XLF Financials ETF 2-Hour Chart; Sideways Symmetrical Triangle; Federal Reserve Chairman Powell Speaks at Virtual Jackson Hole Symposium

The big day has arrived. If you listen closely, you can here the calliope music in the background. The parade is coming down Wall Street, screw Main Street, and Prince Powell is the master of ceremonies. The global trading and investing community expect Powell to ride in on a brand new shiny pony promising easy money forever. Nobody expects otherwise. So Powell better deliver that brand new shiny pony; if he tries to sell a donkey with a sullen back instead, he may end up looking like a horse's arse.

The stock market continues printing all-time record highs. The tech stocks have jumped the rails with parabolic (straight vertical) moves higher. No one cares about technicals or fundamentals; all that matters is the momentum like the dotcom bubble. AAPL has a PE above 38. AMZN is over 132. FB 39. NFLX 97. GOOGL is above 36. MSFT over 38. TSLA's PE is a whopping 1,108. That is hilarious. Pause for laughter.

Yesterday was a goofy day in markets. Prices are all over the place, up, down, sideways. Relationships between indexes and signals are haphazard. Pricing is erratic and unstable. The SPX prints a new all-time record high at 3481.07 and new all-time closing high at 3478.73 on Wednesday, 8/26/20. The Nazzy indexes print new all-time highs with the FAANG stocks and others such as Mr Softy and Tesla pumping the equity markets higher. The RUT small caps end negative on the day. As the stock indexes ran higher, so did volatility; the VIX is above 23. Stocks are up and investors are so happy and comfortable that they are buying gold at the same time. While these oddities occur, the 10-year yield bumps along sideways not knowing which direction to turn.

The stock market is reminiscent of the dotcom bubble top. Larry Wachtel was a character back then. The bullish euphoria was off the charts. Any of you that can remember the late 1990's remember the party in tech stocks and the 'new' internet stocks. Pets.com and Webvan were cheered as the future of America. In offices, employees mentioned stocks daily and how their retirement funds are looking fantastic. Keystone worked with a bunch of jackasses that were buying Enron stock. They proclaimed that only a fool would not put entire paychecks into that hot stock. Enron went bankrupt in December 2001.

Against that euphoric backdrop in markets, where every 10 minutes on business television another talking head would say, "buy, buy, buy," kind of like now, Wachtel was one of the extremely few voices of reason. He would shake his head back and forth and say that this party was going to end in tears and folks need to prepare. Of course everyone thought he was a wet blanket and simply did not know how to have fun. After all, everyone is long the market so everyone cannot be wrong. That is when the dotcom crash began.

In the dotcom bubble, the tech stocks did not have much earnings. That is a key difference compared to now where the tech stocks pumped into bubble territory actually have solid earnings. Perhaps their projections are the problem. As the US languishes in recession and the layoffs increase going forward, the sales projections are likely way off the mark.

If you travel back farther into the 1970's, the days of the Nifty 50, the hottest blue-chip US stocks, everyone thought they could do no wrong. It was easy to simply buy them and forget about them since stocks go up forever. Boom. Investors realized how stocks can drop like rocks and languish flat for years on end. This is how the current market feels more like that topping behavior.

Powell is busy stuffing doughnuts into his piehole at the free buffet set up in his kitchen. An attendant is cleaning a jelly stain from his necktie. Powell has hiked to the mountain top and now has possession of the tablets from on high. Powell will decree how global traders should trade once he begins speaking. He is like Julius Caesar of ancient Rome. In a short time he will extend his right arm and provide a thumb's up, or thumb's down, on the stock market. What power Pope Powell holds! Kneel and worship such divine energy! The central bankers are the market.

The stock market floats higher this week into the Fed statement as well as happy vaccine and covid treatment talk and promises of stimulus money. The rubber meets the road today. Considering the ongoing rampant multi-year record-setting complacency in play, and negativity in the SPX charts, and high valuations, you would think that the stock market would collapse from here no matter what Powell says.

Keybot the Quant remains long and is identifying financials as the key parameter most impacting stock market direction currently. Bears need XLF below 24.20 (red bar) to create stock market havoc. Thus, if you see negativity develop in the stock market today, and the XLF loses 24.20, equities are in trouble and the top is likely in. If stocks sell off but XLF remains above 24.20, the bears got nothing and bulls will eventually recover. If stocks rally, but the XLF tracks lower and loses 24.20, the stock market will then roll over and die.

The sideways symmetrical triangle patterns are in play. Bulls obviously win if price moves above the upper rails while the bears win if price moves below the lower rails. That light blue line is at 24.70-ish which is strong price support. If 24.70 fails, a test of 24.20 is likely. Today may be an interesting, even watershed, day in the stock market. 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 Saturday, 8/29/20: Pope Powell pumps the parabolic price party. The Fed concedes that stagnant wage growth will not create inflation. That has been the problem of the grand 11-plus-year Keynesian financial experiment that has yet to completely play out. With years of dovishness, the Fed is still unable to create inflation but now they say they can and they will tolerate an overshoot above 2%. The yield on the 30-year tags 1.5% and the 5-30 spread pops to 119 bips. The Fed is telling investors that higher inflation is desired and will be tolerated which results in selling on the long end. The yield curve steepens and traders trip over each other to buy the banks. XLF catapults +4.3% higher last week. Of course it does. KRE gains +4.1% which is odd since the regionals should be happier than the money center banks since lending is their bag. Chalk it up to another disconnect during this epic stock market topping activity. Powell is concerned about persistent low inflation (a la Japan) and the theory is that if inflation remains low for a long time, it becomes engrained into people's thinking which breeds more disinflation and low inflation. It develops into a quagmire that is difficult to exit. In addition, the Fed cannot maintain a ZIRP policy forever since it needs higher rates so they can be cut for the next economic downturn. Right now, the Fed is talking a big game puffing out their chest about the new inflation averaging schtick, but they have little ammunition available if the economy rolls over. The obscene Keynesian experiment began under Fed Chairman Bernanke in March 2009 with QE 1. The Federal Reserve stepped in to save the stock market to protect America's wealthy class. And thus began this sick path to the present day with the country mired in debt and 20 million people out of work. In 2012, if memory serves and it may not, Bernanke started the inflation goal talk of +2% and that was cast in stone. But the central banker magicians need some more phony smoke and mirrors stuff to keep the party going. Thus, inflation averaging is now born. Instead of the +2% as a ceiling where Fed tightening would be expected to begin, Powell says inflation should be allowed to overshoot the same relative amount of time as undershoot so a +2% average inflation is achieved. Since inflation has ran below the +2% target for many years, the Fed is saying they plan on keeping rates low and pumping the markets for several more years. A tightening path is so far out in the future you cannot see it. These people are sicko's. The crony capitalism system is a joke. Obviously, the concern would be that as the Fed allows inflation to run hot at some point in the future, does it get away from them? The answer is probably yes since the US likely has hyperinflation in its future say 2 to 5 years down the road when the velocity of money kicks in like crazy. Stocks rally on the happy Powell news; he promised a bright new shiny pony and he delivered that gift to the markets. The euro was jammed above 1.19 so the dollar collapsed to 92.20 pumping stocks to the stratosphere. Cheers erupt at the Eccles Building.  The S&P 500 prints a new all-time high at 3509.23 and new all-time closing high at 3508.01. The SPX went above 3400 on Monday and 3500 on Friday. Wow. Kneel and Worship at the Feet of the Central Banker Money Gods! They are All Powerful! The central bankers are the market. The upper trend lines are at about 24.95. XLF prints a HOD Friday at 25.46 and closes at 25.36. The bank bulls are happy about the steeper yield curve. Bears would need to move price below 24.90 pronto, say on Monday and Tuesday, otherwise, the bulls appear in good shape. It would be an extremely negative development if XLF loses 24.90 early next week.