The Keystone Speculator's Housing Market Indicator; UNITED STATES IS IN A HOUSING RECESSION FOR 23 MONTHS AND COUNTING

People will say it is different this time, and it never is, but this time it is truly different. Anytime that the housing market dipped into recession, an overall US recession quickly followed, especially with a manufacturing and labor recession also ongoing. Not this time. Decades past, life was simpler. No tech wizardry, just folks going to work each day and then having plenty of leisure time each evening and on weekends. All that mattered was the housing and auto industries. When they went south, the US was in recession. It was simple. Not anymore.

Computer technology arrived on the scene in a big way through the 1980's and 1990's many of us starting with the old amber screens and floppy discs that needed formatted using the DOS program. Screen savers were not a thing yet so you had to make sure the same image did not stay on the coal black screen too long. Chips run computers. Thus, as the railroads opened the door to an economic boon, especially in the Midwest and Western US a century ago, semiconductors, chips for short, fuel the economic path forward for the last 30 years and ahead with NVIDIA's Jensen now waving his advanced AI (Artificial Intelligence) chip in the air.

The US is in a housing recession for 23 months almost 2 solid years, an ongoing manufacturing recession and weakness for the last couple years, and a labor recession that is 14 months along. Housing Starts peaked almost 3 years ago and have dropped to the lowest numbers in 4 years. The downward channel remains in play and conditions are worsening as the red and green lines separate. How could the United States not be in an overall recession? The Godot Recession has not yet arrived despite the weakness in housing, manufacturing and labor. One reason is the tech industry and chips but there is a second reason; the Federal Reserve.

The Fed's money-printing since 2009 is so obscene it would make Caligula blush. It enriches America's wealthy class to stupendous heights while screwing common folks that do not own any stocks. One-half of Americans do not own a single share of stock so the Fed's money-printing did not make any of them filthy rich.

Further, once the COVID-19 pandemic hit,  the Fed fired another huge money bazooka of monetary stimulus, and then Congress stepped in with fiscal stimulus, showering the rich Americans with more free money, manna from heaven. Folks, that dough goes into the stock market driving asset prices bigtime higher and the elite privileged class, and upper middle class sycophants that live in McMansions that service the elite, are the ones that own stocks. It is a great racket if you are rich and part of the club, but 300 million Americans are not part of the Big Club, as the notable scholar George Carlin said. It will never get fixed, folks. Get with the program.

It is enough to make you vomit. Look at the chart above. The housing market takes off higher with the Fed's and Congress's thumbs on the scale. Obviously, capitalism does not exist. Capitalism is only a theoretical concept in business textbooks. America is best described as a 'faux free market crony capitalism system' on its last legs. Human greed destroys everything throughout man's 'civilized' 5,000 year existence. The present day is no different. Greed is more powerful than love, hate or fear, and it always will be.

Anyhoo, the joy in tech and semiconductors, and the enormous wealth effect felt by America's wealthy class, and those upper middle class sycophants that service the filthy rich that want to remain in their McMansions, are keeping the US economy afloat and avoiding an overall recession with their robust spending.

The top 20% wealthy Americans are accounting for about one-half of the spending in the US currently. Say no more. The middle class is gonzo. America's now lower middle class, disabled, homeless, minorities, and working poor do not have a pot to p*ss in working two jobs and still unable to make ends meet. Meanwhile, America's wealthy, in bed with the Federal Reserve, enjoy vast riches due to the enormous stock market gains. They are still spending big money preventing an overall recession while asking why everyone else is so glum? Don't you love the filthy crony capitalism system?

However, even the wealthy stop spending eventually. How many brand new $800,000 McMansions, $90,000 Mercedes convertibles, and $9,000 refrigerators do you need? They are still buying for now as Christmas quickly approaches. And on the chip front, the so-called AI revolution needs to start showing concrete results and cost-savings for companies; so far it remains a lot of hype. What happens when the consumer sales for gadgets go south (since the average American does not have a pot to pee in) and tech companies have less money to spend on developing the new chips and gadgets? Everything slows down of course; it is called a recession.

UTIL Utilities Weekly Chart; Overbot; Negative Divergence; AI Party in Utes Is Over

Sleepy utilities sprang out of bed a year ago and started running crazy higher fueled by the artificial intelligence (AI) orgy. AI will need mountains of electrical power to generate those incorrect answers to questions that are only based on the information that exists on the internet. Greedy humans frantically work towards supplying the power for AI when they did not care about providing electricity to starving communities in underdeveloped nations. Such is life.

Anyhoo, utes got caught up in the AI hype and suddenly everyone wants to dance with the ugly boring girl because her daddy AI has lots of dough. The rally is spectacular from the 765 low in October 2023 to the current record high at 1080; that is a +41% gain in only 13 months.

But, all parties have to come to an end and the cops arrive to take names. Million Miles Away. Price is making matching and higher highs with the AI orgy on full display, however, the red lines show all the chart indicators sloping lower with negative divergence. The top is in on the weekly basis. She does not have anymore fuel in the tank to move higher. The RSI and stochastics are also coming off overbot levels.

The pink box for the ADX shows that utes remain in a strong uptrend on the weekly basis but take a closer look. You can see that as UTIL makes a new record high in price, the strong trend shown by the ADX actually weakens and does not extend higher. The ADX is a lagging, or confirmation tool. Once price begins dropping, utes will be in big trouble when the ADX loses 28-ish since the strong uptrend in utilities will be officially over.

The Aroon top bullish line shows that nearly 100% of the utility bulls continue believing that UTIL will go to the moon and nothing will stop it from rallying higher forever. Comically, the lower bearish line shows that nearly 100% of the bears also believe that utes will go up forever. Everyone has bought into the AI hype lock, stock and barrel. It is a contrarian indicator telling you that everyone is partying on one side of the boat and it is about to capsize. 

Utes are programmed into the Keybot the Quant algorithm. As mentioned many times over the years, you must watch the weekly close for UTIL 15 weeks ago since it dictates if utes are in a weekly uptrend or downtrend. This direction typically tells you the direction of the stock market. There is big trouble ahead if the weekly trend develops into a down trend and then all hope is lost in the stock market if the 50-wk MA fails that is now at 943.

Count 15 candlesticks backwards and you can see the numbers that UTIL must start to beat to keep the US stock market party going. You can look at Yahoo Finance under ^DJU and historical data and simply count down 15 numbers for the weekly data to identify the key lines in the sand, or simply pull the numbers off the chart. You want to use the closing number from 15 weeks ago. For this week, UTIL must stay above 1004 to keep the bull party alive in the stock market.

For next week, the first week of December, the UTIL line in the sand is 1010. Then, for the week of 12/9/24 it is 1021. For the week of 12/16/24 it is 1029 then for the week of 12/23/24, Christmastime, it is 1054. UTIL is at 1066 right now. There will be Hell to pay in the stock market if any of these numbers fail going forward.

The set-up for the utes present a bad omen for the stock market. Keystone is in a dark room holding a flashlight under his chin that points upward over his ugly eerie face as he discusses a dire scenario forward. Poison Heart. The previous charts highlight the top in the SPX right now and stocks are expected to be weak going forward for several weeks. It makes sense since there will be tax-loss selling and other tax stuff occurring over the next couple weeks that typically create soggy equity conditions.

With US stocks expected to drop going forward into December, and UTIL expected to drop, if utes lose the key values mentioned above, especially if UTIL loses the 943-ish area, stocks will likely drop from -10% to -20% or more. There is lots of fun ahead. If utes do not fail any of the levels above, the drop in the US stock market to end the year will be a run of the mill pullback of a few percent.

If you are in utilities on the long side, take your money and head for the exits, otherwise, you will be sliced and diced over the coming weeks. You only want to be short utes going forward due to the neggie d above. Keystone is currently not holding any positions short of long in utilities but will obviously play the short side if so inclined going forward. 

The AI hype has ran its course for now. Traders and investors are going to want to see rock solid examples on how customers justify all the obscene spending on AI chips that will be outdated by the time a company gets around to implementing the garbage. As the economy slips away next year, no one is gong to want to see big spending on AI when folks cannot find jobs and are struggling to survive. 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 Tuesday Afternoon, 11/26/24, at 5:04 PM EST: UTIL rises to 1080 with a new record high at 1080.22. Traders throw confetti proclaiming that utes, tech and AI are the future with these stocks guaranteed to grow to the sky. The Uber driver said he went 300% long the utilities with his whole paycheck. The doorman sold his car and used the money to buy utility stocks. Everyone agrees that utes will move higher and traders pat each other on the back while waiting for the free, company-provided, buffet. Everyone is in the conga line following each other. What can possibly go wrong?

Note Added Sunday, 12/1/24: UTIL prints a new all-time record high at 1086.52 on 11/27/24 and a new record closing high at 1079.88 on 11/26/24. Traders keep believing in the AI revolution and need for power and utilities as they walk towards the guillotine.

Note Added Sunday, 12/8/24: The UTIL lines in the sand are 1021 for the week ahead, 1029 for the week of 12/16/24, and 1054 for the week of 12/23/24. UTIL is at 1036 and must hold the 1021 for this week, otherwise there will be Hell to pay. The following week, UTIL must stay above 1029 for the bulls to have hope and for Christmas week, UTIL must be above 1054, or there is trouble ahead for stocks. Watch the utes.

Note Added Tuesday Morning, 12/10/24: UTIL drops to 1019.35 losing the key 1020.86 line in the sand yesterday. This is a major negative development. 

SPX S&P 500 2-Hour, Daily and Weekly Charts; Negative Divergence (Ugly Charts); Donnie Trump Reelection Rally; All-Time Record High at SPX 6044; Overbot; Potential M-Top; Potential Island Reversal

The cold November Rain is here. It is a dark and dreary time for reflection, as Slash plays a haunting solo (4:15 mark), and thoughts turn to love's lost, and now it is also time for the stock market to receive a negative divergence smackdown. As everyone is drunk as skunks, playing the part of the greater fool, and the SPX prints the all-time record high at 6020.75, the hourly, daily and weekly time frames have topped out with neggie d. She's cooked. Crispy-fried. Stick a fork in it. The party just ran out of booze.

We can start with the 2-hour time frame. The potential M-top, or double-top, is plain as day. King Donnie Trump will reassume his throne and the blue circle shows the rocket launch higher in stocks after the election victory. It should be orange in color instead of blue.

You can see the gap-up from green line to green line and price remains on the island above ever since. There are two mountains on the island, the potential M-top. When the SPX comes down, slapped lower by the neggie d, she will either gap-down back through the same 5783-5864 gap, or simply slide down into the gap and fill the gap as price moves lower. If price falls through the gap, from 5864 down to 5783 and lower in a heartbeat, that will be an island reversal pattern.

The red lines on the 2-hour chart show all the chart indicators sloping lower as price prints the all-time record high; neggie d (price is moving higher but the indicators are telling it hey dummie, you should be dropping now). The upper band is violated so the middle band at 5938 and lower band at 5859 are on the table for the hourly time frame.

On the daily chart, things become more interesting. Again, the red lines clearly show that as price prints the new fantastic, epic, glorious, Gloria, all-time record high, the chart indicators are all out of gas and sloping lower with neggie d so she is topped-out. The doji candlestick hints at a trend change which would be lower. The upper band is at 6088 and price was only 67 points away today so it cannot be discounted. It is unlikely but the only thing that can save these charts is happy news from the Fed or some other event. Happy talk may delay the top for a couple-few days which would place the 6088 in play but this is not expected.

On the daily chart, the ADX shows that the last strong trend was in July, and it was up, but it petered out and died in August. More importantly, the ADX sags lower ever since so the strong trend higher in the SPX in the daily time frame is toast. There is no strong trend higher despite every yahoo and his bro showing up on television telling you to "buy, buy. buy!" These charts say, "sell, sell, sell!"

As you look at the weekly chart, it should make you very afraid if long the market. Hold a tray in front of you because your head will be on that platter soon if you are long. It is an ugly chart. Keystone posted this about 3 weeks or so ago before the election circus. Things needed a little time to settle down.

There are 3 matching or higher price highs over the last 4 weeks with the all-time record high occurring today. Alas, the red lines show universal neggie d across all the chart indicators. There is negative divergence across all chart indicators for all three time frames hourly, daily and weekly. You had better take notice of this Sonny and Girly. To repeat, the weekly chart is extremely ugly and if you are long, you are about to have a religious experience.

There was a high volume week in September (blue circle) but the recent record highs have not occurred on stronger volume. That big volume week corresponds to SPX 5600-5700 so that would be a logical place for price to seek in the weekly time frame. Price violated the upper band so the middle band at 5688 and lower band at 5290 are in play. Did Keystone mention that it was a very ugly chart?

The ADX for the weekly chart shows how a strong trend was in place from February through August. The wine was flowing like water and darts could be thrown at the stock pages to pick winners sine everything was a winner. That party is over. There is no longer a strong trend higher in the weekly time frame; it ended almost 3 months ago.

What does all this mumbo-jumbo mean? Shake it up and Twist and Shout. Work it on out, baby. All of you newbie and inexperienced traders would be wise to follow the conga line to the exits, otherwise, you will be stepped-on.

Now the big question. Thinking longer term, what does the monthly chart say about the future? Keystone can take a look. Let's see. The chart indicators are neggie d except for the MACD a tiny smidge higher and the RSI also trying to sneak higher over the last 3 months. She's topping-out but the Donnie rally provided a touch more juice to extend the long-term top out for a month or two. This month is not over yet and those two indicators can still print lower which means devastation for the US stock market since the long-term top would be in now. If the monthly chart can hold on, it may not top out until January.

As provided above, the SPX is toast in the hourly, daily and weekly time frames so a top is occurring now, in real-time. Stocks will remain weak with fits and starts, heading lower for several weeks, receiving the neggie d spankdown on the weekly basis, into that 5600-5700 area and maybe far lower. The monthly chart is key since it may need one more high where price would then have to rally again, say, in late December or January back up to these current highs, and that would likely place the long term top for the SPX (for months, a couple years or more, even several years). That top occurs either over the coming days as November ends, or it may occur as the new year begins, the charts will tell you.

Remember, if she falls fast and hard which is on the table right now in real-time, the monthly chart may join the club creating the long-term top at the same time that will hold for a couple years or more. Are you ready for some fun? You need to sell longs, or bring on shorts, or buy protection, or all three. Keystone is sharpening the blades and he is not very nice once the selling begins. Nothing lasts forever, not even cold November rain. 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 Tuesday, 11/26/24, at 11:00 AM EST: The stock market turd is circling the bowl. Flush it down. The SPX is at the 6006 palindrome. Blow on it and it should fall over. The 2-hour chart will start a new candlestick at noon and then at 2 PM EST. Price is expected to fall from here but the stock market drunk remains standing for now trying to maintain balance. Watch out for that banana peel.

Note Added Tuesday Afternoon, 11/26/24, at 4:43 PM EST: It is Tuesday Afternoon so it is time for some Moody's. What happened? The SPX is supposed to drop not rally. The Fed minutes were released so traders were waiting for that story and that was a Rorschach test where the bulls see rate cuts as far as the eye can see, while bears see a pause or hikes coming as inflation reasserts its ugly face, as they both sing from the same hymn sheet. The SPX was goosed in the last 22 minutes of trading. Keystone has not seen anything jump so high since he pinched Nurse Goodbody's left cheek. Starting at 3:30 PM EST, the VIX was crushed lower creating the late-day orgy in stocks. Chairman Powell maintains his jackboot on the throat of Uncle Vix, keeping him pinned lower, so the wealthy can enjoy higher stock prices. The SPX prints a new all-time record high at 6025.42 and new all-time closing high at 6021.63. On the 2-hour chart, solid neggie d remains in place for the last 2 weeks, and in the very short term, except for the RSI and stochastics squeezing out higher highs. This means a jog move, or two, may be needed to top it off after the rally hype today (down-up for the top, which would be 2 to 4 hours, or down-up-down-up, which would be 6 to 8 hours). The holiday is Thursday and Friday is a shortened session. Stocks tend to be happy into a holiday weekend but that is not the usual case for Thanksgiving that tends to be a mixed bag. The SPX is topping now and at an odd time with Turkey Day at hand but tomorrow should be the top, unless, of course, there is more happy talk. The new moon peaks on Sunday so stocks would be expected to be soggy from Thanksgiving through Monday. Tomorrow may be an exciting day right before the holiday when we all stuff our faces like gluttons and feel no shame.

Note Added Thursday, Thanksgiving Day, 11/28/24: Stocks stutter yesterday but remain in a sideways muddle as the holiday plays through. The all-time high remains at 6025 from Tuesday with price now at 5999. That record high occurs on Tuesday at 3:50 PM EST during the last minutes of trading. This may be a high not seen again for many weeks. This should be the start of the neggie d spankdowns going forward unless world peace is declared. The Thanksgiving Day feast awaits. The turkeys are running for their lives. Keystone wants another helping of that delightful figgy pudding.

Note Added Sunday, 12/1/24: The SPX prints another new all-time record high at 6044.17 and new all-time closing high at 6032.38. The bulls are pushing the jello around the plate as Americans stuff their fat faces with food, candy and alcohol. Now it is time to contemplate Sunday Morning Coming Down by the man in black singing Kris's song. Nothing has changed. The week ahead will provide more clarity with Thanksgiving in the rear view mirror. 

Note Added Sunday, 12/8/24: On Friday, 12/6/24, the SPX prints a new all-time record high at 6099.97, only 3 pennies from 6100, and new all-time closing high at 6090.27. The Fed wine is flowing like water. The holiday orgy continues as the bulls tout AI keeping the semiconductors buoyant. 

Keybot the Quant Turns Bullish

Keystone's trading algo, Keybot the Quant, flips back to the long side yesterday at munch time at SPX 5950. The battle for US stock market direction is between chips and commodes. Bulls need SOX above 5077 to declare victory ahead. Bears need GTX below 3565 to position the quant to flip back to the short side. Two enter the cage match but only one will exit. Watch the semiconductors and commodities to find out What's Up.

Keybot the Quant

Keybot the Quant Turns Bearish

Keystone's trading robot, Keybot the Quant, flips to the short side on Friday morning at SPX 5899. Chips, copper and commodities give up the bull ship sinking stocks. Bears got nothing, however, unless they can push VIX above 17.55.

Keybot the Quant

Keybot the Quant Turns Bullish but Stock Market Remains a Coin-Flip

Keystone's proprietary trading robot, Keybot the Quant, flips to the long side on Friday at SPX 5736. Copper and commodities goosed the stock market early Friday but both lost their gains turning bearish as the session played out and the quant already wants to flip short again. The bears need an 8-point pullback in the SPX to flip the model back to the short side. Watch copper because as copper goes, so goes the stock market.

Keybot the Quant

US Treasuries Yield Curve Losing the Dip in the Belly

Something interesting happened yesterday and no one noticed. The 5-year yield moved above the 2-year yield lifting the belly of the curve up towards normalcy. The yield curve must be on a diet since it is losing its belly. Time for a belly dance in Dubai. 3-year yield remains below the 2-year by only 2 bips so that would be expected to adjust next.

The rates are listed on the chart. The 20-year yield is a newer oddball trying to attract money with a higher rate. The heart of the US yield curve is the 2-5-10-30 curve that has now returned to normalcy. The bond gurus will have to figure out what the return to normalcy means as a US recession remains on a milk carton (missing).

The Godot Recession remains in place in the United States. There are ongoing recessions in the US housing market, manufacturing sector, and labor market, for over a year, which would typically guarantee an overall US recession, but alas, the US recession continues to party with Godot and not show up. Go figure. Something's got to give at some point. Is the election the catalyst everyone is waiting for?

The obscene money-printing by the Federal Reserve since 2009, and the mountains of additional fiscal stimulus pumped into the economy by Congress during the pandemic, have sent the stock market to the stratosphere, making America's wealthy class filthy rich beyond their dreams. Too bad that one-half of the country does not own a single share of stock. Such is the crony capitalism system; be glad it is in its last throes.

The non-stop consumer spending by the elite wealthy class, and the upper middle class sycophants that service the privileged class daily, prevent the overall US recession from appearing. However, think about it, how many $9K refrigerators, $15K vacation trips, and $100K new cars can you buy even if you are filthy rich? 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 Wednesday, 11/6/24, at 7:15 AM EST: Donald Trump wins reelection as the 47th POTUS. Yields catapult higher with the normalization clearly in place. The yields are; 2-year 4.28%, 5-year 4.31%, 10-year 4.47%, 30-year 4.66%. The 2-10 spread is 19 bips.

Note Added Thursday, 11/14/24, at 7:00 AM EST:  The yields are; 2-year 4.27%, 3-year 4.25%, 5-year 4.30%, 7-year 4.38%, 10-year 4.44%, 30-year 4.62%. The 2-10 spread is 17 bips. The yield curve normalizes for the 2, 5, 7, 10, 30 notes and bonds but the 3-year yield remains 2 bips below the 2's. The belly still has a small paunch. This is the third time the yield curve has normalized since the initial move described above on 11/2/24 only 12 days ago.