Keystone's proprietary trading robot, Keybot the Quant, flips to the short side a half hour ago at SPX 4336. Banks cannot rally creating sogginess in the stock market. Let's see what the bears got.
Monday, June 26, 2023
SPX S&P 500 2-Hour Chart; Oversold; Positive Divergence Developing
The new week of trading is off and stumbling. Utilities are in failure a very ominous set-up for stocks going forward. Banks are buoyant which create this morning's positivity. Copper is weak.
The SPX 2-hour chart is setting-up for a recovery move due to the positive divergence (green lines). Keystone called the top that led to last week's move lower. The red rising wedge, overbot RSI and stochastics, and universal negative divergence (red lines) by ALL indicators as price makes the new matching or higher high, told the story. There was no guess work involved. So she, the naughty market, receives the neggie d spankdown.
Price gaps down (orange circle) on Friday morning 3 days ago. As price makes lower lows, you can see the possie d starting to form. Stochastics are oversold agreeable to a bounce higher. The week starts off on a positive note but take a look at the MACD line; it remains weak and bleak (sloping lower). The other indicators are possie d contributing to this morning's buoyancy in the stock market. However, the MACD says another lower low is on tap before it is willing to go possie d.
Thus, the expectation is for the SPX to roll over in this 2-hour time frame and come down for another matching or lower low today. This should occur over the next couple candlesticks (say from now through 2 PM EST) and then ALL the indicators should be set up with possie d. Price will then bottom and bounce today and rally higher probably targeting the orange circle to fill the gap. The rally will have to be assessed as it occurs to see if a gap fill up at 44 hundo is on tap, or not.
If you bring up the SPX daily chart, you see that the RSI is possie d over the last couple days helping the 2-hour chart create buoyancy in stocks today. However, the other chart indicators on the daily remain weak and bleak.
Remember, trading is playing 5-dimensional chess where you must balance the divergences on the minute, hourly, daily, weekly and monthly charts to project the path forward. The expectation is for the SPX to bottom today and begin a mini-rally for a day or three (in the 2-hour timeframe). At that time, when neggie d again forms on the 2-hour chart, the SPX should roll back over and resume its downward move on the daily basis going forward.
When the 2-hour bottoms today say around lunchtime or in the afternoon, watch the RSI and other indicators. You have to first make sure the MACD line is no longer sloping lower and in possie d to call the bottom; and make sure the other indicators remain possie d.
When price relaxes lower over the next minutes and say hour or three, the MACD line may remain weak and bleak and may also turn the RSI lower which would mean the weakness will remain for another day in the 2-hour timeframe. 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 10:42 AM EST: That was fast. The SPX drops like a rock and prints the lower low. The MACD is still weak and bleak so the sogginess persists in the 2-hour time frame. The 2-hour chart prints a new candlestick starting at 12 noon munchtime so check it then to see if the MACD goes possie d, or not. The stock market is trying to encourage itself with positive affirmations like Stuart Smalley in the old SNL skit.
Note Added 12:54 PM EST: It is interesting that Keybot the Quant flipped short today after one-month on the long side. On the SPX 2-hour chart, the SPX price sinks to 4337 right now and the MACD line remains weak and bleak. The RSI leaks a hair lower than the other day so the bears cheer and throw confetti. The histogram, stochastics and other indicators remain possie d. Calling bottoms is like herding kittens. You have to wait for everything to line up with possie d. The RSI leaking lower indicates that the weakness may last a bit longer so instead of a bottom this afternoon it may leak into tomorrow. Price is making matching or lower lows so simply watch for the MACD line and RSI to go possie d to call the bottom. The next candlestick begins at 2 PM EST then 9:30 AM then 10 AM then 12 noon munchtime tomorrow. These candlesticks will tell you if the bottom is in for the 2-hour timeframe or if the weakness will linger for another day or three.
Note Added 7:04 PM EST: The SPX remains soggy since banks, copper, commodities and utes remain soggy. On the 2-hour chart, the RSI and MACD are sloping lower, weak and bleak, wanting more price lows, while the histo, stochastics and money flow are possie d. Stoch's are oversold agreeable to a bounce. Candlestick-wise, a couple of jog moves are needed to call the bottom so up-down-up-down-up to begin a rally. So that is 2 PM EST-ish tomorrow afternoon for a potential bottom give or take. Don't guess; simply confirm it with the possie d. If the indicators keep sloping lower then SPX price will head lower. Price violates the lower standard deviation band so you can start to sniff out a bottom coming in the hourly time frame. Bring up the SPX daily chart and you can see the 20-day MA is 4312 so that may be the destination for the near-term bottom in the hourly time frame. Keystone's 80/20 Rule says 2's lead to 8's on the way down so 4320 is a worrisome level since it opens the door to 4280. When the 4312 likely occurs it may be a quick drop down for only a few minutes to 4312 and then a quick recovery. You will know if the chart shows possie d. Thus, for now, and you have to watch how the charts progress and if there is any news, stocks should continue lower with fits and starts tomorrow perhaps targeting 4312, then a bottom late tomorrow or Wednesday morning and relief rally for a few days say into the holiday weekend and stocks are usually bullish into a holiday weekend. July 4th is not until Tuesday but the party begins on Thursday and Friday for Americans so there will be some bad honky-tonker's laying it down, as Stevie used to sing and play. The daily chart remains weak and bleak so after the relief rally in the back half of this week, the downside will resume and take out new lows after the holiday respecting the weakness in the daily timeframe. Watch XLF 32.75. Price is at 32.67 in the bear camp creating stock market weakness. As banks go, so goes the market. Bulls must push XLF above 32.75 as soon as possible or they are in trouble. Check it in the pre-market tomorrow morning and you will know the mood of the stock market. Easy-peasy.
Note Added Wednesday Morning, 6/28/23, at 6:47 AM EST: That was a sloppy bottom yesterday. Economic data creates bullishness that fed on itself for the Tuesday rally. Shorts cover creating more upside fuel and dip-buyers rush in for fear of missing out on a new leg higher. A tech and AI orgy wins the day again leading the stock market higher (overnight, however, there may be new restrictions on chip companies so stocks are soggy again). The low tick in SPX price was late Monday session and yesterday starts with stocks moving higher. On that price low, the RSI and MACD remain weak and bleak so the rally was not a possie d pop; it was news-driven. It tells you that the downside was not done in this 2-hour time frame but was cut short by happy talk. Price moves higher and the last 2 candlesticks are at matching price highs so the indicators can be assessed. The RSI is flat, which is neggie d, but the other indicators continue pointing higher. Softness in the S&P futures are reflected by the RSI but the expectation would be further lift in price until it forms neggie d on the 2-hr chart, unless negative news hits the tape. Once the 9:30 AM, 10 AM and 12 noon candlesticks print on the 2-hour chart, you can get a better idea of where she is going to top. We shall see if she can fill the gap at 4400-4410 before rolling over again. The 20-day MA support at 4320 and rising remains on the table and price will need to show it respect and come down to touch it.
Sunday, June 25, 2023
Less Than 500 Days Until US Presidential Elections; 1st Republican Presidential Debate Only 59 Days (8 Weeks) Away; US Presidential Politics Explained
There are less than 500 days until the United States presidential election. 498 days to be exact (16 months). Friday was the 500-day mark. The election for the next bozo is 11/5/24 which is the 309th day of next year. Today, 6/25/23, is the 176th day of the year. There are 365 days in the year so taking away 176 is 189 days remaining in this year. Thus, 189 + 309 = 498 days before the next POTUS (President of the United States) is elected.
On the corrupt democrat side, Sleepy Joe Biden, that is likely suffering from early dementia and onset of Alzheimer's, and/or other health issues that impact his mind, thought process and speech, is running for a second term. That's funny. The liberal vultures are circling the Whitehouse waiting for Biden to drop out at some point forward.
Cackling Kamala Harris, the veep (vice president), is latching onto abortion as her mantra since it was the key winning issue in the last election. She wants everyone to know that she loves abortion. This is modern-day society? Failed California Governor Newsom is also eying a run for president if/when Sleepy Joe bows out. The democrats do not have a bench of candidates, these two are losers, that is why they are propping up Biden with a broomstick.
The democrats are not having any debates since they do not want Biden's brain problems and lack of cognition to be on full display for America. Robert F Kennedy, Jr, (RFKjr) however, wants debates and so does America; even some in the democrat party.
Polling within the democrat party shows incumbent President Biden at only 60% not exactly a ringing endorsement. Democrats want someone with vigor and mental acuity but feel they are stuck with Biden since he is the only one that can beat Trump or other republican candidates. RFKjr is polling at over 20% among democrat voters and Marianne Williamson at 8%.
Humorously, the democrats actually prefer Trump as the republican candidate since they think he is the easiest to beat. Trump has already lost to Biden and Donnie is carrying around the lawsuit and indictment baggage that will be a distraction for his orange-head. Left-leaning MSNBC cable news provides polling pumping Trump's numbers higher to encourage the narrative that he will be the republican candidate for POTUS. That's funny.
Remember, as Keystone has described for many years, America's corrupt two-party crony capitalism system is supported by the media outlets which spew the daily propaganda. Cable news outlets CNN and MSNBC, the broadcast channels ABC, CBS, NBC, PBS and NPR, New York Times and Washington Post (Jeff Bezos) cheerlead the democrat narrative while denigrating the republican agenda.
Cable news outlets Fox News and Newsmax, OANN, AM talk radio (that the democrats want to destroy), Breitbart and New York Post cheerlead the republican narrative while dissing the democrat agenda. It is all a pile of stinking crony capitalism slop.
Democrats are worried about Bobby Kennedy's popularity. Biden may be planning to drop out of the race at some point forward and then dictate who the replacement candidate would be perhaps trying to jam Harris or Newsom down voter's throats.
At this critical time and through 2024 and beyond, the USA will not benefit from a brain-dead individual, unable to think on his own, remaining in the Whitehouse for many more years.
On the corrupt republican side, King Donnie Trump maintains a lead in the republican polls. DeSantis remains unknown to a lot of the country but that will change in the upcoming first republican debate on 8/23/23 (only 59 days away; 8 weeks) in Milwaukee, Wisconsin, hosted by Fox News. The second republican debate will be in Simi Valley, California, on a date to be determined (TBD).
Trump is the frontrunner in the republican polls at about 50% support followed by Desantis at about 25%, former Trump veep Pence at 7%, Christie (that joined the race to bash Trump and try to prevent him from being the candidate for POTUS) 5%, Haley 4%, Ramaswamy 3% and Scott 3%. The republicans have a far better bench than democrats this cycle.
Comically, ABC News (democrat-run media) releases an article touting Trump's lead in the republican polls saying it is expanding higher each day (democrats are pimping the Donnie nomination since they think they can beat the orange-headed braggard).
Newsmax (republican-run media) is in the tank for Trump downplaying DeSantis and other nominees in favor of King Donnie. Fox News (republican-run media) is giving the cold shoulder to Trump providing coverage more favorable to DeSantis and other candidates.
The King Donnie clown show will likely be taken down by the weight of the lawsuits. Americans are sick of the Trump soap opera drama. The Donnie presidential reality television show was great for sh*ts and giggles for four years but who with a sane mind wants to repeat that circus? Grandiose Trump claims he can end the Ukraine War in 24 hours. Idiot.
DeSantis can talk intelligently on the issues as opposed to Trump's general comments that then fall back into grievances and claims that he actually won the 2020 election. Nauseating, isn't it? It is time for King Donnie to go away. DeSantis may fall flat on his face going forward; time will tell. Obviously, a lot is riding on the first debate hosted by Fox News in August.
King Trump has not tipped his hand yet on whether he will participate in the first debate. He is not happy with Fox News dissing him and they are hosting the event. However, Trump knows that he needs to show-up at the debates to decree his dominance. Another interesting side note is that the republican candidates must pledge to support the final nominee as a prerequisite for participating in the debates.
If Trump is in the debate in less than 2 months, he makes the same pledge but you know if he is not selected he will not follow through; instead he will likely say he was cheated and go back to his whining and moaning schtick again. Trump also has the problem that he must not discuss ongoing court cases as ordered by the judges but his main campaign cheer is labeling all actions against him as witch hunts. Donnie is not capable of keeping his diarrhea mouth shut.
Vivek Ramaswamy and Nikki Haley are sticking to the issues and telling voters directly how they want to solve problems and make American lives better. It is a fresh approach and Americans may be looking for candidates with more substance, leadership and competency. Look at the last election linked here. The candidates that won were viewed as competent politicians that can carry out their plans without drama.
At this critical time and through 2024 and beyond, the USA will not benefit from an orange-headed bloviating carnival clown retaking the Whitehouse. Trump's disgraceful behavior for failing to stop the 1/6/21 Capitol Hill Riot nullifies him from ever setting foot in the Oval Office again; the majority of Americans see it this way. Donnie only thinks about himself and what is good for him and it is the basis for all his decisions.
So who will be the new US president in less than 500 days? People are fed-up with the corrupt and compromised demopublicans and republocrats so perhaps Bobby Kennedy, Jr, will take charge of the US ship that is headed for the reef? Speaking of reef, it is always a good time to play and sing Margaritaville with Jimmy Buffett and the Coral Reefer Band.
Democrat, and independent thinker, Robert F Kennedy, Jr, is the only candidate currently experiencing momentum and buzz which is what all campaigns want and need. Donors do not shell out money to losers not receiving any traction. Such is the crony capitalism system. Republican Ramaswamy receives an honorable mention as he receives anecdotal traction and popularity.
2024 will be the year of the independent thinker since the two-party system has destroyed the country especially over the last five decades.
On October 1st, 10/1/23, there will be 4 hundo days until the US presidential election in early November 2024.
Friday, June 23, 2023
YC2YR 2-10 Yield Curve Weekly Chart; Yield Curve Inversion for 1 Year but Recession Still Hiding in the Bushes
The 2-10 spread is receiving lots of attention since the yield curve is now inverted more than 100 basis points at -102. The 2-year yield is up to 4.75% with the 10-year yield at 3.73%. Hence, 4.75-3.73 = 1.02 percentage points, or 102 basis points, or 102 bips. An inverted yield curve is a precursor to a recession.
As previous 2-10 spread charts have shown, here is a link that discusses the saga this year with the charts along the way, the hook pattern is what bring on the recession not the initial foray lower with a more inverted yield curve. However, the hook pattern must be sustainable and continue higher to lock the recession in.
You can see the first tease early last year but the 2-10 spread recovered, and then re-inverted in June/July (last summer). More hook patterns occur announcing a recession but then no, the hook fails and the 2-10 spread drops lower nullifying the recession call.
Starting in March of this year, a couple-three months ago, the hook forms again and the thinking is that this is the real deal since the inversion went past 100 bips which is record levels. The hook forms and heads higher but again, the 2-10 spread travels sideways, then drops. Pope Powell and the Federal Reserve's policy decisions send the 2-year yield strongly higher to the 4.75% level which accounts for most of the drop in the 2-10 spread.
Note that after the stall in late March and April, the spread rises again and threatens to break-out higher again and continue the hook pattern higher. That was a key week (5/1/23). You can see the long upper shadow tapping on that upper resistance but then failing and the 2-10 spread then collapses to the current lows. Write that -0.4 percentage points, or -40 basis points, on a sticky note and put it on your forehead. This number is key once the spread recovers higher to form the new hook shown on the right hand side. When the hook travels higher and then takes out the -40 basis points level headed to -20 basis points, the recession will be locked-in and coming fast.
The purple lines show universal positive divergence with all the indicators as the 2-10 spread makes lower lows. The spread is loaded up with fuel and on the launch pad ready to start the new hook pattern higher. The RSI and stochastics are oversold agreeable to a bounce. The 3-month action shows a falling wedge pattern which is bullish (the spread should move higher from here). The spread is also below its moving average ribbon requiring a mean reversion higher.
The 2-10 spread taps on the lower standard deviation band so the middle band, that is also the 20-wk MA, at -0.68 bips, is on the table. The pink boxes on the ADX show that the move higher in the spread in 2021 was a strong trend higher but that petered out in September 2021. The downside move in the spread is verified to be a strong trend starting 2022 but the strong trend lower in the spread faded in April a couple months ago. This action hints that the spread is ready to recover higher forming the new hook which is likely the real recession hook this time.
If you are a young person, prepare yourself financially, mentally and emotionally for losing your job in the weeks and months ahead, or your significant other or spouse losing their job, or both of you losing your jobs. Understand that no matter how much you like your boss and job, you can be sh*t-canned in a heartbeat and no one will even miss you. What will you do? Do you have savings? Unemployment compensation does not last forever. Save your money. Don't be stupid. The cushy life you have had floating along the quiet calm river for many years is now turning into whitewater rapids. You may have to hang on for dear life by the end of the year. 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 Friday Morning, 6/23/23, at 11:05 AM EST: Treasury Secretary Yellen pooh-pooh's the talk of recession. Janet looks under the buffet table and opines, "Nope, no recession here." She looks behind the curtains and announces, "No recession here, either." Yellen says the house construction and retail sales data remains strong and the labor market is resilient. Well, she needs to look at Unemployment Claims over the last 3 weeks. Meanwhile, Eurozone PMI's sh*t the bed some falling back into contraction. Ditto Japan. The eurozone manufacturing weakness sends the euro lower and US dollar index higher sinking US stocks. European chemical companies are taken to the shed behind the garage and beaten mercilessly. If the economy does not need resins, chemicals and paints, well, you do not have a recovery, you have a sick economy going forward. As they said in The Graduate, hello Mrs Robinson, you look lovely today, the key word is "plastics." Profit warnings from the chemical industry are bad news. The services sector is rolling over in Europe (generally, right now in the US and Europe, goods are disinflationary and deflationary while services remain inflationary but probably for not much longer; services will roll over and join goods). Automaker Ford announces new layoffs. How's those glorified golf carts (EV's) going, buddy? What idiot buys an EV when there is a gas station on every corner? The auto golf carts do not work in a power outage or natural disaster. Buy yourselves some good walking shoes if you buy an EV. In a power outage, you will be stuck at home unable to go anywhere, with a 1-ton hunk of junk sitting in the garage, unless you walk. A gasoline car can get you coast to coast effortlessly if you decide to take a trip on a whim. An EV requires pre-planning of your trip; 'good luck wit dat EV, sucka', as they say in the Bronx.
Note Added Saturday, 6/24/23: Federal Reserve data indicates a 71% chance of recession the highest numbers ever and in the past, a recession has occurred within 12 months every time. This activity has been ongoing so the recession will be here, say, by April 2024 or sooner. Thus, the US will be in recession either now going into and through Q3, or Q4, or Q1 2024. Choose your poison. The chart above hints that the recession will be here sooner not later so Q3 (July, August, September) and/or Q4 (October, November, December). Keystone will end up with nothing in his Christmas stocking this December not even the typical chunk of coal.
Note Added Sunday, 6/25/23: The US PMI is 53.0 slipping lower but remaining above the 50 level that separates economic expansion from contraction. The manufacturing recession continues with the US Manufacturing PMI at 46.3. Services PMI is holding-up at 54.1 as long as America's upper middle class and privileged elite, that screwed everyone else over the last five decades, keep spending money.
Note Added Thursday, 6/27/23: The Case-Shiller index falls year-on-year for the first time in 12 years. The home-price reset phenomena is over. Home prices are dropping. New Home Sales pop +12.2% on-month and +20.0% on-year. People that need a home, and have the money, have to build one since folks are remaining in their houses enjoying a low mortgage rate (they do not want to move and end up with a far higher mortgage rate). Analysts and television pundits proclaim a housing recovery is in progress and there is nothing but blue skies and rainbows ahead.
Note Added Wednesday Morning, 6/28/23, at 6:16 AM EST: The Ford layoffs include engineers. Not good. Google is laying off employees. The tech layoffs are mounting including Mister Softy (Microsoft), Scamazon, Google and dozens of smaller firms and start-ups. When the economy fades, the start-ups and other research-type projects are first to get axed and the employees on these projects are sh*t-canned. If you are working now, make sure you do not charge any time to overhead; if you do, you will be laid off. If you have a few hours of time that cannot be charged to a client or customer, ask your boss for more work since that may keep you off the layoff list a bit longer. Even if the work is not there to give you, the boss will remember that you showed initiative and he may keep you around a bit longer. Banking giant UBS, merging with Credit Suisse, announces that one-half the workforce at CS will be canned. Ford, General Motors and other automakers are laying off workers. When the engineers are axed, that signals recession. The engineers and tech jobs are high-paying so consumer spending takes a hit. What people forget about at the start of recessions, is the impact that layoffs have on society and the workers that still have jobs. The day after a company announces layoffs and kicks workers to the curb, the boss calls a meeting for the workers remaining and tells the b*tches to pick up the pace and perform the work of the sh*t-canned workers and not moan about it. Anyone complaining will be next in line to be axed. Neighbors and relatives hear that smart Johnny lost his job and wonder if their jobs are in jeopardy. People will cut back on spending for fear of losing their jobs even if they have a secure job. This pullback accelerates the recession and things fall apart quickly. It typically starts going downhill fast with the recession monster starting to growl strongly when you hear that engineers, accountants, tech workers, programmers and other highly-paid employees are canned.
Note Added Wednesday Evening, 6/28/23, at 7:06 PM EST: Federal Reserve Chairman Powell, at the central banker meeting in Portugal, proclaims, "....it's so uncertain right now, in my view, the least unlikely case is that we do find our way to better balance with without a really severe downturn." Huh? Powell continues, "I think there's a, there's a, significant probability that there will be a downturn as well though, but that is not to me the most likely case." Say what? Can you make sense of that? Whatchu talkin' 'bout Willis? Powell is a traditional two-handed economist. On the one hand, and then on the other hand.... If he expects a recession, why is he raising rates? The world is in uncharted waters but each central bank claims to own the correct map for the path forward.
Thursday, June 22, 2023
US Unemployment Claims Weekly Chart; 4-Week MA Shows Claims Rising for 9 Months Indicating Recession Ahead
The unemployment claims typically trend higher when a recession is on the come. Yesterday's claims are the highest since Halloween 2021 (for last 3 weeks). The chart shows the moving average bottoming last September 2022 and layoffs and firings trending higher for 9 months. The recession, however, remains with Godot, and is not showing-up yet. Recession is far closer than anyone realizes.
It is like when writer Ernest Hemingway was asked about going into bankruptcy. He said it occurs in two ways, first gradual, then all of a sudden.
Keystone's prior unemployment claims charts from March and a couple weeks ago are linked here. DOL data linked here. The revisions are worsening the picture as time plays out but traders, analysts and pundits only remember the happy number on the release. The last two claims numbers are up at 264K claims and the 4-week MA is up to 255,750 claims the most since Fall 2021.
It is important that the brown moving average line moves above the prior highs which indicates more trouble ahead. Unemployment claims tell you a recession is on the come but the wealthy class keeps spending money keeping the economy afloat.
If you are a young person, realize that you, your significant other, or both of you may get laid off over the coming months or year or two. Many of you will say the boss told you that the company could not survive without you. They only tell you that to get more work out of you and make you feel good, jackass. Your boss will drop-kick you to the dumpster at the end of the parking lot in a heartbeat and not even bat an eyelash. Pack-up your family pictures, over-watered houseplants and change for the coffee machine from the top desk drawer and get the Hell out. Oh yeah, hand your door badge in as well. Now beat it.
Plan for troubled times especially since all of you young people have not seen a real recession. This link to a prior Keystone article that went viral may help you understand what is coming. Recession will change all your lives forever. The Boss's song "The River" was a theme song for the rough 1980-1982 recession, the worst economic time since The Great Depression. The memories haunt me like a curse. 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 Friday Morning, 6/23/23, at 11:25 AM EST: Treasury Secretary Yellen pooh-pooh's the talk of recession. Janet looks under the buffet table and opines, "Nope, no recession here." She looks behind the curtains and announces, "No recession here, either." Yellen says the house construction and retail sales data remains strong and the labor market is resilient. Well, she needs to look at Unemployment Claims over the last 3 weeks. Meanwhile, Eurozone PMI's sh*t the bed some falling back into contraction. Ditto Japan. The eurozone manufacturing weakness sends the euro lower and US dollar index higher sinking US stocks. European chemical companies are taken to the shed behind the garage and beaten mercilessly. If the economy does not need resins, chemicals and paints, well, you do not have a recovery, you have a sick economy going forward. As they said in The Graduate, hello Mrs Robinson, you look lovely today, the key word is "plastics." Profit warnings from the chemical industry are bad news. The services sector is rolling over in Europe (generally, right now in the US and Europe, goods are disinflationary and deflationary while services remain inflationary but probably for not much longer; services will roll over and join goods). Automaker Ford announces new layoffs. How's those glorified golf carts (EV's) going, buddy? What idiot buys an EV when there is a gas station on every corner? The auto golf carts do not work in a power outage or natural disaster. Buy yourselves some good walking shoes if you buy an EV. In a power outage, you will be stuck at home unable to go anywhere, with a 1-ton hunk of junk sitting in the garage, unless you walk. A gasoline car can get you coast to coast effortlessly if you decide to take a trip on a whim. An EV requires pre-planning of your trip; 'good luck wit dat EV, sucka', as they say in the Bronx.
Note Added Saturday, 6/24/23: Federal Reserve data indicates a 71% chance of recession the highest numbers ever and in the past, a recession has occurred within 12 months every time. This activity has been ongoing so the recession will be here, say, by April 2024 or sooner. Thus, the US will be in recession either now going into and through Q3, or Q4, or Q1 2024. Choose your poison. The chart above hints that the recession will be here sooner not later so Q3 (July, August, September) and/or Q4 (October, November, December). Keystone will end up with nothing in his Christmas stocking this December not even the typical chunk of coal.
Note Added Sunday, 6/25/23: The US PMI is 53.0 slipping lower but remaining above the 50 level that separates economic expansion from contraction. The manufacturing recession continues with the US Manufacturing PMI at 46.3. Services PMI is holding-up at 54.1 as long as America's upper middle class and privileged elite, that screwed everyone else over the last five decades, keep spending money.
Note Added Thursday, 6/27/23: The Case-Shiller index falls year-on-year for the first time in 12 years. The home-price reset phenomena is over. Home prices are dropping. New Home Sales pop +12.2% on-month and +20.0% on-year. People that need a home, and have the money, have to build one since folks are remaining in their houses enjoying a low mortgage rate (they do not want to move and end up with a far higher mortgage rate). Analysts and television pundits proclaim a housing recovery is in progress and there is nothing but blue skies and rainbows ahead.
Note Added Wednesday Morning, 6/28/23, at 6:16 AM EST: The Ford layoffs include engineers. Not good. Google is laying off employees. The tech layoffs are mounting including Mister Softy (Microsoft), Scamazon, Google and dozens of smaller firms and start-ups. When the economy fades, the start-ups and other research-type projects are first to get axed and the employees on these projects are sh*t-canned. If you are working now, make sure you do not charge any time to overhead; if you do, you will be laid off. If you have a few hours of time that cannot be charged to a client or customer, ask your boss for more work since that may keep you off the layoff list a bit longer. Even if the work is not there to give you, the boss will remember that you showed initiative and he may keep you around a bit longer. Banking giant UBS, merging with Credit Suisse, announces that one-half the workforce at CS will be canned. Ford, General Motors and other automakers are laying off workers. When the engineers are axed, that signals recession. The engineers and tech jobs are high-paying so consumer spending takes a hit. What people forget about at the start of recessions, is the impact that layoffs have on society and the workers that still have jobs. The day after a company announces layoffs and kicks workers to the curb, the boss calls a meeting for the workers remaining and tells the b*tches to pick up the pace and perform the work of the sh*t-canned workers and not moan about it. Anyone complaining will be next in line to be axed. Neighbors and relatives hear that smart Johnny lost his job and wonder if their jobs are in jeopardy. People will cut back on spending for fear of losing their jobs even if they have a secure job. This pullback accelerates the recession and things fall apart quickly. It typically starts going downhill fast with the recession monster starting to growl strongly when you hear that engineers, accountants, tech workers, programmers and other highly-paid employees are canned.
Note Added Wednesday Evening, 6/28/23, at 7:26 PM EST: Federal Reserve Chairman Powell, at the central banker meeting in Portugal, proclaims, "....it's so uncertain right now, in my view, the least unlikely case is that we do find our way to better balance with without a really severe downturn." Huh? Powell continues, "I think there's a, there's a, significant probability that there will be a downturn as well though, but that is not to me the most likely case." Say what? Can you make sense of that? Whatchu talkin' 'bout Willis? Powell is a traditional two-handed economist. On the one hand, and then on the other hand.... If he expects a recession, why is he raising rates? The world is in uncharted waters but each central bank claims to own the correct map for the path forward.
Wednesday, June 21, 2023
The Keystone Speculator's Housing Market Indicator; US Housing Recession Ongoing for 6 Months
The US Housing Starts yesterday come in at a robust 1.631 million units a big +22% increase the fastest pace in a year. Television pundits proclaim that a strong recovery in housing is underway led by Federal Reserve Chairman Powell that testifies before Congress today. The band is playing and the girls are dancing. Confetti is thrown in celebration and the wine is flowing like water.
Keystone brings a wet blanket to the party. Obviously, one number (the 1.631) is not a trend as the old cliché goes. Second, 4 of the last 5 revisions in Starts are down and the one that was up was only a marginal increase. In other words, that 1.631 million units number may end up as 1.50 or 1.55 million units next month when the revision is announced. Third, the spread in the chart above, that identifies the US housing recessions and recoveries, is the widest yet.
The US housing recession is now 6 months along and counting with the indicator lines diverging from each other (worsening). Needless to say, there is a lot riding on next months Housing Starts number on 7/19/23; it is uber important the Superbowl of Starts.
Here is the link to the prior article that highlights the housing market turmoil this year. The housing data has been more encouraging over the last couple weeks prompting Pope Powell and the tv pundits to proclaim blue skies and rainbows ahead for the housing industry. However, if there was one time of the year where you expect a pop in Starts, it is now, springtime. Duh. Spring is when new construction begins and folks hope to be in their McMansion or new apartment by Thanksgiving (late November).
2/16/12; Housing recession ends and recovery begins due to the Federal Reserve's obscene money-printing to support the corrupt crony capitalism system from 2009 forward
7/17/19; 7-year housing recovery ends and housing recession begins (note this is before the COVID-19 pandemic begins)
1/17/20; 6-month housing recession ends and housing recovery begins fueled by more obscene Fed monetary stimulus and now also Congressional fiscal stimulus during the pandemic verifying that capitalism does not exist; Powell may be thinking that the 6-month housing recession pattern will repeat further encouraging him to say that the housing sector looks good going forward
12/20/22; 3-year goosed housing recovery ends and housing recession begins now 6 months along and becoming worse despite the happy 1.631 million units Housing Starts number yesterday. The Starts on 7/19/23 will provide clarity. 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 Thursday Morning, 6/22/23, at 7:10 AM EST: KBH reports an earnings beat last evening and guides higher. LEN reported positive results last week. It is interesting that the housing recession lingers on for 6 months (there is also an ongoing manufacturing recession), but homebuilders are at or near record high stock prices. LEN, KBH and TOL are at record highs but XHB is not. ITB is trying to print new record highs. All five of these tickers are topping-out with negative divergence over the next couple weeks so they can be shorted going forward say from early to mid-July forward. A weekly downtrend will begin for the homebuilders. The homebuilders benefit in the current situation for several reasons. The stocks were beaten-down so traders stepped-in to buy the bargains. The hype in tech and the AI orgy lifts all boats. The existing house market struggles with no inventory. People have low mortgage rates and do not want to move. Folks that need to move into a house are forced to build a new home (if they can afford it) since there are few existing homes available. The homebuilders are lean and mean operating efficiently. Rates relaxed lower for a couple months providing a tailwind for the builders but in the last few weeks rates are moving higher. Once the homebuilder stocks top-out on the weekly basis in a couple weeks and begin trending lower for several weeks, analysts will focus more on the ongoing housing recession. KBH trades down -2.5% in the pre-market. Pundits and analysts are shocked at the pullback considering the big beat and higher guidance and ask why? Because you are in a housing recession, dummies.
Note Added Thursday Evening, 6/22/23, at 8:40 PM EST: Existing Home Sales are flat on-month (+0.2%) and down -20.4% year-on-year. Lack of inventory (tight supply), inflated prices and high interest rates are to blame. Also low interest rates that are locked-in with people unwilling to move since they will be hit with a higher rate on a new loan. Everybody and his bro, including Pope Powell in his pale green robe, say the housing recovery is in full swing with nothing but blue skies ahead. The United States has the lowest availability of existing homes since 1999; that is nothing to party about Prince.
Note Added Friday Morning, 6/23/23, at 11:05 AM EST: Treasury Secretary Yellen pooh-pooh's the talk of recession. Janet looks under the buffet table and opines, "Nope, no recession here." She looks behind the curtains and announces, "No recession here, either." Yellen says the house construction and retail sales data remains strong and the labor market is resilient. Well, she needs to look at Unemployment Claims over the last 3 weeks. Meanwhile, Eurozone PMI's sh*t the bed some falling back into contraction. Ditto Japan. The eurozone manufacturing weakness sends the euro lower and US dollar index higher sinking US stocks. European chemical companies are taken to the shed behind the garage and beaten mercilessly. If the economy does not need resins, chemicals and paints, well, you do not have a recovery, you have a sick economy going forward. As they said in The Graduate, hello Mrs Robinson, you look lovely today, the key word is "plastics." Profit warnings from the chemical industry are bad news. The services sector is rolling over in Europe (generally, right now in the US and Europe, goods are disinflationary and deflationary while services remain inflationary but probably for not much longer; services will roll over and join goods). Automaker Ford announces new layoffs. How's those glorified golf carts (EV's) going, buddy? What idiot buys an EV when there is a gas station on every corner? The auto golf carts do not work in a power outage or natural disaster. Buy yourselves some good walking shoes if you buy an EV. In a power outage, you will be stuck at home unable to go anywhere, with a 1-ton hunk of junk sitting in the garage, unless you walk. A gasoline car can get you coast to coast effortlessly if you decide to take a trip on a whim. An EV requires pre-planning of your trip; 'good luck wit dat EV, sucka', as they say in the Bronx.
Note Added Saturday, 6/24/23: Federal Reserve data indicates a 71% chance of recession the highest numbers ever and in the past, a recession has occurred within 12 months every time. This activity has been ongoing so the recession will be here, say, by April 2024 or sooner. Thus, the US will be in recession either now going into and through Q3, or Q4, or Q1 2024. Choose your poison. The chart above hints that the recession will be here sooner not later so Q3 (July, August, September) and/or Q4 (October, November, December). Keystone will end up with nothing in his Christmas stocking this December not even the typical chunk of coal.
Note Added Sunday, 6/25/23: The US PMI is 53.0 slipping lower but remaining above the 50 level that separates economic expansion from contraction. The manufacturing recession continues with the US Manufacturing PMI at 46.3. Services PMI is holding-up at 54.1 as long as America's upper middle class and privileged elite, that screwed everyone else over the last five decades, keep spending money.
Note Added Thursday, 6/27/23: The Case-Shiller index falls year-on-year for the first time in 12 years. The home-price reset phenomena is over. Home prices are dropping. New Home Sales pop +12.2% on-month and +20.0% on-year. People that need a home, and have the money, have to build one since folks are remaining in their houses enjoying a low mortgage rate (they do not want to move and end up with a far higher mortgage rate). Analysts and television pundits proclaim a housing recovery is in progress and there is nothing but blue skies and rainbows ahead.
Note Added Wednesday Morning, 6/28/23, at 6:16 AM EST: The Ford layoffs include engineers. Not good. Google is laying off employees. The tech layoffs are mounting including Mister Softy (Microsoft), Scamazon, Google and dozens of smaller firms and start-ups. When the economy fades, the start-ups and other research-type projects are first to get axed and the employees on these projects are sh*t-canned. If you are working now, make sure you do not charge any time to overhead; if you do, you will be laid off. If you have a few hours of time that cannot be charged to a client or customer, ask your boss for more work since that may keep you off the layoff list a bit longer. Even if the work is not there to give you, the boss will remember that you showed initiative and he may keep you around a bit longer. Banking giant UBS, merging with Credit Suisse, announces that one-half the workforce at CS will be canned. Ford, General Motors and other automakers are laying off workers. When the engineers are axed, that signals recession. The engineers and tech jobs are high-paying so consumer spending takes a hit. What people forget about at the start of recessions, is the impact that layoffs have on society and the workers that still have jobs. The day after a company announces layoffs and kicks workers to the curb, the boss calls a meeting for the workers remaining and tells the b*tches to pick up the pace and perform the work of the sh*t-canned workers and not moan about it. Anyone complaining will be next in line to be axed. Neighbors and relatives hear that smart Johnny lost his job and wonder if their jobs are in jeopardy. People will cut back on spending for fear of losing their jobs even if they have a secure job. This pullback accelerates the recession and things fall apart quickly. It typically starts going downhill fast with the recession monster starting to growl strongly when you hear that engineers, accountants, tech workers, programmers and other highly-paid employees are canned.
Note Added Wednesday Evening, 6/28/23, at 7:36 PM EST: Federal Reserve Chairman Powell, at the central banker meeting in Portugal, proclaims, "....it's so uncertain right now, in my view, the least unlikely case is that we do find our way to better balance with without a really severe downturn." Huh? Powell continues, "I think there's a, there's a, significant probability that there will be a downturn as well though, but that is not to me the most likely case." Say what? Can you make sense of that? Whatchu talkin' 'bout Willis? Powell is a traditional two-handed economist. On the one hand, and then on the other hand.... If he expects a recession, why is he raising rates? The world is in uncharted waters but each central bank claims to own the correct map for the path forward.
Sunday, June 18, 2023
USD US Dollar Weekly Chart; Sideways Funk; H&S Threatening; Dollar Moves Send Stock Market in Opposite Direction
The US dollar, dixie, the greenback, the Almighty Buck, is running the stock market show along with the AI orgy. Commodities jump on the weaker dollar (see the long red candlestick for last week) sending the stock market ever higher. Generally, stocks rise on the weaker dollar and equities fall on the stronger dollar although, comically, in recent weeks, AI orgy hype is overriding the dollar strength sending stocks higher. Thus, the melt-up in the stock market occurs.
The H&S pattern (blue) remains in play threatening a big drop in the dollar over coming months that would potentially (it's not that simple) help stocks. But price is resisting the failure at the neckline at 102 and created a second right shoulder. It can be jokingly dubbed the Quasimodo pattern. With a head at 114 and neck at 102, that is 12 points difference so taking away 12 from 102 is 90 for the downside target. If 102 fails and the dollar begins trending lower, the ultimate downside target is 90.
Note at how dollar price is lining out sideways along with the moving averages. The chart indicators also favor a multi-week sideways funk so the jury remains out on the H&S pattern. The ADX verifies the trendless market that staggers sideways like a drunk in Times Square last evening. The last strong trend (pink box) was in 2022 (last year) when the buck was moving higher. Of course, that upside trend was toast late last year. If the downside trend was strong, the ADX should have curled higher and be pushing up through 30; it's not. The dollar is in a sideways funk.
Let's drill down over the last month and see if we can gleam a direction out of the dixie chick. The second right shoulder hump over the last few weeks occurs with price printing matching or higher highs for 3 weeks. The thin black line shows the last price high and you can see that the negative divergence of the RSI and histogram create the spankdown conspiring with the USD daily chart that topped-out with neggie d.
So the dollar drops last week and here comes ECB President Madame Lagarde stomping on the greenback with her high heels. Lagarde's hawkishness elevates the euro and since the euro/dollar baskets are interlinked with about 60% or more holding each other's currency, the two move inverse. Euro up dollar down and US stocks receive another goose higher on the weaker buck.
The MACD, stochastics and ROC indicators are sloping higher as price makes its new high and are not negatively diverged. This hints that the dollar wants to come back up again for another look at those highs at 104-ish. It also reinforces the sideways choppy slop behavior. The stochastics are at the prior high (purple) but price did not make a higher high as compared to February/March. This hints that the dollar wants to come back up again.
The failure at the H&S neckline remains elusive and the dollar will keep you guessing. Bring up the dollar daily chart. You can see the RSI was possie d for the Friday bounce in the dollar but the MACD remains weak and bleak. The dollar needs a few days to bottom on the daily basis. This is interesting since the stock market is due to roll over and that would be in concert with the dollar gaining strength again. That may start anytime in the days ahead. As the dollar recovers on the daily basis, probably starting in the week ahead, it will be interesting to see if the AI orgy can override dollar strength again, or not.
Life is all about being a day late and a dollar short. The Story of My Life. 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 Sunday, 6/25/23: USD tags 103.17 on Friday.
Saturday, June 17, 2023
SPX S&P 500 and USD US Dollar Index Daily Charts; Dollar/Stocks Relationship Overridden by AI Orgy
The inverse relationship between stocks and the US dollar is on full display in the charts above. Dollar up stocks down and dollar down stocks up. Commodities, oil, gold, etc..., are traded in dollars and move inversely to the dollar which sends overall stocks in the same direction.
That relationship was groovy until April and May when the dollar slides into a sideways funk. Thus, so do stocks (blue channels). The AI orgy kicks into high gear and clearly overrides the dollar strength in May. It tells you that the AI hype is dominant and off the charts. The dollar then slumps all of this month sending stocks ever higher.
Stocks go up on a weaker dollar and stocks go up on the AI hype despite a stronger dollar. No wonder the bulls are partying like its 1999 as Prince would sing. 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 Sunday, 6/25/23: USD tags 103.17 on Friday.
Thursday, June 15, 2023
SPX S&P 500 Daily Chart; Overbot; Rising Wedge; Negative Divergence Developing; Price Extended
The Federal Reserve carnival moves through town; the caliope sound is fading into the distance. The previous SPX 2-hour chart shows price topped-out. That negativity will team up with the overbot RSI and stochastics and negative divergence (red lines) on the daily chart above to spank price lower in the hourly time frame.
However, the green lines on the daily chart above show the RSI long and strong and momentum in the MACD line and money flow. This hints that one more high is needed in the daily time frame before the top is in for the daily time frame. Remember, trading is playing multi-dimensional chess where you have to balance the time frames against each other to form the path forward.
The SPX should drop in the hourly time frame starting today, and say through Friday into the weekend with the new moon peaking, but next week price will likely recover back up to the current highs to satisfy the RSI above and the ST juice in the MACD and money flow. There is not much there to drive price higher in the daily time frame but likely enough to bring her back up for another look once the pullback in the hourly time frame plays out.
Note that price is extended above the moving averages ribbon requiring a mean reversion lower. The red rising wedge is a bearish pattern. The upper band is violated so the middle band, that is also the 20-day MA at 4249 is on the table.
Thus, the pullback in the 2-hour time frame may take price down to 4341-ish tomorrow and Monday, then back up again to the current 4390-4400 maybe mid-week, then down in the daily time frame starting mid-week next week targeting 4249 as an initial downside target.
As usual, positive news, or announcements of stimulus from central bankers in the corrupt financial markets, will temporarily pump stocks higher or at least maintain buoyancy. Conversely, negative news will exacerbate the downside since stocks are set up for weakness in the ST now that the Fed circus is driving out of town. 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 7:57 PM EST: What happened? Madame Lagarde and the ECB send the euro catapulting higher tanking the US dollar sending US stocks higher. The stock market is in a melt-up and the bulls can do no wrong. Positive news appears at the right intervals to keep goosing price higher. Bring up the SPX 2-hour chart. The pump occurs due to the ECB decision so the SPX price makes a new high up at 4439. Wowza. The 2-hour chart remains neggie d except for the RSI and MACD line that are long and strong. The RSI and stochastics remain overbot. The RSI is flattish so it will easily roll over from this nosebleed position. The MACD line likely needs a jog move to line out with neggie d so the top can be placed, again. Perhaps there will not be news that saves the day when that occurs. There will be new candlesticks on the 2-hr chart at 9:30 AM EST, 10 AM, noon and 2 PM; it is the way the stockcharts programming is set up. Thus, a jog move (down-up) would place the top in the mid to late morning time frame (tomorrow (Friday) morning, say, between 10 AM and noon). Bring up the SPX daily chart. That was a rocket launch today. Keystone is bringing on index shorts and is taking it in the shorts. Ouch. Keybot the Quant remains long. The histogram, stochastics and money flow are neggie d on the daily chart but the MACD line and RSI receive a push higher requiring a jog move on the daily basis to top-out. The revised analysis after the bullish orgy today sounds a lot like the previous analysis. Stocks will top-out Friday morning, probably soggy into and through Monday, but then recover again to current highs next week, then roll over and die on the daily basis. UTIL moves above 916.25 today a big win for bulls. Watch the utilities tomorrow. Copper rallied helping the bull case. Mr Softy is at a record high. Everything's Coming Up Roses as Ethel sings. What do you think? Maybe bad stuff overnight and a Black Friday tomorrow?
Note Added Friday Evening, 6/16/23, at 7:30 PM EST: The major indexes all topped-out minutes after the opening bell this morning. The SPX receives the start of the neggie d spankdown on the 2-hour chart tagging the HOD at 4448, then falling on its sword, down to 4410 at the closing bell. LOD 4407. Now we see if the bears got legs. Winners and Losers, Heaven and Hell, which one did you live today? The new moon peaks this weekend the darkest time of the month. Stocks are typically weak through the new moon. There will likely be increased activity in the Ukraine War over the coming days since the Ukraine troops are loaded for bear with night vision technology ready to rout out the Ruskies in the pitch-black darkness (they were likely waiting for the new moon). The bears finally get a chance at steering the stock market ship. The stock market will be closed on Monday for Juneteenth. That holiday came out of left field many probably do not even know the markets are closed on Monday. Keystone is a white dude but he has been retired for many years so you can say he is free from slavery also. There was no Black Friday. What do you think? Maybe a Black Tuesday?
SPX S&P 500 2-Hour Chart; Overbot; Rising Wedge; Negative Divergence
Okay, the circus moves through town over the last few days into the Fed meeting. Bulls goose stocks from late last week trying to keep equities elevated into this week so the expected bullishness in front of the Fed meeting would occur; they succeeded. China stimulus helped by sending copper higher creating lift in the stock market. For OpEx week, a Tuesday low typically leads to a Wednesday high so more bullishness helped keep stocks elevated into the Fed event yesterday afternoon.
Stocks rally today and the SPX 2-hour chart shows matching highs above 4390 but all the indicators are negatively diverged identifying a top. The rising red wedge is bearish. The RSI and Stochastics are overbot agreeable to a pullback. The new moon peaks for the month on Saturday so stocks may be soggy from Friday into Monday.
A drop in stocks should begin now (neggie d spankdown) going forward in the hourly time frame. The middle band at 4341, and rising, is a downside target. 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 7:45 PM EST: What happened? Madame Lagarde and the ECB send the euro catapulting higher tanking the US dollar sending US stocks higher. The stock market is in a melt-up and the bulls can do no wrong. Positive news appears at the right intervals to keep goosing price higher. Bring up the SPX 2-hour chart. The pump occurs due to the ECB decision so the SPX price makes a new high up at 4439. Wowza. The 2-hour chart remains neggie d except for the RSI and MACD line that are long and strong. The RSI and stochastics remain overbot. The RSI is flattish so it will easily roll over from this nosebleed position. The MACD line likely needs a jog move to line out with neggie d so the top can be placed, again. Perhaps there will not be news that saves the day when that occurs. There will be new candlesticks on the 2-hr chart at 9:30 AM EST, 10 AM, noon and 2 PM; it is the way the stockcharts programming is set up. Thus, a jog move (down-up) would place the top in the mid to late morning time frame (tomorrow (Friday) morning, say, between 10 AM and noon). Bring up the SPX daily chart. That was a rocket launch today. Keystone is bringing on index shorts and is taking it in the shorts. Ouch. Keybot the Quant remains long. The histogram, stochastics and money flow are neggie d on the daily chart but the MACD line and RSI receive a push higher requiring a jog move on the daily basis to top-out. The revised analysis after the bullish orgy today sounds a lot like the previous analysis. Stocks will top-out Friday morning, probably soggy into and through Monday, but then recover again to current highs next week, then roll over and die on the daily basis. UTIL moves above 916.25 today a big win for bulls. Watch the utilities tomorrow. Copper rallied helping the bull case. Mr Softy is at a record high. Everything's Coming Up Roses as Ethel sings. What do you think? Maybe bad stuff overnight and a Black Friday tomorrow?
Note Added Friday Evening, 6/16/23, at 7:13 PM EST: The major indexes all topped-out minutes after the opening bell this morning. The SPX receives the start of the neggie d spankdown on the 2-hour chart tagging the HOD at 4448, then falling on its sword, down to 4410 at the closing bell. LOD 4407. Now we see if the bears got legs. Winners and Losers, Heaven and Hell, which one did you live today? The new moon peaks this weekend the darkest time of the month. Stocks are typically weak through the new moon. There will likely be increased activity in the Ukraine War over the coming days since the Ukraine troops are loaded for bear with night vision technology ready to rout out the Ruskies in the pitch-black darkness (they were likely waiting for the new moon). The bears finally get a chance at steering the stock market ship. The stock market will be closed on Monday for Juneteenth. That holiday came out of left field many probably do not even know the markets are closed on Monday. Keystone is a white dude but he has been retired for many years so you can say he is free from slavery also. There was no Black Friday. What do you think? Maybe a Black Tuesday?
Sunday, June 11, 2023
UTIL Utilities Weekly Chart; Utilities Dictate if Pending Stock Market Pullback will be Serious (Crash) or Not
Are you ready for the Superbowl of stock trading this week? It will be epic. It is interesting that the West Coast ports are shutting-down due to the strike problems. Inflation data drops on Tuesday and Wednesday and Pope Powell will bring the tablets down from On High on hump day and tell global traders how to trade. Isn't crony capitalism nauseating? It is what it is.
The SPX broke out of the multi-month sideways range through 3800-4200 and has now floated 100 points higher teasing 4300. The short-term top would have been placed already but the drama with the Federal Reserve, debt crisis and inflation data keeps stocks buoyant. Investors are watching and waiting, holding onto longs with one hand but the index finger of the other hand is ready to press the sell button.
The put/call ratios are in the cellar verifying, along with the VIX, that complacency is running rampant in markets. Many traders are staying long stocks and not worried about any pullback that may occur. Television pundits and commentators opine about how bearish everyone is but as usual they are incorrect. Never listen to what people say since most humans lie especially nowadays. Watch what they do especially with their money and that always gives you the answer. Traders and analysts may wring their hands nervously aboutthe stock market, wiping sweat from their foreheads with stained handkerchiefs, but 10 minutes later they are buying 5 blocks of AAPL, or insert any ticker symbol, at the ask. Traders and investors are off the charts bullish not bearish.
The put/call ratios dictate that a top is at hand and the ST SPX charts are in agreement displaying neggie d. Pope Powell in his pale green robe is the only one that can save the day in the week ahead. Traders are trying to keep equities buoyant through Monday since stocks typically run higher on Tuesday and Wednesday in front of the Fed presser. This makes the stock market price behavior on Monday uber important.
The SPX is topping-out now and will pullback from 100 to 400 points. As mentioned, Powell is the main attraction ahead. Even if stocks would remain buoyant through the Powell presser, the expectation would be for the downside to occur after the new mini-party.
The utility chart is shown above because this tells you if the drop in stocks will be a run of the mill pullback of 100 to 400 S&P 500 points, or, if the pullback is going to be far more serious (go ahead, say the 'crash' word, it's okay).
Keystone has posted and discussed the utility chart many times so you know that the 50-wk MA is key, now at 955, and the weekly closing price from 15 weeks ago that determines the weekly trend. If utes are in a weekly uptrend, that portends rosy happy times for stocks going forward but if utes fall into a weekly downtrend, like now, that forecasts serious trouble ahead.
Obviously, the 915 price remains far below the 50-wk MA at 955 so the bears receive a checkmark in their column of doom and gloom. The blue circle shows the closing price from 15 weeks ago at 916.23. This was high drama on Friday since the way UTIL closes at 4 PM EST Friday at the end of the week provides insight into what may occur on Monday morning.
UTIL started Friday at 920 and fell to 915. If UTIL would have ended last week above 916.23, the week ahead would start on an up note with the bulls throwing confetti. It did not. Instead, the bears are joyous that price dropped and ended below 916.23 which sets up conditions for a soggy start to the week ahead. Of course, it is a game of pennies and dollars now since price may explode above 916.23 at the opening bell on Monday. Conversely, UTIL may collapse on Monday hinting at the start of major stock market trouble ahead.
The purple circle shows the 15-week lookback comparison number for the following week of 6/19/23. For that week, the 916.23 becomes a worthless number replaced by 887.55 a far easier number for the bulls to stay above.
Stocks are expected to top-out and sell off in the days ahead. Watch UTIL. If price moves above 916.23, that tells you that the pullback in stocks will not be a big deal and will likely be followed by more upside in the weeks ahead. Obviously, if you are bullish the stock market and blindly holding longs in your portfolio, you better pray that UTIL rallies in the week ahead.
If UTIL remains below 916.23, stocks will likely be dropping like rocks and then the key issue will be where does price end on Friday, 6/16/23, at 4 PM EST, that can provide insight into the following week. If UTIL trends lower in the week ahead but does not break 9 hundo, or even if it does drop below 900 but it cannot fall below 888 by late Friday, that also hints that the pullback may not be that bad.
If, however, UTIL trends lower and takes out 888 and ends the week below 888, Katy bar the door because there would be a high probability that the US stock market will crash going forward. That would be fun. The brown lines show that for the weeks ahead, the UTIL comparison numbers will become more difficult again. A loss of UTIL 888 in the days ahead almost guarantees a stock market crash going forward; this would make the bears smile, as Steve sings. Comically, in Asia, 8 is a lucky number. 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 6/15/23, at 8:00 PM EST: UTIL recovers above 916.23 to 921 a win for bulls but the drama will continue over the next couple-three weeks.
Friday, June 9, 2023
US Unemployment Claims Weekly Chart; Moving Average Trends Higher for 9 Months Indicating Recession Ahead
The unemployment claims typically trend higher when a recession is on the come. Yesterday's claims are the highest since Halloween 2021. The chart shows the moving average bottoming last September and layoffs and firings trending higher for 9 months. The recession, however, remains with Godot, and is not showing-up yet.
Keystone's prior unemployment claims chart from March is linked here. DOL data linked here. The data set is sloppy since last Fall was not shown as the bottom in the moving average back then. The revisions worsened the picture showing that the trend higher in claims is ongoing for many months since last September.
The brown moving average line should move above the prior high over the next couple weeks since claims jump higher maintaining the trend higher. Unemployment claims tell you a recession is on the come but the wealthy class keeps spending money keeping the economy afloat. 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.
VIX Volatility and SPX S&P 500 Weekly Charts; VIX Prints Lowest Price in Over 3 Years; SPX Prints Highs of 2023 Near 4300
The VIX prints the lowest price in over 3 years. Traders and investors are relaxed and complacent expecting the stock market to continue higher. Volatility spiked in early 2020 due to the COVID-19 pandemic so stocks went into freefall. The panic and fear was off the charts with VIX pegging 85+ so professional traders were buying, running into the burning building, while Joe Sixpack and Jane Retail were running away with their hair on fire swearing they will never own a stock again.
The rally continues through 2020 and 2021 and the VIX drops back down teasing the lows from early 2020. This marked the epic top in the US stock market above 4800 as 2022 started. The cyclical bear market ran through 2022 turning into choppy sideways slop for 2023. Note the choppy trading last year with the peaks and valleys in the stock market identified inversely by the complacency and panic in the VIX. Note that a VIX above 30 is enough fear and panic to create the rallies over the last year.
The purple stars are an odd lot. Keystone likes purple crayons because they taste like grapes. Stocks rally from early 2020, during the pandemic, to the top in late 2021 early 2022. With stocks higher, you expect a lower VIX than late 2019 early 2020 but it never came down for a lower low. That was a clue that the stock market was weak despite the bullish euphoria in late 2021. Sure enough, stocks roll over into the cyclical bear for 2022.
For the purple stars from mid-2021 to present, the VIX does print a lower low so the expectation is that stocks would be at a higher high. Not even close. The SPX is at a closing high for this year but nowhere near the 4800+ record high. This tells you that something is not quite right.
Comparing the purple stars from early 2020 to present, the stock market is higher but again, the VIX is not yet at a lower low than late 2019 early 2020.
The VIX is a beachball that you are holding underwater to make sure stocks go higher if you are long. But once in a while your hand slips and the VIX explodes up out of the water sinking your long plays. Once the VIX beachball is wrestled back under control (by the corrupt Federal Reserve in the crony capitalism system) and pulled back underwater, stocks become buoyant again. 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.
Thursday, June 8, 2023
SPX S&P 500 2-Hour and Daily Charts; Overbot; Negative Divergence; SPX Closing High for 2023 at 4294; Triple-Top Requires Resolution
The daily chart is weak but of course the Fed wild card is on tap next Wednesday and inflation data Tuesday and Wednesday. Stocks usually float higher the 2 days in front of a Fed meeting next week. So perhaps some sogginess is the order of the day until we move into the Fed meeting next week.
Remember, the low put/calls have not yet resolved so a pullback is expected to begin anytime for stocks. Keystone sold some longs such as CGEN and EDIT and is bringing on index inverse ETF's today (short plays). 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 12:19 PM EST: The SPX pops higher to 4287 the HOD. Traders are tripping over each other to buy stocks afraid of missing out on the rally party. Woo-hoo. The music turns louder at the bull orgy with price popping to 4288. We shall see if she can remain buoyant, or not. Let it drop as Sports Team sings.
Note Added 6:53 PM EST: Whoopie. The bulls pump the SPX to a new closing high for 2023 at 4293.93. The high for the year is 4299.28 on 6/5/23 (Monday). The bulls are high-fiving and patting each other on the backs amazed at how smart they are to be leveraged long now betting Junior's graduation money on the market. The guy on television said stocks are Outtasite and a recession is off the table. What's he smoking? The above analysis should be same-o, same-o regardless of the rally. Bring up the SPX daily chart, you can see the candlestick closes at the new high for the year. Today is 5 days of matching or higher prices so the chart indicators can be assessed for negative divergence and all are sloping lower just as the above chart shows. The MACD is trying to muster up a day or so of remaining strength but is clearly neggie d since the April and February tops. Plug in the moving averages for the 20-day, 50, 100, 150 and 200 and the moving average ribbon is showing price in the stratosphere above the 20-day MA above the 50 MA above the 100 above the 150 above the 200 requiring a mean reversion lower. Bring up the SPX 2-hour chart to see the triple-top. The old saying is that 'triple-top's don't exist' because they typically resolve higher and only end up as two highs with price taking off bigtime higher to Paradise as John Prine sings. In truth, triple-top's are a 50-50 proposition sometimes they hold and spank price lower and other times price rockets higher nullifying the triple-top. It will be interesting to see how price resolves; it has to make a bounce or die decision now. The three highs this week are 4299, 4299 and 4298 today. Price comes up for the matching triple high this week and the chart indicators remain neggie d. Note the selling volume candles from Wednesday, when stocks fell, are taller than the buying volume candlesticks today, in the same price range (bearish). This will be fun to watch. What do you think? Is she ready to jump off the cliff overnight, or, will tomorrow be another bull orgy into the weekend? Friday may be an interesting day. Stocks will likely remain choppy until Pope Powell brings the tablets down from On High next week. Before then, perhaps we see some excitement tomorrow and Monday. Take a deep breath. Maybe One Last Breath.
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