Stocks jump wildly higher on news that former Federal Reserve Chair Yellen, Queen of the Doves, will takeover as Treasury Secretary (Mnuchin's job); she will sign the US money. The Dow tags 30K. Indexes keep printing or teasing new record highs.
The SPX weekly chart has finally set up with universal negative divergence across all its indicators. It's cooked. Stick a fork in it. The choppy sideways to up bias with stocks the last couple weeks is due to the PFE vaccine rally, then the MRNA vaccine rally, then the AZN vaccine rally, and lastly, the Yellen Rally. Some of today's joyous 58 point pop in the SPX is attributed to the start of the transition of the presidency but the Yellen appointment is far more important. She will do everything in her power to try to push fiscal stimulus through while cheerleading Fed Chairman Powell to print money endlessly (monetary stimulus).
The red lines show the negative divergence now in play across all chart indicators as price made the higher high today. This is the top unless happy talk occurs to extend the fun again. Price also violated the upper band so the middle band, the 20-week MA, at 3403, is in play and lower band at 3166. Price is extended above the moving average ribbon requiring a mean reversion lower. The red rising wedges are ominous since the collapses from this pattern can be quite dramatic.
A neggie d smackdown is needed to put price back in its place. Price is elevated due to the vaccine and stimulus hype, Yellen easy money joy, and perhaps an end to the King Donnie baby saga at the Whitehouse.
Barring anymore happy talk, the weekly chart is ready to receive a spank down in the weekly time frame (a multi-week selloff begins). We shall see what the bears got. It is odd timing however, with the holiday. Typically, stocks are bullish into a holiday but the stock market is overdue to crack and the low put/calls and elevated NYHL want to see a major selloff. The month is up and when that happens the last few days typically finish down. Do not be surprised if the stock market retraces today's huge up move with a reverse move just as large or larger tomorrow. 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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