Tomorrow is key for more earnings reports and the EOM. Friday is important for the US Monthly Jobs Report at 8:30 AM EST where the unemployment rate is key, as Chairman Powell said today, and of course King Donnie's tariff deadline is Friday, 8/1/25. But stuff all this noise into the end of a trombone because there is an event on Friday that is more important than all this dribble. What is it? The SPX monthly chart will start another candlestick on Friday for the month of August providing further insight into the historic 2025 AI Bubble top.
The euphoric bullishness continues in the stock market reminiscent of, and rhyming with, the Dot-Com Bubble in 1999/2000. The party was, and now is, in full swing with traders drunk as skunks picking stocks by throwing darts at the stock pages since all tickers go up forever. Tech can do no wrong so the Silicon Valley crowd, donning their flannel vests that sport a company logo, say the AI stocks will go up forever. The shoeshine boy, doorman, taxicab driver, Uber driver, and valet, are betting entire paychecks on triple-leveraged long ETF's bragging that they will be rich in quick order.
In the break room, loser Larry is boasting to pretty Emily, the administrative assistant, proclaiming that he is the next Jesse Livermore, a stock market guru, and will be a millionaire in quick order. Emily laughs, almost spilling her almond milk, proclaiming that she would never date a man that does not understand or respect negative divergence on the SPX monthly.
Anyhoo, the SPX monthly chart timeline is months and years; think long-term (LT). The jump off the April bottom is impressive with a big thrust but only serving to print a historic top that will likely be called the 2025 AI Bubble in the future. Note how price makes the new high on the monthly basis but every chart indicator is sloping down (negatively diverging) away from price that floats higher. The chart is out of gas and at a historic top due to universal negative divergence. The rising wedge pattern is bearish.
The RSI is trying to get above the prior high to prove that the bulls can stretch the top out for another month or two but as of now, the chart is a piece of sh*t ready to begin a multi-month and perhaps multi-year move lower. That is why the new candlestick is important starting Friday for Aust and it should maintain the neggie d top formation.
The all-time record high is 6409.26 on 7/29/25 and all-time closing high at 6389.77 on 7/28/25. Price almost touches the upper band at 6464. It is close enough for government work but do not be surprised if the bulls squeeze-out 6464 by week-end. S&P futures pop 50 handles this evening so that is a done deal if the joy holds through tomorrow. This opens the door to the middle band, the 20-mth MA, at 5597, and rising. The 10-month MA at 5927 and 12-mth MA at 5890 are important support levels. The 10 is an early warning signal that the stock market is in extremely serious trouble on the verge of crashing. A drop through 5890 would be lights out for equities setting up a drop to the April lows.
Price is over extended to the upside above the moving average ribbon so a mean reversion lower is needed. Just think, price should eventually go below the 200-mth MA at 2.7K and rising. Keystone calls the May 2015 top the last legitimate top in the stock market. Everything after that through now is a pile of pig slop where the crony capitalism made the wealthy class filthy rich at the expense of everyone else. It is easily conceivable that stocks will fall for the next year or two and end up sub 4K and probably down in the 1800-2200 range eventually. What fun it will be.
The ADX indicates that the last strong trend was higher in 2018. Despite the euphoric rally to all-time greatness in 2025, none of the last 7 years was considered a strong trend higher. The ADX now trails off to 22 heading lower even less inspired. For all-time record highs, the SPX should be above 30 running higher.
The Aroon verifies the euphoric out of control bullishness at play that further reinforces the AI Bubble top. The green line shows that 100% of the bulls remain 100% bullish; no surprise there, right? The red line shows that basically all the bears are also bullish. Pause for laughter. The bears are as rare as hen teeth and Keystone is told to walk the plank for his blasphemy against the stock market but the charts and technicals say, Sell, Mortimer, Sell.
When she cracks, it will likely be due to the banks and retail stocks so pay attention to those two sectors. Copper is in collapse. Look at the volume candlesticks above and big volume selling in February, March and April. The buying volume now is unable to surpass the selling volume in the spring; another negative. Joe Retail is buying but the institutions are backing away all too happy to slough-off shares to Joe, Carlos Bagholder and Carmelita Sucka that hangs out on Alvarado Street.
Get out of the stock market and let that cash sit in your brokerage account for the next few months until you see what happens. If you remain in the market, you will lose your shirt and frantically call your financial manager complaining that he said the tech stocks were sure-fire winners. As you lose your shirt, the money manager will remind you that you are a long-term investor that means he hopes you are a sucker that stays in stocks while his old butt can exit and keep his dough for retirement. Pump and dump.
Plan accordingly. Looking at the long-term S&P 500 chart above, it is financial malpractice to tell clients to keep investing in stocks going forward. The chart above can serve as a reference as the new August candlestick plays out for the first few days of the month. You are watching an epic top take place in real-time. Are you ready? Good ole Ozzie kicked the bucket. In his dying breaths, the Prince of Darkness was singing, "Mama, I'm Coming Home," and he did. 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 Saturday, 8/2/25: The SPX prints two outside reversal days and an outside reversal week not a good sign for going forward. The SPX loses -1.5% yesterday and is down -2.4% this week to 6238. The SPX placed the record top at 6427.02 on Thursday and then falls on its sword collapsing, or mini-crashing, almost 2-hundo points in less than 2 days, into a Black Friday, or let's call it a mini-Black Friday. Let the festivities begin.
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