SPX S&P 500 Monthly Chart; Overbot; Rising Wedge; Negative Divergence; Upper Band Violation; Price Extended; Stock Market Places Multi-Month and Likely Multi-Year Top

September is in the bag. October, and Q4, trading begins. What do you see when looking at the chart above (ignore the annotation)? Price is moving from the lower left to the upper right so it is fantastico, right? Wrongo. The SPX monthly chart is broadcasting a long-term multi-month and multi-year top. It's all over but the cryin'.

The monthly charts receive new prints after Wednesday's close and the candlestick on the right reflects the trading thus far for the first two days of October. This month's candle slips below that lower trend line. The stochastics are overbot agreeable to a pullback. The red rising wedge pattern is ominous since the collapses from this chart pattern can be quite dramatic. This is a monthly chart so keep that time frame reference in your head as you assess the chart.

Price is extended above the moving averages requiring a mean reversion lower. Price has violated the upper band so the middle band at 3054 and lower band at 2620 are on the table. Most importantly, the negative divergence (red lines) is across all indicators. There is no more fuel in the tank to take stocks higher. The MACD is trying to eek out some fumes and remaining vapor to help equites remain buoyant for a month or two more, but that appears a long shot. Even so, for a long-term top which is occurring now, a couple months is not going to mean anything. There will be lots of downside ahead for many months forward.

The pink box for the ADX indicates that the move higher in the US stock market in late 2017, 2018 and early 2019 was a strong trend higher but that petered out by spring 2019. Interestingly, despite the new stock market record highs, the ADX tells you the trend higher over the last couple years is not a strong trend higher and in fact keeps losing steam.

The move higher in equities is due to the Federal Reserve and other central bankers printing money like madmen. This provides those temporary multi-month bumps in econmic data that hen peter out as the easy money subsides. The central banker Keynesian intervention has sent stocks, bonds, real estate, art, antique cars, diamonds, you name it, into bubble territories rewarding the wealthy class with riches beyond their imaginations.

The Fed members perform the bidding of the wealthy class since they are rewarded with lucrative speaking engagements at Wall Street investment bank's token luncheons once they leave public office. The crony capitalism system is on its way out but it will take a decade or two for America to move towards a nation that provides opportunities to all citizens rather than a rigged system for the privileged class. It will be a better America but it will likely be violent and ugly for a few years, like the 1960's, before we get there.

The market game depends on participants maintaining full confidence in the central banks. The central bankers are the market. When confidence is lost in these modern-day money god's (purposely small g false god's) and the Wall Street Temple, all is lost. The game continues as long as the four central banker horsemen of the financial apocalypse, the Fed (US), BOJ (Japan), ECB (Europe) and PBOC (China) ride across the sky dropping money. It ends when the Fed rides in one last time on its pale green horse but fails to save the day. Confidence in the false god's ends as does another 'ism'.

Anyhoo, back to the chart, note the distribution days over the last few years, in fact, every sell month was distribution over the last five years. That is remarkable. The smart money has been exiting stage right passing their shares to Joe Sucka, Bob Fool, Patty Dupe and Betty Bagholder on the way out. This parade of fools entering the stock market are tripping over each other to "buy, buy, buy," like the guy on television recommended.

The CPC and CPCE put/call ratios continue signaling rampant market complacency and fearlessness, and that behavior is verified by the unstoppable dip-buyers, so stocks need to retreat further to create panic and fear, and a potential tradeable bottom for a relief rally, but the fear and angst is not yet showing itself. Perhaps Trump's illness will create worry and fear?

The chart says down for months to come and shorting the rallies is a prudent strategy going forward. As time moves along, the buy-the-dip crowd will fade away after getting burned a few times. More traders will then start selling the rips instead of buying the dips. There are exciting times ahead. We are witnessing an epic stock market top in real-time that will likely be talked about for decades to come.

On a side note, the stock market has always guaranteed investors that it will go up. Decade after decade the stock market moves higher. Any given year there is an advantage of 55% to 45% in favor of bulls. However, what you want to start thinking about is THE top in the US stock market. In the years ahead, as inflation, then hyperinflation, takes hold, the dollar will turn into toilet paper. The stock market will go to the moon but the big gains will not mean much with the dollar in collapse.

In addition, America's crony capitalism system is crumbling. Citizens wonder why their lives have been destroyed over the last 11 plus years but the wealthy are richer than ever driving brand new cars, wearing expensive clothes and buying vacation homes. As the recession worsens over the next year, the population will become more restless and the social unrest will likely morph into a class war which brings all protesting and rioting factions under one roof; rich versus poor. 30 million people in the United States screwed the other 300 million over the last five decades and now it is payback time for the couple decades forward. Plan accordingly.

Watch the 10-month MA at 3130 and 12-mth MA at 3140. Usually, the 10 will give you an early warning signal for a market that is about to potentially go down hard, and the 12 is Keystone's cliff-edge where all hope (for longs) is lost, but the two are so close together, you can treat them as a significant line in the sand. If 3130-3140 is lost, it is time to place the crash helmet on your head and strap yourself into the computer chair because you may get hurt in the pending carnage. The 200-mth MA is down at 1765 and do not be surprised if over the next couple years the SPX mean reverts to here and lower.

It is interesting that the top is finally here. Keystone has described this top forming for many months waiting for all the indicators to line up properly. Honey, I'm home. The only caveat, as usual, is the Fed and Pope Powell. The monetary policy is already at ZIRP but Powell and the whole Hee-Haw gang will no doubt come up with some additional fancy financial engineering tools to try and stop the wolves, er bears, at the door. Perhaps this is when Powell will ride in on the pale green horse for one last time.

The multi-month and multi-year top is in for the stock market. Plan accordingly. For you young folks that have just invested a lot of money in stocks, especially tech stocks, get out before you get hurt. Otherwise, once the serious selling begins, Keystone and others are going to hack your head off and hand it to you on a platter. It appears that America is headed for some tough times over the next couple years. The wealthy class will not be happy seeing the stock market in retreat in the months ahead. 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.