Sunday, August 2, 2020
VIX Volatility One-Minute Chart
The stock market was soggy all day Friday with robust sell side volume until 2:15 PM EST. The Federal Reserve panics as usual and for good reason. Two extremely important market signals failed before lunch time. Stocks were beginning to wobble and fall apart, but alas, the strongest of the four central banker horseman of the financial Apocalypse, the Fed, rides in to save the day. The BOJ, ECB and PBOC watch their brother in arms perform their special intervention magic.
The two important failures (which recovered on the late-day rally) are the utilities and NYA index. UTIL is already below its 50-week MA and lost its high from 15 weeks ago in the Friday session. The 15-week lookback assesses whether the utes are in a weekly uptrend, or downtrend, since the stock market will follow this signal or at least move coincidentally with the utilities. The Keystone Speculator's NYA with 40-Week MA Cross Indicator also failed on Friday (the NYA, the NYSE Composite, price falls below its 40-week moving average). The utes and NYA are not only two key signals for the present and near-term ahead, but also for the intermediate and long-term. In other words, the party was over on Friday. With utes and the NYA failing, it guarantees stock market trouble into year-end. Hence, Pope Powell rides in on the snorting light green steed and waves his staff to cure the market woes.
The Fed places its jackboots on the throat of volatility (to keep it down; stocks and volatility move inversely to each other over 90% of the time) and voila, a massive rally occurs during the last 90 minutes of trading. Powell is beating Uncle Vix with a baseball bat to keep the stock market elevated to protect America's wealthy class. Watch the key bull-bear line in the sand at NYA 12452. The NYA begins the week at 12465 only 13 points in the bull camp creating stock market lift. Comically, the bulls, er, cough, the Fed, pumped stocks higher on Friday and in the very last minute, seconds actually, of trading for the week, the NYA was pushed above 12452. Do you think the bulls are worried?
NYA 12452 tells the stock market story on Monday. If the NYA remains above headed higher, the bears are toast, and the bulls will carry Pope Powell around the trading floor on their shoulders to show appreciation for always taking care of the privileged class. If the NYA loses 12452, there are dire consequences for markets into year-end and Powell will only be seen crying daily into his cafe latte as markets crumble. 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.