candy especially considering it reflects the long-term multi-month and perhaps multi-year period ahead. The red lines show universal negative divergence for all chart indicators as price produces monthly closes that are higher and higher. The SPX is out of gas on a monthly basis. It is running higher on fumes right now. A neggie d spankdown is on tap. Bulls will try to eek out some more near-term momo with a stimulus deal but it does not look good for stocks. The RSI or MACD would need to take out the February highs for any additional move higher to be meaningful and to push off the inevitable drop off for another couple months.
Right now, the chart tells you it's over for the stock market on a monthly and perhaps year or two, or more, basis. If you own a boatload of longs and plan on holding those positions or adding to them going forward, you will lose your shirt. The SPX is placing an M Top, or Double-Top, if you prefer. Price has not quite touched that upper standard deviation band at 3366 printing a HOD yesterday at 3331, so this has to be respected. If a stimulus bill is approved, that may be the final orgy push higher with the bell for the top ringing as the SPX touches the top band.
The SPX hourly and daily charts are set up with neggie d so they say down now. The weekly chart is agreeable to downside with its stochastics although it is being coy about the top and may prefer the SPX to come back up for a matching price high in about two weeks time, after initial market softness. The SPX monthly chart above is cooked and saying flush this turd now, and even if it is flushed, the stink is going to linger for several months.
As the stock market rolls over beginning at any time, the slight bit of fuel remaining on the weekly chart may be useless as the monthly chart negativity may crush anything positive going forward. In other words, we may have seen the long-term top in the stock market at the February highs. Isn't this stuff exciting? We may be on the stock market plateau right now where these prices will not be seen again for many months if not a year or few, or, may never be seen again.
The Aroon negative cross has already stealthily occurred and as the euphoric bullish party continues unabated. Fed Chairman Powell spiked the punchbowl with easy money champagne and folks are hammered buying stocks without a care in the world. Vice Chairman Clarida is singing karaoke while hugging JPM CEO Jamie Dimon. They raise their glasses of Fed booze toasting and applauding the Power and Glory of the Federal Reserve, the modern-day Money God's. The wealthy class enjoys the crony capitalism system raping America for all its worth. Bulls should be extremely concerned that after such a huge rally, the Aroon remains negative.
The ADX shows strong trends higher in the stock market in 2014 and 2018. Remember back in May 2015 when Keystone called that major top? The bears were screwed back in 2015 because the Federal Reserve stepped in again to prevent stocks from falling to protect America's wealthy privileged class. Look at the price move in 2016 and 2017. That is not natural; that is Fed money. Do you understand that or are you stupid? The central bankers are the market. The May 2015 was the last legitimate, so to speak, top in the stock market. In other words, the SPX price has no business being above 2200. The stock market is only higher by the grace and generosity, and obscene Keynesian money-printing, of the Fed.
As price falls in the months ahead, the 2300 level will be key. It will likely fail and open the door to that 1800-2200 range which represents the 2015 top. If 1800 fails, we are likely talking next year or perhaps even 2022, the 1100-1400 zone will be in play. Some of you may have just spit your coffee across the room reading this and immediately call bull sh*t! No way! After all, 99% of the people are saying stocks will go up forever from here. Plan accordingly. It is going to be a hoot watching the festivities this year and next. 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.
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