Wheeee! Whooopie! Wheeee! The stock market is one big party every day. Virus, schmirus, Job losses, schmosses. Capitol Hill Riot, schmiot. Maybe another riot will occur tomorrow with announcements of more covid infections and deaths and stocks will go to the moon. It is fun to watch this historic stock market and economic activity play out in real-time. This is epic stuff. Q1will be one of the most historic periods in stock market history.
The S&P 500, SPX, which is the United States stock market, prints a new all-time record high at 3826.69 and new all-time closing high at 3824.68 on Friday, 1/8/21, when the first negative jobs report since April was announced. Bad news is good news for 11 years running! The wealthy dance with glee.
Last week was the Biden Orgy. The stimulus taps will be flowing like water so traders and investors buy, buy, buy! President-elect Biden has said several times that more stimulus is on the way and last year was only a small down payment. Federal Reserve Chairman Powell plans on providing stimulus forever. Keystone drove by the Eccles Building last night and asked the guard why the basement lights were on? He said Greenspan, Yellen, Bernanke and Powell are in there all weekend long running the printing presses 24/7. In addition, Yellen, Queen of the Doves, will head the Treasury so she will be instrumental in pushing through bills loaded with so much pork, even bacon-eater's will cry uncle.
On top of all this monetary and fiscal stimulus, rumors hit trading floors on Friday that the $2000 individual fiscal stimulus payment may be off the table--and replaced with $4,000. Ho, whoa, yippee, thank you phony free markets, stocks go vertical. Traders guzzle down the Fed monetary stimulus wine and buy any stock with a heartbeat. What glorious times we are living! Praise, Honor and Glory to the Fed and All Central Bankers; Our Money God's! Kneel and Give Praise to Their Power!
So last week's rally on top of five dead bodies at the Capitol Building accelerates into the weekend. The daily chart purple box show the hanging man candlestick on Friday which usually indicates a trend change on tap (which would be down). The blue box is the key outside reversal day where stocks took out the prior day's high but then closed below the prior day's low. This is a bearish indication as the weeks play out but typically in the near-term, such as a few days or week or two, or three, ahead, price may squeeze out more highs, before it dies, and that happens now with the parabolic pop last week.
On the SPX 2-hour chart, the indicators are all negatively diverged except for the MACD line that has a slight bit of fuel remaining in the tank (long and strong; sloping higher). So price likely needs a move lower for a candlestick, then back up again, and at that price high the MACD should go neggie d, and the top is in. Thus, barring any positive news over the coming hours, the stock market should top-out between 11 AM EST and 2 PM EST (two candlesticks). If negative news should occur, the turd would be flushed immediately.
On the 2-hour, the upper band is violated so the middle band at 3759, and rising is on the table and the lower band at 3671. Price is extended in favor of a mean reversion lower. Stochastics are overbot favoring a pullback. The rising wedges on both charts are extremely ominous since the collapses from this pattern can put on quite a show (fast and big drops).
Keystone's 80/20 Rule says 8's lead to 2's and 2's to 8's. The breach of 3780 opened the door to 3820 which came fast. The 3818 opens the door for 3822 which occurred. The 3828, should it occur, opens the door to 3832. The 80/20 rule is satisfied at current levels so the conditions are in play for price to top out here in the 3826-3833 range.
On the SPX daily chart, similar dealio to the 2-hour. Overbot RSI and stochastics, rising wedge, hanging man, neggie d across all indicators (red lines) although there is near-term momentum from that Friday Biden Orgy (tiny green lines). Note that all indicators remain neggie d over the last few months it is only this near-term spurt that creates this small momentum push. This means price may jog at these elevated levels a couple days, however, as previously mentioned, do not be surprised if this turd is flushed at anytime. It is starting to stink so it does need flushed.
Price has violated the upper band so the middle band, the 20-day MA, at 3717 and rising is on the table, and the lower band at 3632. After the outside reversal day, you can see how price was trying to hold the 20-day MA support, and it did, for three days, which helped the Biden Orgy explode price higher to ecstasy. The tight pink bands squeezed out the move higher, which is surprising since the market is poised to drop, but again, the Biden Orgy was powerful. The stimulus money is going to be flowing like water (doubtful since the country simply no longer has the money).
The ADX is down at 16 proving that this wild upside rally this year, and since September, is NOT a strong trend higher. Isn't that something? It tells you the record price highs are based on central banker phony money, vaccine hype and the belief that $5K stimulus checks will drift down from the clouds every other day for all Americans like manna from heaven. The best job is one where you take every day off and get paid every other day. The markets are a joke. They have become a caricature of themselves. The last strong trend higher was into the September top (pink box); it is likely safe to assume that everything above the September top is froth.
The new moon peaks for the month on hump day this week just as it begins at midnight Tuesday into Wednesday. Stocks are usually weak moving through the new moon so that would be Tuesday to Thursday. The new moon is the ideal time to carry out covert raids but Donnie Trump's wings are clipped after the Capitol Hill Riot debacle so no one is listening to his orders anymore. Interestingly, it is OpEx week as well so a Tuesday low typically leads to a Wednesday high which is an opposite force of the new moon. The bull-bear ying-yang struggle continues.
The Aroon green line remains overbot and red line oversold which is maximum bullishness. This will begin to reverse at some point and the red line is moving higher to 28. Look for that negative Aroon cross to tell you that it is over. The charts say the market is cooked. Considering the goofy price action and erratic stuff going on, do not be surprised if a flash crash or some other crazy event occurs. It was a Long Way to the Top but will likely be a fast way down. 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 Monday Morning, 1/11/21, at 9:25 AM EST: In a CNBC interview, permabull Ed Yardeni expects more stimulus spending and a happy outcome to the vaccine situation. Yardeni calls for SPX 4,300 this year. GS analyst Kostin ups his earnings estimates for this year. The Wall Street analysts and television pundits remain uber bullish. Even if a pullback occurs they say 'buy the dip'. Everything is bullish happy talk. The week begins on a down beat, however, with S&P futures down -31 points. The US dollar is catching a bid up to 90.62. Will the dollar shorts panic a la March redux?
Note Added Monday Morning, 1/11/21, at 9:38 AM EST: Stocks sink at the opening bell. The S&P 500 slips 32 points, -0.9%, to 3792. The US stock market remains at nosebleed levels.
Note Added Monday Morning, 1/11/21, at 9:49 AM EST: The VIX is at 24.29. Keybot the Quant algorithm remains long but it is tracking VIX 25.21 as the key bull/bear line in the sand. If VIX moves above 25.21, the stock market will be in big trouble. If the VIX remains below 25.21, bulls are fine.
Note Added Monday Morning, 1/11/21, at 11:32 AM EST: The VIX is at 23.45. VIX HOD is 24.56 so watch this number closely, then the 25.21. For now, the bulls are yawning asking the bears if that's all they got. SPX 3811.
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