SPX S&P 500 Daily Chart; Potential Expansion Pattern

Wheee! Woopie! Wheehehe! Yee-Haw! He he he haw haw haw. The stock market orgy is back in full swing with traders and investors swigging down Fed wine while smoking fiscal stimulus crack. The RBA and BOK (Aussie and South Korean central banks, respectively) stepped into markets on Friday and the RBA again this morning and other central banks are running printing presses full tilt. The week begins with everyone drinking the bullish Kool-Aid. The SPX shot up over 100 points which is impressive but volatility did not come down much.

Volume is interesting. The brown circles show distribution days about 8 in the last 2 months, some may be stricter technical-wise and call it 5 but same thing. If you see 4 or 5 distribution days over the last couple months of a rising market, that is the smart money handing off shares to the bag holdin' sucka's. Did any of you buy today?

There were weak hands that jumped in short late last week after the Thursday drawdown. They waited and did not believe a top was in then it occurs, so they said oh-no, and then they watched stocks fall lower and lower, and they said oh-no I should have shorted, so they jump in to short, then they get their face ripped off this morning and the short-covering by the weak hands sends stocks to the moon. Speaking of full moons, it peaked on Saturday for the month and stocks are usually bullish through the full moon which was Friday afternoon strength through today.

The bulls continue to pontificate blue skies and rainbows ahead regardless of whether the stock market goes up or down or all around. GS analyst Kostin says traders are buying stocks of companies that do not have the best balance sheets but that will continue. Kostin proclaims a SPX 4300 target this year. Bullish RBC analyst Lori Calvasina says the selling last week is "not eroding my case for equities." Calvasina decrees more upside in stocks ahead. BNY Mellon's Alicia Levine jumps into the bull ring on Bloomberg proclaiming that the financials have broken out and have a long way to go. She is overweight cyclicals. Levine stands on a soap box and announces to Wall Street that she is "very positive on the market and a buyer on pullbacks."

This evening, CNBC commentator Jim Cramer jumps into the bull ring with chartist Mark Sebastian. Cramer proclaims "that the panic is over and the market is beginning to roar." Tweedledumb and Tweedledumber (said jokingly; kidding around) say the spike in the VIX signaled fear and panic and time to buy so the all-clear signal sounds. They are wrong. Bring up the CPCE, Sonny. Market participants are partying like its 1999. The CPCE is down to 0.38 and you will not see panic and fear until 0.80 so it would be prudent to wait until then before telling the folks to nibble long. You ain't seen panic and fear yet, but you will.

Keystone thought he saw a bear the other day but it was a guy walking back from the costume shop. He said he needed the bear suit for a gag at the bull party today. Keystone stopped the beat cop at Fifth and Vine and asked him where the bears went? He said the bears have all died, and the bulls proclaim infinite blue skies, bye bye American Pie.

You remember the top with universal neggie d across the hourly, daily and weekly charts, so down she went. The red lines show universal negative divergence and the weak and bleak nature continues. A relief rally is not surprising at all the magnitude was surprising today. Volatility should have dropped far lower but it did not. Keybot the Quant remains short and is tracking volatility, retail stocks and utilities as the deciders of stock market direction ahead.

Price may follow the expansion pattern shown with the maroon lines. Price tapped on the upper trend line today so watch to see if it can pop up through tomorrow. If so, see if price makes a matching or higher high at 3927-ish, if so, see if any of the indicators are above the blue lines. If not, that will be neggie d and stocks will begin another flush lower in the daily time frame. If one of the indicators poke above the blue line, stocks may remain buoyant for a few days.

Pope Powell speaks on Thursday at noon at a jobs summit so the bulls may try to keep the game going until the Pope can bestow more free money. That may be an event where he tries to stick to jobs and steer clear of policy discussions. Price came down but did not touch the lower band so that still may be on tap at 3794. 

The chart should be setting up for the next down move. Remember the SPX weekly had that MACD line that was a smidgeon higher? You will have to scroll back and take a look. Bring the weekly up. That top-tick two weeks ago came with universal neggie d but the MACD was a hair higher. If price keeps running higher to 3930-3940, fine, ring the bell. On the weekly chart that will be a matching high and it will come with universal neggie d, including the MACD, that means the top is in and  multi-week down move in stocks begins. Expect 200 or 300 handles lower for starters. There will be epic days ahead in the stock market especially over the coming days and weeks. The market should top-ou8t again any day forward. She is so close, it would be fine to see the SPX pop to 3940 tomorrow if so, realize that you are likely living the top in real-time.

This is likely a historic and uber major top in place now and everyone will know it within the next couple months or so. It will likely be a more intense top than the Dotcom Bubble of 1999-2000 and Great Recession Housing Bubble of 2007-2009. Perhaps we will call it the Great Depression Redux Central Banker Failure Bubble of 2021. Nah, that's too long and not catchy enough. 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.