SPX S&P 500 Monthly Chart; Overbot; Negative Divergence; Price Extended; Major Multi-Month and Multi-Year Stock Market Top At Hand

Keystone has called all the tops in recent years. Easy-peasy using neggie d. For long-term forecasting, the monthly charts matter. After the tops, remember how Keystone said since all the chart indicators are not negatively diverged, price will come up again for another high in the monthly time frame? You can see how the tops in 2018 and 2019 are due to the neggie d except for the MACD that remains long and strong (sloping higher). Thus, price eventually recovers and prints another higher high in price because there was still gas in the tank with the MACD.

Same dealio in 2020. The S&P 500 forms neggie d, so a spankdown is on tap due to the negative indicators, but now the histogram is long and strong so another price high should come, and the 2021 orgy occurs. The Federal Reserve's money printing since March 2009 creates the enormous rise in stocks rewarding America's wealthy while screwing everyone else. 30 million Americans screwed the other 300 million over the last 5 decades with the rigged crony capitalism game so there is payback coming in the decade or two ahead.

The four central banker horseman of the financial apocalypse, the BOJ (Japan), ECB (Europe),  PBOC (China), and the Fed (USA) on the pale green horse, are the Ghost Riders in the Sky, ushering in months and years of economic pain and misery going forward.

Thus, the major top only occurs when all the indicator kittens are herded together and all in agreement with negative divergence (SPX price moves higher but all the indicators slope lower signaling that the index or stock is out of fuel and the top is in) and the top is in. It is surprising after all these years to see the long-term top now at hand since the majority of traders are lulled into thinking that stocks go up forever. But they don't, and will not anymore.

The one caveat, as always, is intervention by the Fed and other central bankers. The only chatter nowadays is how much the Fed will hike rates this year but no one is talking about no rate hikes or cuts. People are in a tizzy over inflation but as Keystone explains in the previous article with the Keystone Inflation-Deflation Indicator, inflation is not a worry as yet. If the stock market tanks big time over the coming weeks and few months, the Fed can always goose it again like the last 12 years but their firepower is waning.

May 2015 was the last legitimate top in the US stock market. That was the last time that universal neggie d was in play for the monthly chart calling a major top. As expected, stocks tank but the Federal Reserve saved the day to protect the wealthy, as usual, and started printing more money like the madmen. The sick money printing sends stocks into the stratosphere rewarding the wealthy with more vacation homes and yachts while common Americans suffer thorough years of structural unemployment. One-half of Americans do not own a single share of stock. The rigged crony capitalism system is pretty sickening, eh? Don't fret, it is on its last legs.

A drop to the May 2015 top would be expected at some point over the next year or two and that is down at 2100-ish. The moving average ribbon is shown with price extended so a mean reversion lower is in order. Just think, price eventually needs to work back down to the 200-mth MA at 2011 and actually overshoot lower as typically happens.

Over the next year or two, a drop to 1200-2100 would not be surprising at all which would be an epic crash of between -56% and -75% from the 4819 all-time record high. That will be fun. The SPX currently sits 300 points off the 4819 top which is -6% down from the top so another -50% to -70% drop in stocks over the next year or two is on the table. That gives you a lot to think about.

The ADX shows the waning strength of the multi-year rally with the peaks lower as price moves higher (neggie d). The Aroon is set up with maximum bearishness with the green bullish line near one hundo at maximum euphoria and joy while the red bear line is in the basement with short sellers believing stocks will never go down again. These extremes were in place at the May 2015 top (contrarian indicators).

The 10-mth MA is at 4469 and the 12-mth MA (the cliff-edge) is at 4404. These are two of the most important numbers in the stock market. For now, at 4519, the bulls are about 50 points above the 10-mth critical warning alarm level.

The stock market is officially cooked on a long-term basis. The neggie d indicates that there is no reason, and no fuel remaining, for price to come up for a higher high on the monthly basis. Get out while you can. The only thing that could save the stock market once it begins crashing is the Federal Reserve's monetary stimulus (or perhaps emergency Congressional fiscal stimulus). 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.