The SPX weekly chart is a bunch of Spaghetti-O's. It is patriotic with reds and blues and whites. It is obvious that the stock market is waiting for the Superbowl next Wednesday, 6/14/23, for the Federal Reserve rate decision and Chairman Powell presser. The 2-day Fed meeting starts on 6/13/23 the same day the CPI inflation data drops and then on Fed day, hump day, the PPI inflation data drops. This is when the stock market story will be told and the charts are set up waiting for this 2-day event next week. Comically, next Wednesday is Flag Day so Powell may be waving a white surrender flag.
The blue lines show the Fibonacci retracements (38%, 50% and 62%) for the collapse from 48 hundo down to 36 hundo. Price is teasing the 62% Fib retracement at 4312. Interestingly, the top standard deviation band is at 4311 and price came up to 4300 yesterday almost a touch. A violation of the upper band will place the middle band, which is also the 20-wk MA, at 4101, on the table, as well as the lower band at 3890.
A pop above the 62% Fib retracement would be a big deal (several days of closes above 4310-4320) with the bulls throwing confetti seeing blue skies and rainbows ahead. However, the chart is not set up for that rosy ending. Chairman Powell remains the wildcard that is in complete control of what direction the stock market goes. Don't you love the garbage crony capitalism system? Don't worry since crony capitalism is in its final throes.
The SPX weekly chart is set up negatively but the negative divergence is not fully in place as yet so a run at the 4320 level is definitely on the table. Keystone's 80/20 Rule says 8's lead to 2's on the way up so a move, and a few days of closes above 4280, opens the door to 4320. A move above 4278 opens the door to 4282.
The red rising wedge pattern is bearish. The stochastics are overbot which is a bearish sign although the RSI is not in overbot territory. The red lines show that as price makes a new high this week, the RSI, histogram, stochastics and money flow are all neggie d wanting to see a spankdown and start of a multi-week down move. However, the MACD line, typically the last kitten that always needs herded, remains long and strong.
The MACD wants to see a higher high in the SPX on the weekly basis which sets up the Superbowl event for next Tuesday and Wednesday as explained above. The expectation is that the SPX price should make the matching or higher high this week and next, as it is doing now, and the MACD should roll over and go neggie d, joining the other indicators, and calling the top on the weekly basis.
The Aroon green line shows that 100% (the absolute maximum) of the bulls believe that stocks will continue higher going forward. The Aroon red line shows that all the bears also believe that stocks will continue higher. This is a contrarian indicator. When everyone is nearly 100% bullish about stocks, that is when the market typically sells off.
The ADX at 13 shows that the multi-month rally in stocks off the October low is garbage and not a strong trend higher. The last strong trend for the US stock market was the cyclical bear market last year (pink box). The strong down move in stocks in 2022 stalled into the current multi-month sideways funk that is beating-up bulls and bears alike. If the stock market rally was a strong trend higher, the ADX would be above 25 or 30 right now heading higher. It's not.
The SPX probably needs to back kiss the 100-wk MA at 4198 and the 20-wk MA at 4101 as explained above. What does all this mumbo-jumbo and technical voodoo mean to the heads that are exploding from knowledge overload?
Stocks may be soggy this week but should rally into the Fed meeting next week (stocks are up 80% of the time during the couple days in front of a Fed meeting) probably tagging the 62% Fib at 4312 and upper band at 4311, call it 4320. At that time, the MACD line will likely go neggie d to mark the top. A multi-week down move should begin for stocks anytime over the next couple weeks. Simply watch the MACD line so you know when the top is in on the weekly basis; you do not have to guess.
Once she rolls over, the down move can be very ugly. The SPX needs a run of the mill pullback of 100 to 400 SPX points to satisfy the uber complacency shown by the put/calls but the failure in utilities points to a far worse outcome; double that fall or more. Watch UTIL 928 this week since that will prevent the worst outcome going forward. The stage is set for next week when Pope Powell brings the tablets down from On High and tells global traders how to trade in the world's corrupt financial system. It's fun. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.
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