SPX S&P 500 Monthly Chart; Megaphone (Expansion) Pattern; Overbot; Negative Divergence Determining When the Multi-Month and Multi-Year Stock Market Top Occurs

Keystone holds the megaphone to his mouth and exclaims, "Now here this, now here this, prepare yourself." The uber low put/call ratios continue signaling a substantive stock market top occurring now. The US dollar is teetering at the 92 level deciding to bounce or die. If the dollar dies below 92, stock will remains joyous into year-end. If the dollar pops higher, a potential March redux is on the table creating pandemonium into year-end.

The SPX monthly chart above is in its last throes. The red lines show negative divergence in play; the ole gal is running out of gas. The stock market is placing a multi-month and very likely multi-year top currently. The MACD line is all that matters right now and will tell you if the top is now, or, if the chart needs to breathe for another month or two to place the top and roll over.

The MACD line is poking higher (purple circle), long and strong, signaling that it still has fuel in its tank to take price higher which means a jog move is likely (down, back up). The other indicators are neggie d so a spankdown is in order in this monthly basis but the MACD tells you that price will come back up for another matching high after the selling occurs, on the monthly basis. At that time, when price makes the new matching or higher high, the MACD will go neggie d and the long-term top will be in, say during December or January. 

Here's the fun part. The long-term top may occur during the month-end price action (now). There are 4-1/2 trading days remaining in the month. US markets are closed on Thursday for Thanksgiving Day and Friday is a half-session. Next Monday is EOM, 11/30/20. If stocks flush lower now, which is a more likely outcome than stocks not flushing lower, watch that MACD line like a hawk. It will drop as selling occurs and since it is a monthly chart the final print is not cast in concrete until Monday one week hence. Therefore, if a big drop in equities occurs now, that MACD may come down just enough to get back below the prior highs in the MACD and turn neggie d as of next Monday. That would mean the long-term top is in now. As Bob always sings, it's all over now, baby blue. Don't fear the future; embrace it.

The megaphone, or expansion, pattern points to a dire outcome a couple years from now with the SPX eventually retracing to the 1800-2200 area. The long-term top is in either right now, which we will know next Monday, or, she will top out next month or January. Next Monday will tell the story. Expect many months and perhaps a couple-few years of pain ahead with a bear market. Plan accordingly.

The 10-month MA at 3156 is an early warning alarm that the stock market is in serious trouble and may collapse substantially. The 12-month MA at 3168 is Keystone's cliff-edge indicator where all hope is lost in the stock market. The 10 is usually above the 12 but the two are currently tracking each other, thus, take a red crayon and draw a thick line across 3156-3168 and that is the bigtime line in the sand where the stock market will have a high likelihood of crashing if price falls below.

The pending pullback expected now due to low put/calls should be anywhere from 50 to 300 SPX points over the next week or three, unless happy talk saves the day. Negative news, such as some problem with vaccines, would act as a catalyst to flush the market immediately lower. 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.