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.
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.