NFLX Netflix Weekly Chart Overbot Rising Wedge Negative Divergence

RBC Capital Markets analyst Mark Mahaney says buy Netlfix with a 600 price target. The chart is telling you to run from this stock not to it. It is a nasty chart set up with overbot stochastics, a wicked red rising wedge, and negative divergence across all indicators. Keystone called the prior spankdown in July, however, the histogram and money flow remains strong so you knew that price wanted to come up for another look at those highs after the spankdown, which it did.

Note the MACD line remains long and strong in the shorter term so there is maybe 1 to 3 more of sideways to up remaining and then the path down should quickly appear. The large short interest may create a big short-covering rally but those events are more prone to occur when a stock is already being beaten down and there may be weak short hands at play. Many of the shorts in Netflix will likely stay on moving forward. Today is a big +1.4% pop so some shorts threw in the towel to create these new record highs.

If you enjoyed big profits from the run simply exit and move on to other ideas. If not in NFLX, a long position is not attractive. Playing NFLX on the short side is more attractive but for a momo and news-driven stock like Netflix it is a dangerous play. Since the MACD is long and strong in the short term, NFLX can probably be viewed as a short play that can be started over the next 1 to 3 weeks with lower prices expected for the weeks and months ahead. A purple H&S pattern may form into 2015; it will need a drop towards the neckline then a recovery to build a right shoulder and then eventual failure at 325 (which would target 150), however, that is a long way off; a year or two. Take things one step at a time and assess the chart as the weeks move forward. 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 7:04 AM:  NFLX prints an all-time high today at 489.29 and then drops to close down on the day at 479.01. The 20-day MA is 470.70 and rising so a reasonable expectation is for price to take a look at 470-472 for a bounce or die decision.

Note Added 7:05 PM on 9/10/14: Suntrust upgrades Netflix with a price target of 525. NFLX is at 484.

SPX 30-Minute Chart 8/34 MA Cross Sideways Channel

The SPX is staggering sideways like a drunk in Times Square on Saturday night. Key S/R is 2011, 2007, 2005, 2002-2003, 1998, 1995, 1990-1991 and 1988 (brown lines). Reference the SPX S/R missive posted on the weekend by scrolling back or typing "SPX S/R" in the search box at the right for further study with support and resistance levels. Note how price recovered late day and stopped at the 2002-2003 resistance ceiling. A move above 2003 opens the door to 2005. The bears will push for a test of 1998 and try to break through to send price to 1995.

The blue sideways channel through 1995-2005 is in play. Bulls win above 2005. Bears win below 1995. The indicators are not tipping their hand traveling trendless and sideways. The histogram hints that another price high is on tap but the stochastics indicate that a lower low in price is also desired. Thus, flip a coin. The movement through the S/R highlighted above as well as the 8/34 cross will dictate the path forward.

The 8 MA is under the 34 MA signaling bearish markets for the hours ahead, however, price is above the 8 MA at 1999.82 which will curl the 8 MA higher and set up a potential bullish 8/34 cross. For now, the bears are driving the bus. In the last seven days, the SPX has moved a huge 136 points of distance, 7% of its overall value. So intraday, the SPX is moving through 1% of its value. And these wild whipsaw swings are occurring with volatility in the 12's; remarkable. Just think when vol returns to 20 and higher. In the days and weeks ahead, daily moves of 20 to 50 SPX handles may become commonplace.

Keystone's algo, Keybot the Quant, is short with copper and volatility the two main market drivers currently. JJC is 38.67 exactly on top of the 38.67 bull-bear line identified by the quant and copper leaked lower overnight now down -0.7%. For today, as copper goes, so goes the markets. Weak copper will keep the bears in the driver's seat. Watch VIX 12.34. Markets will continue leaking lower as long as the VIX stays above 12.34. Bulls will retake control with either JJC above 38.67 or VIX below 12.34, either would do, and if either one turns bullish, and the SPX moves above 2007 and higher, Keybot will likely flip long. The AAPL new product release circus begins at 1 PM EST (6 PM London time). 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 11:27 AM:  The bears push with VIX above 13 and copper tanking. The SPX loses 1995-1996 support then bounces off of the strong 1990-1991 support, now back kissing the 1995-1996 for a bounce or die decision. Bears smile broadly seeing copper collapse. The AAPL circus can change the entire market mood, now only 1-1/2 hour away at 1 PM EST. TRIN is 0.89 favoring bulls despite the down markets. This hints that the bulls are given the benefit of the doubt with the Apple show on tap. Bears need the TRIN above 1.0 to prove the downside is the way forward. Watch the S/R levels listed above. The 8 MA remains under the 34 MA and the 8 MA trials lower favoring the bears. The 8 MA is 1997 so the bears need to keep the SPX under 1997. Bulls will fight back if they break up through the 1995-1996 resistance and move above 1997 and higher. The SPX is at 1996.29.

Note Added 6:51 PM: The bears ride copper weakness to victory. The VIX remains elevated near 13. The SPX falls through the 1995-1996 and 1990-1991 support levels and was snagged by the 1988 support where price sits to think things over. The 1990-1991 is such important and strong resistance (it was support until today) that a back kiss would be needed to show it respect. The support levels below are 1988, 1985-1986, 1982, 1980, 1978, 1976 and 1973. If 1985-1986 fails the bulls are in trouble since price will target the strong 1973 next with the intermediate support levels providing areas for give and take on the way lower. The SPX bounced off the 20-day MA at 1985.39. LOD 1984.61. So note that intraday today, price failed at the 1988 but the strong 1985-1986 support held price in check. Will 1985-1986 hold tomorrow? Another critical bull-bear signal to watch is Keystone's 200 EMA on the SPX 60-minute chart now at 1981.10 favoring bulls for the hours and days ahead (price is 1988 above 1981). Markets are in big trouble if 1981 fails. Marry this level with the support numbers and the 1980-1982 level takes on a stronger role as support. If the 200 EMA fails at 1981, it is likely that price will venture down to 1973. Keybot the Quant remains short. Watch VIX 12.34 and XLF 22.92. Bulls need VIX under 12.34 to stop the bleeding. Bears need XLF under 22.92 which would create market carnage. So keep your ears open for any bank news. The 8 MA remains under the 34 MA on the 30-minute chart signaling bearish markets for the hours ahead.

CP Canadian Pacific Railway Weekly Chart Overbot Rising Wedge Negative Divergence Price Extended Keystone XL Pipeline Discussion

President Obama refuses to approve the Keystone XL pipeline project for the last few years despite extensive environmental and other studies that approve the project. The president does not approve Keystone XL since the environmentalists are typically democrats and he wants to maintain these voters in the democratic fold. Shamefully, however, the middle class and poor desperately need jobs and the pipeline approval would bring high-paying jobs to the Midwest and support thousands of other jobs. The president's allegiance is with the democratic-leaning and liberal major cities such as New York and Los Angeles and he has little interest in the heartland that is mainly made up of republicans. The president says he will not act on Keystone until after the election but he changes his mind like the weather so perhaps he will surprise everyone. Nonetheless, Keystone XL may be approved before year's end.

The rails have been on fire in recent months. There was a hint that the president would approve the Keystone XL pipeline project earlier this year as one of the major environmental studies finished and said the project is not hazardous to the environment. President Obama, however, placed the kabash on this and refuses to approve the pipeline. The rails were dropping on the Keystone approval possibility but once it was squashed by the president the railroads catapult higher since more oil must be transported by train. Note that the train accidents are increasing resulting in fiery crashes due to hauling far more volatile oil. President Obama's buddy Warren Buffet of BRKA and BRKB own rails so it is one rich buddy taking care of another rich buddy. The elite live a different life than you.

With elections now only about 8 weeks away, two months, the political atmosphere becomes more charged. The republicans may take over the Senate (which may be contributing to the stock market rally recently) so the president may pull a rabbit out of the hat before the election by approving the Keystone XL pipeline to goose enthusiasm and have voters thinking that the democratic incumbents are not so bad after all and they can be reelected. Of course this is conjecture but you must think like a politician, or criminal, same difference, to be a good trader. If the president allows the Keystone XL pipeline project to proceed, the railroads will tank. Even if he does not approve the project before the election, the approval is likely on tap for the months ahead and may occur by December.

The rail stocks are running nearly parabolic. The CP chart above shows a red rising wedge, overbot conditions and negative divergence that forecast a spank down in price. The MACD, however, remains long and strong so after the initial spank down in the weekly time frame, price will come up for another look at these levels, then likely roll over since the MACD will go neggie d as well. So a short can be played for the initial pull back but for such a momo move over the last few months the trade is only for experienced nimble short traders. When price returns higher say in one to three weeks that will likely be a far better place to start scaling in to a short position. Of course if the president announces Keystone XL, CP will immediately collapse. Canadian Pacific is the rail stock most dramatically negatively impacted if Keystone XL is approved just as it has benefited greatly by the president refusing to approve the project. Other rails, however would venture lower in sympathy.

CSX is the same sick chart as above only its MACD line is already neggie d so it can be shorted now. CNI has gone parabolic and follows the same technical analysis as CP. NSC, mainly a coal hauler, is already negatively diverged across all indicators like CSX so that one can be faded now. The tight standard deviation bands (purple) for CP above squeezed out two strong moves higher. Price needs to move down to the middle band at 181 and rising at a minimum and the lower band at 151 and rising is in play.

Thus, keep an ear open for any news concerning Keystone XL pipeline. CSX and NSC can be scaled into on the short side going forward and CP and CNI can be viewed from the short side in a couple or three weeks. Whenever the president decides to approve the Keystone XL pipeline, the rails will collapse, receiving extra juice from the negative chart set-ups discussed, and CP will be bludgeoned more than the others. Until then, playing the rails on the long side is like picking up nickels in front of a bulldozer. If you have strong profits in any rail position, take half off and begin scaling out to exit within the next month or so. 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 9:14 AM on 9/9/14: CP begins the week losing -0.8% to 205.70.

SPX Weekly Chart Overbot Negative Divergence Doji Price Extended

The bears have the weekly chart on a silver platter. The prior top in July was an easy call based on neggie d and now the chart is set up again favorably for bears. The blue and red rising wedges, overbot stochastics and universal negative divergence across all indicators want to see a spank down and lower prices ahead. Price is extended well above the moving averages requiring a mean reversion lower. The candlestick from last week is a doji indicating that a trend change is on tap, however, the SPX will need to sell off and print a negative week next week to verify the trend change.

The SPX prints five consecutive up weeks. Note how the volume continues to trail lower for each successive week with lower and lower participation and none of the up week volume comes close to the selling volume six weeks ago. It would be prudent for price to visit the range of that large sell candle at 1910-1980 to see if the bulls can print a larger volume candle to prove the upside is real, or not.

The MACD performs a bull cross by a hair but it is bullish nonetheless. Therefore, if the bears are going to rock and roll they need to push lower from the get-go on Monday morning and not hesitate. If the bulls manage to squeeze out more upside with the SPX moving above 2011, the top may not occur until 2025-2035. The bears have it on a silver platter and only need to get the ball rolling down hill since the negative divergence will begin smacking price strongly lower. However, the bears have to eat their Wheaties and show up ready to fight on Monday morning and prove they want it. 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.

SPX Daily Chart Overbot Negative Divergence

Remember over the last few days and week or two Keystone has been commenting on the long and strong MACD line on the daily chart wanting to see another price high after any pullback and this has occurred. Note now how price is printing new highs but the MACD line has leveled off perhaps ready to roll over to the downside. The indicators are universally negatively diverged across all indicators in both the couple-month and near-term few-day time frame. It is now all systems go for the bears, however, the one fly in the ointment would be the RSI that is teasing to want to move higher than the level from a few days ago which would create more oomph for a few days. The RSI did not reach overbot levels so this is on the table.

The blue line is an expected outcome if the RSI remains negatively diverged. If the RSI sneaks out a higher high in the near-term then the purple path is more likely with a few more days of buoyancy before price rolls over to the downside. A reasonable expectation would be to see a fight at the strong 2002-2003 support on Monday. The projection is for the SPX to begin tracking lower due to the negative divergence and the MACD line flattening and negatively diverging. Watch the RSI for any potential fly in the ointment for the bears. Of course the bulls are going to try and jam the RSI higher to keep extending the party for a few more days. Barring any further rise in the RSI, the expectation is for lower equity markets moving forward. 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.

SPX Support, Resistance (S/R), Moving Averages and Other Important Levels for Trading the Week of 9/8/14

SPX support, resistance (S/R), moving averages and other important levels are provided for trading the week of 9/8/14. Levels shown in bold are strong resistance and support. Bold and underlined levels are very strong and important S/R. The SPX all-time intraday high is 2011.17 on 9/4/14 and the SPX all-time closing high is 2007.71 on 9/5/14. The bulls are relentless and merciless against the bears. The non-stop stock market upside is fueled by perpetual central banker easy money. ECB President Draghi announces a European-style QE program last week to maintain the upside market orgy.

For Monday, since the SPX price closed at the high, the bulls only need a smidge of green in the Sunday overnight futures and the upside party will accelerate higher with the SPX printing at 2015 and higher. The bears need to push under the 1990-1991 support to accelerate the downside. A move through 1992-2010 is sideways action to begin the new week of trading.

Friday was a 17-point swing in the SPX with bears attacking the 1990-1991 support but unable to stab down through. Therefore, the bulls ran with the ball and close at a new all-time high at 2007. Looking big picture, the 2002-2003 is very strong support that would lead to 1998 if it fails. If 1998 fails, the bears will give another try to break down through the strong 1990-1991 support. The 1885-1991 zone is a formidable support gauntlet. The bulls are on easy street above 1991. A bull-bear fight occur between 1885-1991 and bears win going forward sub 1885. The 1973 will be on tap if 1985 fails.

The SPX is above the 20-day MA above the 50-day above the 100 above the 150 above the 200 so the moving average ribbon is extended or now becoming extended with a mean reversion on tap now or soon (a market top and roll over to the downside). The early August bottom was at 1905 and note that the 10-month MA is now at 1907 so if price revisits those lows and the 10-month fails, the markets will be in serious trouble. For now, the bulls are on easy street injecting Fed heroin into their veins and buying stocks.

The bulls will win big if the Sunday overnight futures are green. If the bears can maintain market negativity into the Monday opening bell, the initial downside support targets are 2005, 2002-2003, 1998 and then 1990-1991.

2011 (9/4/14 All-Time Intraday High: 2011.17) (9/4/14 Intraday High for 2014: 2011.17)

2011.17 Previous Week’s High

2011.17 Friday HOD

2009

2007 (9/5/14 All-Time Closing High: 2007.71) (9/5/14 Closing High for 2014: 2007.71)

2007.71 Friday Close – Monday Starts Here

2006

2005 (8/26/14 Intraday High: 2005.04)

2004

2003 (8/29/14 Closing High: 2003.37)

2003.37 September Begins Here

2002

2001

2000

1999

1998

1997

1995

1993

1992

1991 (7/24/14 Intraday Top: 1991.39)

1990.10 Friday LOD

1990.10 Previous Week’s Low

1989

1988 (7/24/14 Closing High: 1987.98)

1987

1986 (7/3/14 Intraday Top: 1985.59)

1985 (7/3/14 Closing High: 1985.44)

1984

1982

1980

1979.32 (20-day MA)

1979

1978.63 (200 EMA on 60-Minute Chart a Keystone Market Turn Signal)

1978

1977

1976

1974

1973

1970

1969.74 (50-day MA)

1968 (6/24/14 Intraday Top: 1968.17)

1965

1964

1963 (6/20/14 Closing High: 1962.87)

1962

1961

1960

1959

1958

1956 (6/9/14 Intraday Top: 1955.55)

1955

1951 (6/9/14 Closing High: 1951.27)

1949

1947

1942.76 (20-week MA)

1942

1940

1937.53 (100-day MA)

1937

1936

1931

1929

1928

1925

1924 (5/30/14 Intraday Top: 1924.03) (5/13/14 Closing High: 1923.57)

1923

1920

1919

1912

1910

1907.22 (10-month MA; a major market warning signal)

1907

1906.60 (150-day MA; the Slope is a Keystone Cyclical Signal)

1902 (5/13/14 Intraday Top: 1902.17)

1901

1897 (5/13/14 Closing High: 1897.45) (4/4/14 Intraday Top: 1897.28)

1894

1891 (4/2/14 Closing High: 1890.90)

1889

1886.22 (12-month MA; a Keystone Cyclical Signal) (the cliff)

1886

1885

1884 (3/21/14 Intraday Top: 1883.97) (3/7/14 Intraday Top: 1883.57)

1883.05 (200-day MA; not tested for 20 months extremely odd behavior)

1882

1880

1879

1878 (3/7/14 Closing High: 1878.04)

1877

1874

1872

1871

1868

1867

1865

1862

1860.63 (50-week MA)

1859

1855

1853

1852

1851 (1/15/14 Intraday Top: 1850.84)

1849 (12/31/13 Intraday High Top for 2013: 1849.44)

1848.36 Trading for 2014 Begins Here

1848 (1/15/14 Closing High: 1848.38) (12/31/13 Closing High for 2013: 1848.36)

1846

1845

1843

1842

1841

1840

1839

1838

1837

RUT Russell 2000 and INDU Dow Industrials Daily Charts Cyclical Bull and Bear Markets Dictated by 150-Day MA Slope

Three weeks ago, Keystone highlighted the flattening of the RUT 150-day MA and then the Dow followed suit. The 150-day MA slope is a key cyclical signal (weeks and months) for any stock or index. If the 150-day MA is sloping higher, the index or stock is in a Cyclical Bull Market. Long traders are happy as the stock trends higher and any dips can typically be bot. If the 150-day MA is sloping lower, the index or stock is in a Cyclical Bear Market. Short traders are happy as the stock trends lower and any rallies can be sold. Check the 150-day MA slope for all your current positions to see what side of the street you are on with each.

For the RUT, let's give the benefit of the doubt to the bear's since they have maintained a flattening 150-day MA for two months. The Dow, however, signaled a cyclical bear beginning but that signal lasted all of two weeks before the bulls decided to take the blue chips higher again feeding off the Fed and other central banker stimulus. The Dow returns to a cyclical bull pattern slapping the bear's in the face.

The small caps have rolled over first and the markets are deciding if they should follow the RUT and roll over to the downside, or, if the RUT should throw in the towel and start injecting the Fed easy money into its veins and catapult higher back into a cyclical bull. The outcome ahead for the RUT 150-day MA is extremely important. If the 150-day MA starts sloping higher again for RUT the bears are in for a few more weeks of beatings.

Use the long skinny red box on the RUT as key upper and lower boundaries. If the 150-day MA falls under the lower red line and moves lower, the cyclical bear market is locked in and the broader indexes will follow the small caps lower. If the 150-day MA pokes above the upper red line and moves higher, the cyclical bull market has returned for the small caps and the broader indexes will likely remain elevated and printing new highs for several more weeks. If the RUT price can quickly drop under the 150-day at 1153 this will drag the critical moving average lower for bear victory. If the RUT price remains above 1153, the 150-day MA will continue higher placing the bulls in the victory circle. High drama. 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.

CBOE Skew Daily Chart

The SKEW remains at obscenely high levels. The expectation would have been that the June-July peaks were enough to create a short to intermediate term downtrend for stocks (weeks and months) but the bears were slapped in the face at the SPX 1905 bottom in early August when Russian President Putin started talking happy talk concerning Ukraine. No doubt the Russians had bot boatloads of calls on the market since they knew Putin's words would create big upside gains, which occurred.

The SPX catapults to an all-time high at 2011 a 106-handle gain for the rally based on Putin happy talk and then the new ECB QE easy money program anticipated and announced by President Draghi. The 2011 print nails the 1.24% Fibonacci extension retracement for the move down from the July top to the 1905 low.

The SKEW remains at nosebleed heights and it is surprising to see the complacent behavior continue so long. Then again, with long traders hooked on the Fed's easy money heroin, the complacency and market fearlessness makes sense. The Investors Intelligence sentiment survey just reported the bears at a paltry 13%. Everyone is long the market. The SKEW is very overextended above 130. The red circles show recent market tops all resulting in spank downs from 15 to 85 points; the large 85 point drop is the red arrow from the SPX 1990 top in July to the 1905 bottom in early August.

The SKEW is set up the same way as before the July market selloff. Also note that despite the stock market printing new all-time highs compared to July, the SKEW is elevated but off the July highs; a negative divergence. The negative MACD cross appears to be occurring just like in July so the ducks appear aligned again for another market sell off. Perhaps this one will lead to a broader based and more substantive selling move into the intermediate term (months) ahead. 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.

Keystone's September Seasonality Factors for Trading the Markets

The month of September is typically down about 1.2% and is the worst month of the year for the Dow Industrials. September is typically a weak month for the over-the-counter and small cap stocks. In general, the largest market gains are realized November thru April with flat returns May thru October. Thus, the markets remain two months away from the start of the yearly strength period.

Typically, at the start of any month, the markets are bullish from the last day of the previous month into the fourth day of the new month which occurs for this month. OpEx Friday's are typically up; that is 9/19/14. Typically, during OpEx week, markets are bullish from a Tuesday low to a Wednesday high; that is 9/16/14 to 9/17/14, which corresponds to the Fed announcements on 9/17/14. OpEx Monday's, 9/15/14, are typically bullish.

Q4 (Oct-Dec) is strong for technology and biotech but that quarter remains one month away. Q3 ends this month on Tuesday, 9/30/14, so expect window dressing shenanigans late September. Window dressing is where funds and money managers sell losing stocks and buy winning stocks, especially at quarter's end, so the quarterly statements to clients appear that they are positioned properly in the correct stocks that are outperforming. September results are important since if Q3 is up for the markets, Q4 is up about 74% of the time. July started at 1960-ish for the SPX so price is almost 50 handles above with 3-1/2 weeks yet to play out in this volatile month. September began at 2003.37 so pay attention to this number near the end of the month as well as the Q3 starting number at 1960.23.

Drilling down for September, as a blanket rule, this month is the worst month of the year for stocks. The first Friday is typically a triple digit day for the Dow Industrials, largely due to jobs data. For last Friday, the Dow gains 68 points a healthy gain but not triple digits. Congress is returning next week for two weeks so this is bearish for markets.

Mutual funds rebalance their portfolio's each year in the late September early October time frame. The high in 1929 was marked by the day after Labor Day, thus, this day can be a tumultuous turning point each year. Labor Day may chart the path forward for stocks into year-end. Typically, markets move down between OpEx (9/19/14) and mid-October. As a rule, traders tend to avoid buying stocks between September and mid-October.  The week after OpEx in September has been down about 80% of the time so keep this in mind for the week of 9/22/14.

An old Wall Street adage is "Sell Rosh Hashanah and buy Yom Kippur," although some traders will hilariously tell you the opposite. Rosh Hashanah begins at sundown on 9/24/14 and Yom Kippur is 10/4/14. The adage has a good track record say at about a two-thirds (65%) success rate over the last couple decades. So you may want to stroll the short side of the market from the back half of September into early October.

For commodities, typically you sell natty around Labor Day and buy oil. Natty is bot again in May for the summer air conditioning season. Natural gas has struggled in recent months due to the cool summer. August through October is typically up for gold. September is the Indian marriage season and India consumes one-third of the world's gold supply. China gold sales also pick up during this time period. Typically, September is a good month to buy steel and steel stocks have been well bid recently.

Even though history tells us that September is the worst month, in recent years, the SPX is up 8 of the last 10 years for the month of September; the bad years are the financial crisis in 2008 and the budget crisis in 2011. September 2010 was the best September since 1939. The last couple days of this month the markets typically see a pull back of almost one-half percent, about 10 SPX points. Watch back-to-school spending since this is a preliminary indicator for holiday sales.

On the esoteric side, there is a full moon on Monday, 9/8/14, and markets are typically bullish moving through a full moon each month. The new moon is 9/23/14 and the stock market tends to sell off through the new moon period say 9/22 through 9/24. There are no Bradley turns until 10/7/14. Keystone's Eclipse Indicator targets the potential for a large broad market sell off to begin around 9/15/14, give or take one week or two on each side, thus, between 9/5/14 and the end of the month at 9/29/14. Another window will open for a potential large market sell off between 10/31/14 and 11/28/14. If the large sell off occurs in September then the November time frame will likely become moot.

The Fed plans to end QE Infinity in October. The stock market started selling off 4 to 6 weeks ahead of when the prior quantitative easing programs ended. That places the stock market vulnerable as traders finally realize that the Fed punch bowl will be empty next month. (Fear not, however, since the Fed is maintaining the ZIRP Forever policy until the middle of next year or longer.) Also of interest is the third year of a presidential cycle on tap ahead and seasonality-wise, decades of data indicate that October 2014 through the Fall 2015 should be a strong period for the stock market. This is typically due to the incumbent president hitting his stride with spending programs and passing out large cardboard checks, however, suffice it to say the world is far different currently tangled in war, conflict and disease. Nonetheless, long traders and permabulls that have been correct to the present as the stock market prints new highs may cheer lead the presidential cycle moving forward.

In conclusion, September is the worst month of the year for the markets, typically down about 1.2%. Labor Day is a key pivot point for the intermediate market trend. Interestingly, the SPX, Dow Industrials and Dow Transports are all at record all-time highs. Congress is returning and will be back in session which is bearish. The week after OpEx, 9/22/14 through 9/26/14, is typically down 80% of the time. Watch for Q3 window dressing during the final days of the month which will buoy stocks but the last day or two should finish weak.

Using the seasonality factors alone, the bulls are favored early in the month with the bears heavily favored in the back half of the month. The Fed news on 9/17/14 will greatly affect market direction.

USD/JPY Dollar/Yen Weekly Chart New Record Six-Year High

The dollar/yen currency pair prints at 105.70 overnight the highest number since October 2008 (white circles). The weaker euro is sending the dollar higher that sends the dollar/yen higher but at the same time a weaker yen created by BOJ money printing also sends the dollar/yen higher. A rising dollar/yen is in concert with a rising stock market and a dropping dollar/yen is in concert with a weaker stock market. The red rising wedge and negative divergence created the 2007 spank down. Then the green falling wedge and possie d created the launch off the bottom in late 2011 early 2012. The pink inverted H&S target in the mid to high 90's was easily achieved. The red lines showing neggie d to begin this year created the spank down in dollar/yen and in the stock market as the yen strengthened.

The neon descending triangle was in play in recent months but the indicators such as MACD were positively diverging that would not allow a breakdown to occur. The dollar/yen came down to 101.19 ready to collapse when the spike recovery kicked in. The dollar/yen catapults higher to the 2013 highs and higher now comparing back to 2008. The maroon lines show continuing neggie d that should soften price but the RSI is trying to print a higher high to maintain the upward buoyancy longer. The projection forward is sideways to sideways lower favoring the 101-106 sideways channel.

The yen has collapsed in recent days (XJY) sending the dollar/yen higher and the stock market to new all-time highs. The weakness appears overdone and a dead cat bounce would be needed for the yen at a minimum which will send the dollar/yen lower. The upside orgy in the dollar basket (USD) caused by the weaker euro should also subside since the down move in euro and up move in dollar are overdone in the VST. A lowe dollar will send the dollar/yen pair lower. 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 10:09 AM: Dollar/yen drops to 104.72 one full point below the 105.70 high only a few hours ago. The dollar is dropping after the Jobs Report sending the pair lower.

Note Added Saturday, 9/6/14: The dollar/yen recovers back to the sticky 105 area.