It is August and the SPX weekly is an ugly chart. It walked into an ugly forest and bumped into every tree. It is a great chart for a technical analysis workbook. It is a piece of crap stating that the SPX (S&P 500 Index; the United States stock market), has topped-out on the weekly basis, as previously explained, and started a multi-week down move. The bulls are trying to hold the line one last time with all their faith and confidence in the US Monthly Jobs report only 26 hours away.
This chart is so nasty that even if price rallies greatly today or tomorrow, and starts to make its way higher to more new record highs, it will not matter. Sell Mortimer, Sell! The SPX is experiencing the neggie d spankdown as previously explained (red lines). Price was making new record highs but it is easy to see that all the chart indicators are sloping lower, negatively diverged, so you can make the top call. Conversely, when price falls lower and lower and sets up with positive divergence, possie d, that forecasts the start of a rally move higher. Neggie d and possie d are the two most important metrics in technical analysis since they enable you to call tops and bottoms and have fun making money. If price makes a new high, it is unlikely that the indicators will print higher.
The right candlestick is in progress since the week has 2 more days remaining and the jobs drama will impact the markets today. Pope Powell says a September rate cut is on the way (9/18/24) as long as data cooperates always wanting to protect America's wealthy class and the investment banks with his dovish talk. Stocks rally big yesterday with each dovish proclamation from Powell's pie-hole. He said the labor stats are not adding to inflation which means wages are stagnant so those numbers will be key. Inflation will definitely stall if wages are moving flat or lower.
The US has been in a labor recession since last September as per Keystone's work (scroll back to study the chart) for nearly one year. The unemployment rate has risen from 3.4% to 4.1% a gain of 0.7 percentage points. As stated after the last jobs report, the unemployment rate can be 3.8% or higher tomorrow to maintain the ongoing labor recession. With the rate at 4.1% now, and the consensus is at 4.1% for today's report, it is hard to imagine a rate of 3.7% reported tomorrow, thus, the labor recession should continue going forward as the Fed whistles past the graveyard singing from the data-dependent hymn sheet.
Back to that sad-looking chart above; it's a POS. As mentioned, a neggie d spankdown has started on the weekly basis. The red rising wedge pattern is textbook resulting in a collapse from the apex. Price tagged the upper standard deviation line, now at 5666, there sure are a lot of 666's showing up in the numbers these days, so the middle band, that is the 20-wk MA at 5325, is on the table as well as the lower band at 4984.
Price is above the moving average ribbon so a mean reversion lower is desperately needed. The RSI, stochastics and money flow were at overbot levels agreeable to a pull back. It is all crap, folks.
Note how price makes a higher high but the ADX is also neggie d. This tells you that despite the new euphoric highs in stocks, the strong trend higher is weakening. When/if the ADX drops below 28-30, that will confirm that the selloff in the weekly time frame is well underway (pink box). Note the pink box in 2022 that confirmed that the selling was a strong trend lower until the end of 2022, and that is when the long rally to now started.
The Aroon is comical. The green line shows that every bull is bullish on the stock market and every bear is also bullish on the stock market; rampant euphoria. There are zero bears remaining; all have left town and are in hibernation. The stock market is bulls selling to other bulls hoping that those bulls will come back and buy again. Who will be the bigger fool?
The blue circles show that the smart money is passing off shares to the dumb money over the last few months; distribution. Joe Sixpack, Carmelita Winedrinker, and Carlos Bagholder are riding the AI and inflation hype trains buying stocks with their paychecks. Every top loves the bagholdin' sucka's. Yields fall like rocks during July so that tells you the smart money at the investment banks are taking profits in the stock market, sloughing off stock market shares to the bagholding sucka's, and that money is then placed into Treasuries for perceived safety sending the note and bond prices higher and yields lower.
The weekly chart is complete negativity. It is forecasting that the selloff on the weekly basis has started and will continue for a few weeks, say the month of August. There is no reason for price to come up for another record high since the neggie d is on display for all indicators. It can only happen with some type of good news (jobs tomorrow? or the Fed?) that can goose stocks and put off the top for a little while longer. The expectation is for stocks to drop this month into a much-needed pullback. The Drop.
For this morning, Jobless Claims are on tap, but, it is all about the US Monthly Jobs Report tomorrow. Watch the rate and wages. Keystone continues holding index shorts and Keybot the Quant remains short, but this could change if the rally higher continues. The jobs report will dictate the path ahead for the next couple-few days. 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 8:25 AM EST: The consensus for the Jobs Report tomorrow is 175K jobs, a steady 4.1% unemployment rate, and +0.3% monthly wages. The jobs report was 206K jobs and a 4.1% rate last month. C expects the unemployment rate to tag 4.2%.
Note Added 8:32 AM EST: US Jobless Claims are 249K a big jump higher (236K was expected) the worst number in a year. The inflation part of the report is steady but Powell will be concerned about a slowing job market. The drama around tomorrow's jobs report increases after the larger than expected claims number. Comically, when claims were not moving much higher, Wall Street analysts said this is excellent data to rely on, but as the claims now move higher and higher and up to almost 250K today, the same folks now say claims data can be noisy and unreliable. The Wall Street casino is a hoot. The jobs circus is coming down the road led by the BLS, those kooky cats that want to rock this town inside out. If you listen closely you can hear the calliope.
Note Added 9:39 AM EST: The US trading session is underway. SPX 5550. The 20-day MA is 5543 so this may act as a magnet and/or support holding area until the BLS brings the jobs tablets down from On High tomorrow morning (23 hours away).
Note Added 7:09 PM EST: The SPX peaked at 5566 only minutes after the post above this morning. The robots send the SPX steadily lower all day long in programmed selling to a low at 5410. That is a 156-point intraday move lower; a bed-sh*tting. The bears successfully back kiss the 20-day MA at 5538 with price tagging the moving average and then collapsing back down. With a jobs report on tap, calmer sideways markets would be expected but that did not occur today. It was the 50-day MA at 5449 acting as support with the session ending at 5447. The SPX loses -1.4%. RUT (small caps) -3%. SOX (semiconductors) crashes -7% giving up all the prior day's gains. ARM loses an arm crashing -16%. QCOM is in DEFCON 1 crashing -10%. MRNA pukes -21% after lowering guidance for COVID-19 vaccines. AI darling NVDA collapses -7%. After the bell, Scamazon, AMZN, collapses -5% (is the US consumer dead), INTC crashes -17%, AAPL is down -2%, SNAP snaps like a twig plummeting -20%. COIN -5%. DoorDash is a winner in the afterhours dashing for the door before the slaughter started. Whoever liked the stock market at SPX 5670 a couple weeks ago, the bagholders, must love it at 5447. Pause for laughter. S&P futures are down -25 with the Jobs Report in 13 hours. Pope Powell will next tell global traders how to trade from Jackson Hole, Wyoming, USA, on 8/22/24 to 8/24/24 and then after that is the next FOMC meeting when a rate cut is expected on 9/18/24 (2-day meeting begins 9/17/24). The rate cut is 7 weeks away; do the markets have that much time? Discussions about 'lags' may be required going forward. The jobs circus is setting up tents this evening. Come on boys, may as well entertain everyone with Wagon Wheel to improve the mood. Bring out the dancing girls and hand me that guitar.
Note Added Friday Morning, 8/2/24, at 4:45 AM EST: The weakness in stocks continues around the world in a cascading global selloff. It has been a while since we seen one of these. Japan's Nikkei crashes -6%. South Korea's KOSPI mini-crashes -4%. China, Hong Kong and Aussie indexes are down -1% or -2% or more. The selling next cascades to Europe with trading now getting underway with all those indexes lower although only by a percent or two. European traders may be giving the benny of the doubt to the US Monthly Jobs Report to be released in a few hours. US futures are getting beaten with an ugly stick. S&P futures are down -55 points soiling the sheets. Nazzy futures are down -1.666%. Those darn trip 6's. The VIX (fear gauge) is above 20. AMZN -8%. INTC -22%. AAPL -1%. NVDA -4%. Investors and traders think Fed Chairman Powell may have waited too long to cut rates. The economy may be falling apart faster than anyone realizes and policy changes will have a lag time. Traders are selling first and asking questions later. Some of that dough is going into bonds and notes sending those prices higher and yields lower. When the 10-year yield fell below 4%, a loud bell started ringing. Traders are seeking the perceived safety of bonds and notes because they are viewing the economy and markets negatively going forward. Powell is up early on the East Coast, wringing his hands, beads of sweat on his forehead, and in his robe with the jelly doughnut stain on the lapel, he prays that the jobs report, that drops in less than 4 hours, will save the day. Remember, the unemployment rate is key expected to remain at 4.1%. If it comes in higher, the Sahm Rule indicator would be triggered forecasting a US recession (some say this trigger is at 4.20% and others say it is 4.28% depending on rounding the numbers). Sahm has been hesitant at putting a lot of confidence in her own indicator. Keystone's indicator has identified an ongoing labor recession since last September; the Fed would have cut on Wednesday if following Keystone's analysis. Powell disses the importance of the Sahm Rule and the inverted yield curve in predicting recessions, perhaps at his own peril. Watch wages since inflation cannot go up without wages increasing and a decrease in wages would show a further lessening of inflation and move toward disinflation. China is a major problem since its economy is falling apart and communist Dictator Xi does not want to provide adequate stimulus to keep the turd afloat. China's problems are Apple's problems.
Note Added Friday Morning, 8/2/24, at 5:27 AM EST: S&P futures -62. VIX 20.33. European indexes leak slightly lower. AMZN -9%. INTC -22%. SNAP -17%. NVDA -4%. AAPL -1%. The US Monthly Jobs Report drops in 3 hours.
Note Added Friday Morning, 8/2/24, at 8:33 AM EST: The US Monthly Jobs Report lays an egg reporting only 114K jobs and downward revisions. Last month drops to 179K from 206K jobs. The unemployment rate jumps to 4.3% so that will maintain Keystone's labor recession indicator and the Sahm Rule will finally be triggered. Gee, thanks a lot after the stock market is already tumbling, notes and bonds are going to the moon (higher prices, lower yields), and it looks like the Fed has waited too long to cut, the Sahm Rule now hints at danger ahead. Danger Will Robinson! Danger! Growth scare..... Policy Error .... Danger Will Robinson..... Growth Scare ..... Policy Error .... Wages disappoint like the rest of the data with only a +0.2% increase on month and the annual wages are down to 3.6% missing the 3.7% estimate and below last month's 3.9% revised down to 3.8%. The jobs data is a turd. Wow. The 2-year yield plummets to 3.8% and 10-year yield collapses to 3.80% for a spread of only -6 bips. The yield curve is dis-inverting signaling that the US recession is likely on hand. Let's see if the 2-10 spread will move above zero for a full dis-inversion (10-year yield higher than 2-year yield). S&P futures drop to -96 points or -1.8%. The Nazzy is down -2.5% and the RUT small caps are down -4%. It is a bed-sh*tting. Europe loses hope after the US jobs report with the major indexes across the pond tanking -2%. Italy's MIB collapses -2.5%. There were nothing but bulls remaining in the US stock market; the bears had all given up hope. Now the bulls are running around in a panic trying to sell shares to each other as prices fall like rocks. It's fun. Note that the island reversal pattern, that Keystone has mentioned, plays out on the daily and 2-hour SPX chart at the 2380-2410 gap.
Note Added Friday Morning, 8/2/24, at 9:53 AM EST: The SPX is down 75 points to 5372. VIX rockets higher to the 21.12 palindrome. AMZN pukes more than -12%. INTC is a bloodbath crashing -27%. So much for Ma and Pa's retirement account.
Note Added Friday Morning, 8/2/24, at 10:03 AM EST: The SPX is down 118 points, -2.2%, to 5328. VIX 23.25. The stock market is crashing a wonderful sight; if you are short.
Note Added Friday Evening, 8/2/24, at 6:24 PM EST: The US stock market takes the pipe today with the SPX dropping 100 points, -1.8%, to 5347. That beating is going to leave a mark. The Dow mini-crashes -1.5% at one time down nearly 1,000 points. The Nazzy loses -2.4% and the Russell 2000 (RUT small caps) pukes -3.5%. INTC crashes -26%. Intel is roadkill. Wow. AMZN crashes -9%. Jeff Bezos is crying in his beer at the billions that were vaporized in Scamazon today. All the Wall Street analysts, some say anal-ysts, said last week that everything was beautiful and rosy now they are calling for rate cuts. The Fed was placed at a disadvantage by the calendar with the rate decision only 2 days before a critical jobs report. There are now calls for a 50-bip rate cut as the first cut in September. JPM now wants a cut to occur before the September meeting. Senator Elizabeth Warren, known for giving the investment banksters a hard time on Wall Street, joins the chorus calling for rate cuts. She says Chairman Powell has waited too long to cut rates. Everybody is an armchair quarterback these days. Two days ago at the press conference, Powell swatted back a question about a 50-bip rate cut (instead of employing 25-bip cuts at future meetings) proclaiming that 50 bips is not on the table; he likely wants to take that statement back since it takes away his optionality. Powell can cut by 50 in September but he will have to own up to his statement dissing a potential 50 move two days ago. Claudia Sahm is making the rounds in business media today holding court on the Sahm Rule. It is obvious that Sahm is not comfortable in the position of proclaiming that the Sahm Rule is triggered (unemployment rate is rising indicating that a recession is at hand), even though it is her own rule. During the morning, as stocks fell apart and note and bond yields fall in earnest, she says this time may be different and she will not commit to a US recession even though her rule triggered. She says the labor market is weakening but does not pull the recession card. What good is the rule? It appears that the Sahm Rule is likely more of a coincidental or after-the-fact verification tool and not a forecasting tool. Keystone's labor indicator is a forecasting tool. A funny meme circulates on social media; "Sahm (some) Rules are made to be broken." Poor Claudia looks like she would rather be at the dentist than defending all the attention around the Sahm Rule. Chicago Fed President Goolsbee tosses his hat into the ring saying, "the Federal Reserve is not panicking about one number." In the afternoon, Sahm appears on Bloomberg TV again discussing the Sahm Rule. She proclaims, "We're still in a good place." She disagrees with her own rule. "The US is not in a recession right now." Sahm admits that the Sahm Rule is not a forecasting tool. Bingo. That is what Keystone concluded today. Sahm says the rule usually triggers about 3 months into a recession but interestingly, this conflicts with her dissing her own rule. According to prior data, the Sahm Rule would indicate that the US is actually in a recession for the last couple-three months but Sahm says the economy is not in recession. She will have a fun week next week; she would be smart to go on vacation. Sahm cites supply disruptions as potentially skewing the data also factoring in the migrant workers is tricky. Claudia earned her money this week. Something that likely has Sahm concerned, that she does not mention, is that when her rule is triggered, like now, the rate is rising in an exponential not linear fashion and the unemployment rate will typically jump another 1.9% to 2.0% over the coming months. 4.3% plus 2.0% is an unemployment rate that will likely tag 6.3% in the future. That is a lot of folks collecting unemployment compensation while sitting at home eating BonBons and watching the Beverly Hillbillies repeat episodes on television. The 2-year yield is at 3.88% and 10-year at 3.79% for a yield curve that is only inverted by -9 bips after two long years remaining sub zero. The long-term sideways symmetrical triangle pattern for the 10-year yield chart that Keystone previously showed resolves to the downside and targets 3.0% going forward. The market excitement will continue next week. Will stocks recover with everyone feeling groovy (59th Street Bridge Song) or, is this week the Eve of Destruction and the Wall Street bloodbath will continue next week? The first test is Asia and the futures trading at 6 PM EST Sunday evening. The cascading global selloff started in America, and then went to Asia, and then went to Europe, and then back to the United States for one full go-round so far, and Sunday night we find out if the rolling selloff continues with the pain and misery back in Asia's court. .
Note Added Sunday Evening, 8/4/24: The cascading global stock market selloff, quickly becoming a crash, continues rotating around the world. Asia is punched in the face. Japan's Topix is in a bear market down more than -20% from record highs. The Nikkei is down 10,000 points from its record high a month ago. The Topix triggers circuit breakers which places trading on hold for a short while. The US yield curve (2-10 spread) is up to -4 bips a hair from dis-inversion, and recession. The 2-year yield is 3.76% and 10-year yield 3.72%. Bitcoin is in retreat to 57K a dramatic drop after former President Trump, King Donnie, proclaimed that 70K was a permanent floor for bitcoin a la Irving Fisher before the 1929 stock market crash. That's funny. S&P futures are down -80 points so the global crash will continue through Monday.
Note Added Monday Morning, 8/5/24, at 3:30 AM EST: Global stocks are crashing, traders are in a panic, it is a Manic Monday so we need Susanna, her Rickenbacker, and the other girls. S&P futures are down -136 points, -2.5%. VIX pops above 40 with fear in the air. Japan's Topix and Nikkei crash -12%. The Nikkei prints the worst day since the 1987 crash. The dollar/yen currency pair collapses -3% to 142 (stronger yen). This spells disaster for the global markets. The yen carry trade has been ongoing for a decade plus and the unwinding signals that the free money punchbowl is being taken away. South Korea's KOSPI crashes -8%. Tech stocks lead lower. Apple suppliers are selling off in force on news that Warren Buffett's Berkshire Hathaway is ditching the rotten apple shares. Bitcoin plummets to 52,442 that is a -25% crash off the 70K high only days ago. Donnie Trump is the Irving Fisher of bitcoin. European stocks are flushed down the toilet with the major indexes collapsing from -2% to -4% and more. Nazzy futures are down -4.4% and the Nazzy 100 futures are crashing -6%. The Dow futures are off -600 points. Gold is at the 2442 palindrome. The US yield curve (2-10 spread) is at -4 bips a hair from dis-inversion, and recession. The 2-year yield is 3.79% and 10-year yield 3.75%. Israel prepares for an attack from Iran creating more global angst. In the early US pre-market, AAPL crashes -7% the Warren Buffett news is slapping investors. AI darling NVDA crashes -9%. NVIDIA discovers flaws in its AI chips which will delay production. Jensen is selling the Artificial Intelligence picks and shovels but he is providing tech tools with cracked handles. Tech and chip stocks are taking the pipe. ARM crashes -10% losing both its arms. Super Micro is not super crashing -10%. AVGO is a no-go today crashing -7%.
Note Added Monday Morning, 8/5/24, at 4:40 AM EST: Monday, Monday, so good to me, that is, if you are short the market. If long the market, you are receiving your head on a platter. Traders now estimate a 60% chance that the Federal Reserve will cut 25 bips within the next week. Oh my. That is panic. If the Fed would do that, it would create panic that the economy is far worse than thought, however, investors are already panicking running around with their hair on fire. The US yield curve (2-10 spread) is at -4 bips a hair from dis-inversion, and recession. The 2-year yield is 3.81% and 10-year yield 3.77%. The S&P futures are down -120 points. The ugliness continues. The cascading global rout has now made two round trips around the planet. The global selloff started Thursday in the US, then on to Asia, then Europe, then the jobs report continues the fun in the US on Friday. After a weekend pause, Asia picks up the negative baton again and runs with it handing off the misery to Europe and now to the United States again with futures puking.
Note Added Monday Morning, 8/5/24, at 6:31 AM EST: The VIX explodes higher to 50.39 verifying rampant stock market fear. Timmy the Trader cannot deal with all the client calls so he runs across the trading floor and jumps out the window. Don't worry. He is on the ground floor. Gold 2420. Copper -2.3%. S&P futures sink -154 points, -2.8%. The Nazzy futures are down -4.4% and Nazzy 100 futures -4.3%. The Russell 2000 small caps crash -5.1%. NVDA -10%. AAPL -9%. .
Note Added Monday Morning, 8/5/24, at 7:03 AM EST: The US yield curve (2-10 spread) is at -1 bip almost dis-inverted and probably, finally, signaling recession. The 2-year yield is 3.7581% and 10-year yield 3.7435%. The S&P futures are down -148 points, -2.8%. VIX is 50+.
Note Added Monday Morning, 8/5/24, at 7:33 AM EST: The 2-year and 10-year yields sit at 3.73% remaining only one tiny hair inverted. The S&P futures plummet -163 points, -3%, to the lows of the session. VIX 50.68. NVDA pukes -13%. MSFT collapses -7%. Bitcoin is at 50,947, a 50K-handle, when King Donnie told everyone to buy, buy, buy bitcoin at 70K; he is a business idiot. Claudia Sahm appears on Bloomberg to discuss the Sahm Rule but it is same-o, same-o. The rule has triggered but she will not commit to the thinking that a recession is underway as the rule dictates, instead she remains in opposition of her own rule. Sahm concedes that the economy appears to be slowing. VIX 54. S&P futures are down -190 points, -3.5%. The blood is flowing on Wall and Broad. Happy days are not here again. .
Note Added Monday Morning, 8/5/24, at 8:42 AM EST: The 2-year is at 3.6559% and 10-year yield is at 3.6672%. Sound the Seven Trumpets!! THE US YIELD CURVE DIS-INVERTS FOR THE FIRST TIME IN OVER 2 YEARS. Normalcy returns in the bond market with the 10-year yield a single hair above the 2-year yield. S&P futures are down -235 points, -4.4%. Medic! Medic! VIX 64. Chicago Fed Goolsbee says, "The Fed will fix it," if markets and the economy deteriorate. Isn't that sickening? Do any of you idiots think that capitalism exists? America' is a crony capitalism system is on its last legs. .
Note Added Monday Evening, 8/5/24, at 6:02 PM EST: If you blinked during the dis-inversion of the yield curve, you missed it. The yield curve re-inverted quickly this morning with the spread widening again. The 2-10 spread then dropped from the slightly positive number back down to the -0.13% support. Hello, Mrs Robinson. The 2-year yield is at 3.92% and the 10-year yield is at 3.79%. The zero level and dis-inversion is obviously a big deal so it would be expected for yield to stab at the zero resistance once or three times before thrusting up through. The spread likely re-inverted as traders believe that a 50-bip cut is likely not coming. The hook pattern is continually spanked back down delaying the recession. The stock market mini-crashes today although the indexes recover off the lows. The S&P 500 drops 160 points, -3%, to 5186. VIX hits 65.73 early this morning and ends the session at 38.57. Gold 2452. Bitcoin 54551. The ugly stick is passed to Asia. Will they continue the negativity and cascading global stock market crash? It depends on the yen.
Note Added Monday Evening, 8/5/24, at 6:25 PM EST: S&P futures are up +47 points, or +0.9%. Nothing to see here... move along, move along... nothing to see here. .Donnie Trump tries to label the stock market selloff the "Kamala Crash." As stocks moved higher to print record highs days ago, King Donnie said his policies from 4 to 8 years ago created the stock market party this year (pause for laughter), but now that stocks collapse he blames Cackling Kamala; and people want four more years of the orange-head's bloviations? Trump the loser keeps repeating the filthy lie that he won Georgia in the last presidential election but Sleepy Joe is in office the last 4 years. Trump the idiot probably lost thousands of independent voters over the last few days with his stupid vengeful revenge talk. People are sick of listening to that garbage. Donnie's legacy is a whining, cry-baby sore-loser. King Cry-Baby.
Note Added Tuesday Morning, 8/6/24, at 5:20 AM EST: Global markets calm down and the cascading crash stops with Asian indexes moving higher. Europe is also higher in early trading. S&P futures are up +40 points. Japan's Nikkei recovers bigtime catapulting +10% higher. The VIX is elevated above 30 so the intraday stock market point moves will be massive going forward and also the day to day moves. Seat belts are required. The SPX (S&P 500; the United States stock market) peaked on 7/16/24 printing the all-time record high at 5670 and fell to a low of 5119 yesterday. That is a drop of 551 points, -9.7%, in only 15 days. 10% of the US stock market value was wiped out in 3 weeks. Better yet, the SPX tagged 5566 on 8/1/24 (last Thursday) and in only 3 trading days fell to 5119 a drop of 447 points, a -8.0% crash. Ouchie. Just think, over the last month, all those *ssholes on television told you to buy, buy, buy! A little time is needed for the smoke to clear. Is Iran attacking Israel yet? The dollar/yen pair is at 145, higher, which means a weaker yen, reversing yesterday's story. The drama continues.
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