The watch for the near-term top continues. The first recent pullback, which turned into a mini-selloff was from SPX 3120. The SPX quickly bounced on happy trade talk news and central banker largess. The next top was at 3150-ish with a drop to 3070-ish, that looked like the start of the selloff but alas, Soybean Donny and Dictator Xi announced the trade deal and stocks rocket higher. That little touch of 1.20 above helped the bulls create some buoyancy in stocks. The SPX prints a new all-time record high at 3198.22 and new all-time closing high at 3192.52 on Tuesday, 12/17/19, yesterday.
As the stock market high occurs, the CPC put/call plunges depths not seen since 2016. The complacency, fearlessness and euphoria is rampant in the stock market signaling a significant top at hand. Even those that opine about the possibility of a little selloff occurring are quick to say "buy the dips." Traders that voice cautiousness to the media are buying stocks like madmen in the background. Everyone is bullish.
Investors believe that the Federal Reserve and other global central bankers will print money forever and send stocks higher for eternity. The central banks are the goose that laid the golden eggs. However, we have reached a denouement for this one-decade obscene Keynesian financial experiment. Everyone is all-in. It's easy to see. Bears have capitulated. Anyone questioning the Fed's power is now broke or has finally cried "uncle" promising never to short a stock again as long as they live. We're there.
It's the holiday season and this week is the last full week of trading for 2019. It is fascinating that the put/calls chose now to go from rampant complacency to off-the-charts euphoric over-the-top complacency.
Timmy Trader says he is taking in client money like gangbusters and immediately pushing it into ETF's. He does not even care what ticker since everything will go up on central banker largess in early 2020. That is the universal consensus; just ask anyone at the big party on that side of the boat over there. The one guy is guzzling down Fed wine like its water.
Aunt Agatha, who shunned the market for years, took her life savings and bot AAPL and AMZN stock yesterday like the nice young man in the suit and tie suggested at the financial office next to the pizza joint. Uncle Frank, said he would no longer sit back and watch the stock market go up and listen to his friends brag, so he ran out yesterday pulling all his money from his bank accounts and he bot FB stock plus several ETF's. Frank and Agatha celebrate saying they will be rolling in money come springtime.
The low 0.63 tells you a serious stock market top is at hand. People are too complacent and fearless recklessly taking chances and investing in things they do not understand. If you are putting new money, to work, short the market. The holiday season creates some wacky pricing but the expectation is for stocks to fall like rocks going forward. The top may be now, or tomorrow, the next day, or a few more days ahead, but it is so close you can smell it.
Taking a look at the January-February 2018 collapse (after traders became too complacent), the SPX fell from 2880 to 2540, that was 340 points, or -11.8%, call it -12%, into a correction. Price bounced off the 200-day MA. Using this fractal for the pending collapse in the days and few weeks ahead, a drop from 3200 to the 200-day MA at 2948 would be a 252 point drop, or -8%. If the SPX fell the same point amount, 340 points, that would place price down at 2860, a 11% drop. If the SPX falls -12% like early 2018, that would target 2816. So three downside targets once the carnage would begin are 2948, 2860 and 2816 which are drops of -8%, -11% and -12%, respectively. For giggles, averaging the three is a target of 2875.
Make your preparations. Paraphrasing Betty Davis, "It's going to be a bumpy ride." Merry Christmas to all. 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.
Apple analysts say channel checks show healthy and robust buying of iPhones this holiday season. AAPL is a moon shot this year as CEO Cook and King Donny join hands skipping joyously across the Whitehouse lawn cheerleading technology, jobs, markets, apple pie and the future.
The rally from 145 to 280 is 135 bigtime points, a wild +93% gain in one year's time; a double. Investors are eating what Cook is cooking. It seems odd considering so many eggs are in the China and India baskets. With the ongoing US-China trade war, it is surprising that the Chinese folks have not shunned Apple iPhones, or, maybe the data has not yet shown this. The folks in India are thrifty so Apple is having trouble making inroads there. Nonetheless, analysts and Apple itself say there is nothing but blue skies and rainbows ahead.
The blue upward-sloping channel is parabolic; the wealthy class dances with glee. AAPL is at the record high at 281-ish. Keystone's 80/20 Rule says 8's lead to 2's so a close or two above 280 opens the door to 320. The breach of 278 opens the door to 282. The RSI, stoch's and money flow are overbot agreeable to a selloff ahead.
The chart is setting up with neggie d (red lines) but not yet. As price makes new highs, the RSI squeezes out a tinier high and the MACD line clearly continues sloping higher, so there is a little more upside juice for the SPX available. The RSI may create a jog move down one week and up one week to matching highs, and ditto for the MACD after that. The chart data is weekly so the candlestick can change quite a bit by week-end. Thus, AAPL should top out in 2 to 4 weeks, say late December early January, on the weekly basis.
Price violated the upper band (pink) so the middle band at 238, and rising, is on the table as well as the lower band at 185. Price is extended above the moving averages requiring a mean reversion lower. The Aroon green line is at one hundo with nowhere to go but down. The red line is oversold with nowhere to go but up. Both signals are bearish going forward. Watch for the negative cross.
The ADX is a bigtime 53. Strike up the band since AAPL is in a confirmed strong uptrend. Apple has momentum and you always have to think long and hard about any short position against a momo ticker. Investors believe in Apple down to their core. Warren Buffett, who shunned technology stocks for decades saying he does not understand them, is now all-in with AAPL stock professing party time ahead; he must now understand tech stocks.
With the wild upside two-bagger thrust move this year, the MACD line on the monthly chart slopes upwards to new highs. As has been highlighted the last few months, the wait continues for the Apple monthly chart to top out with neggie d which will likely be a multi-year high. It remains very close but this parabolic price move will extend the top a month or two. The monthly chart will want price to come back up again to current levels after a pullback.
The weekly chart above says the top is in about 2 to 4 weeks forward (as soon as the RSI and MACD line are neggie d), and a multi-week selloff will follow, say during January into early February. However, due to the long and strong MACD line on the AAPL monthly chart, price should come back up again with a multi-week rally, say in February, and that will likely be the multi-month and multi-year top for mighty Apple. Also, keep in mind, that the monthly candlestick is a work in progress since December continues playing out; that MACD line on the monthly chart may drop back down if sogginess occurs in the AAPL price and that would bring Apple's multi-month and multi-year top directly to your front doorstep.
Thus, if you want to go long AAPL, don't. There is not much room to play with up top. AAPL may bounce in this 280-320 range for a week or two to end the year placing its top. Look at shorting it in early January if you are a risk-taker. Once it rolls over and drops, say in January, it will likely venture to 250-ish to greet the 20-week and middle band coming up, then bounce back up as per the monthly chart. Then AAPL likely places its long term top in that 280-320 zone again say in late January or February and it is lights out. Keystone does not hold any long or short in AAPL right now but will consider a short in early January depending on chart above.
What is funny about all this is that Joe Sixpack and Amy Dogooder are buying shares of AAPL for their youngsters for a Christmas or holiday gift thinking it is a good investment. These noble folks, with lofty dreams and aspirations, only serve as the bag-holding sucka's going 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.
The US-China trade deal, where comically no one knows if we are now in Phase One or Phase Two, creates stock market buoyancy. Trading floors are like wax museums with lots of people standing around but not doing much of anything. Investors wonder if the trade deal is a sell the news event, or not. If the Phase One supposed-deal is not signed for another few weeks (the Chinese-English translations for the text are only beginning; you would think this was done as the deal proceeded), perhaps traders will expect more happy daily news bites going forward.
The SPX prints an all-time high at 3197.71 and all-time closing high at 3191.45 on Monday, 12/16/19.
The big deal in 2019 is obviously the central banks. Their power is astounding. As Keystone explained in early January of this year and several times hence, the global central bankers, that have been acting in collusion for several years now, panicked and began printing money like madmen to save the stock markets on 1/3/19. The Fed, BOJ, ECB, PBOC and over 20 central banks around the globe are injecting liquidity into global financial markets at an astounding pace this year.
The Fed's money injections in October are the highest in nearly one year. The world is awash in liquidity. Traders and investors, and Ma and Pa, pick the money up off the ground that is laying everywhere (cheap loan rates) and buy stupid stuff they do not need or make investments they should stay away from. All asset classes float higher in price including stocks, bonds, real estate, vineyards, art, collectibles, antique cars, etc...
The wealthy elite class benefits the greatest since they own the large stock portfolios. That is why former Fed Chairman Bernanke stepped in to save the US stock market in March 2009; simply to protect the wealthy. This is how the crony capitalism system works. Take a good look at that chart. The low is on Christmas Eve last year at that 2350-ish level where it teased and tested support at the 200-week MA. The power of central bankers is awesome and bewildering at the same time. The central bankers are probably surprised themselves at how powerful they are; they must feel like God's. It's beautiful.
Once the Fed and other central bankers stepped in, look at that rocket launch this year. It sure is something. The best rally that central banker money can buy. Even more impressive and amazing is the rally from October to present goosed by central banker money. The Tweezer Bottom occurs in early October at 2850-ish and the SPX catapults 350 points in only 10 weeks time to 3200; a remarkable +12.3%!!!. Kneel and Praise the Power and Majesty of the Federal Reserve and other global central bankers! The central banks are financial God's!
The Fed, BOJ, ECB, PBOC and the whole hee-haw gang plan to keep printing money to support the stock market. The massive October injection is jamming stocks higher into year--end and many analysts feel the central banker sugar-high will continue into Q1. This is why stocks remain buoyant and refuse to go down. However, even your credit card has a limit. One of these days, Toto will pull back the curtain in the basement of the Eccles Building to expose Powell, Yellen, Bernanke and Greenspan feverishly running the Keynesian printing presses themselves.
The stock market will always go up on central banker money printing; until it does not. Equities are well bid with easy money because traders and investors have full faith and confidence in the Federal Reserve. Once that is lost, all is lost. That is why the last year is so perplexing. Chairman Powell hiked the key rate last December and planned more hikes this year but instead panicked and flip-flopped in early January to save the stock market.
This year turns out to be three cuts instead goosing the stock market to new record highs. You would think all faith and confidence in the Fed would be lost at such a bush league and drastic reversal of monetary policy; obviously the Fed is making it up as they go along. But instead, traders and investors worship at the Fed's altar and agree that all days forward will be rainbows and blue skies. No one cares why stocks go up only that they do go up. The stock market only cares about liquidity.
So price has gone parabolic due to the central banker easy money accomodations and the happy US-China trade deal that still will not be a deal for a month or two, if then. The SPX weekly chart is in negative divergence over the last couple year period. In other words, price keeps moving higher but the chart indicators want it to move lower. The central bankers keep printing money which creates the few-month rallies, and the charts have to price in the action, but then the fun always peters out again and prices relax lower.
On a long-term basis, as Keystone continues to describe, the stock market is very likely placing a multi-month and multi-year top. The waiting game continues for the charts to set up with neggie d and give the all-clear for downside ahead. The RSI sneaks back up into overbot territory, so it is now agreeable to a pullback, but it is a higher high compared to a couple months ago. Thus, the SPX may perform a jog move, down one week and then back up the week after, to allow time for that RSI to go neggie d for this shorter-term. It does not have to as far as a top goes since the drastic negative divergence over the last couple years is striking.
The MACD line is the same dealio as the RSI. It is ramping higher but remains below the two-year high so it may try to squeeze out a couple more weeks at these elevated levels, but again, it does not have to. The stochastics are overbot and neggie d wanting price to move lower now on the weekly basis Ditto the histo. Price has violated the upper standard deviation band (purple) so the middle band at 3024 is on the table and lower band at 2828.
The ADX shows that the trend higher in 2017 and early 2018 was the real deal, very strong, but that petered out in the summer of 2018. Of course the waterfall crash followed in Q4. For the entire move higher in the stock market this year, the ADX says it is NOT a strong trend now sitting way down at 12. That is fascinating. It tells you that it is a central banker money pump rally this year and does not have much to do with global financial fundamentals.
The Aroon green line is pegged at the ceiling at one hundo with nowhere to go but down and the red line is oversold with nowhere to go but up; both signals are bearish going forward. You have to watch for the red line to cross above the green line to signal doom and gloom ahead. Price is extended above its moving average ribbon that are all extended above each other so a mean reversion lower is desperately needed.
These are epic times. If you are young, you must realize, that what you are seeing in the stock market now into early 2020 may be so historic that you will talk about it for the rest of your life. The chart says down but the central bankers say up. 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 5:24 AM EST: S&P futures are down -1, call it flat. VIX 12.17. Copper +0.3%. Traders see the end-of-year finish line ahead, and know that this week is the last full week of trading in 2019, and wonder if stocks can make it that far. Housing Starts are on tap and the most important data point each month next to the jobs report. Keystone's data identifies a housing recession starting on 7/17/19. The central bankers have been pumping markets like madmen, however, the Fed's liquidity injection in October is the highest in almost one year. This creates housing and overall market joy for a few months. It will be interesting to see if Keystone's data lifts itself up and out of the recession call, or not. Even if it does, the expectation is that it would likely roll over again. We are in the longest economic expansion and rally period in stock market history and the first decade that goes by without a recession. Wow. Enjoy the party now because the hangover (recession and likely start of a class war in America) will not be pretty.
Note Added 5:39 AM EST: S&P -6. VIX 12.37. Copper +0.1%. Looks like a little air pocket.
The S&P 500 prints a new all-time record high at 3196.66. It would be interesting if the stock market topped-out at a '666' just as it bottomed at a '666' in March 2009. The PBOC promises to remain flexible and appropriate in setting monetary policy (dovish). China's central bank plans to support and goose the manufacturers and private sector companies. Happy days are truly here again.
The central bankers are the market. The Federal Reserve is also providing ample liquidity through the end of the year. In fact, the money the Fed pumped into the financial system in October is the largest injection in nearly one year; that money buys stocks. All Hail the modern-day Money God's in charge of the Wall Street Temple! Rejoice! Sing Praise! The wealthy dance with glee, smoking expensive cigars, dabbing the ashes on the stupid huddled masses.
Charts can only price-in everything known up to the moment and any new news needs to be absorbed. The SPX 2-hour is shown above since it has been of interest to the readers over the last few days as the top-watch continues. It's not really a true 2-hour chart since stockcharts prints a candlestick for 9:30 AM EST to 10 AM EST, then from 10 to noon, then noon to 2 PM, then 2 to 4 PM. The chart just updated for the noon candlestick.
The PBOC pump boosts global stocks along with happy and optimistic homebuilder sentiment but, as the ole joke goes, when did you ever see a depressed homebuilder? (They are in the business of selling homes so they always have to be optimistic and positive for their potential customers).
The US-China trade deal confusion continues. Lighthizer speaks on the weekend and changes his $40 billion number to $50 billion to match Soybean Donny's ongoing proclamation but he is the one directly involved in the negotiation and should know the number. Trump never likes to look bad. Perhaps it created confusion on China's end since a few hours later the number is now quoted as $40 to $50 billion in ag goods. They are making it up on the fly.
There is no time line or list of the actual goods involved in the trade deal so humorously, what is the deal? Lighthizer repeats what President Trump said about equipment and other items being lumped into the ag number; it is surprising the business media is not reporting on this. Obviously, Trump wants to compare apples and oranges so he can say it is the greatest deal in the history of mankind.
Comically, Treasury Secretary Kudlow is also talking on the weekend and says the translations from Chinese to English and visa versa for the trade deal are not complete as yet, which means the lawyers have not even started looking at the text. Kudlow says it will be a few weeks until a signing would take place and there is no date certain for that. When you get down to it, after a month of hype, the trade deal is about where it has always been; a few weeks away. Lighthizer also hinted that he may tweak a couple things in the deal.
Even funnier, Trump said Phase Two begins immediately but Phase One will not be officially done for several more weeks. This stuff is hilarious. The stock market likes it since Soybean Donny can keep tweeting happy stuff every day saying the final-final imminent super final trade deal is about to occur. It is starting to look like the Godot Trade Deal.
Another plate in the air is the impeachment. The House of Representatives will impeach President Trump this week, Wednesday, 12/18/19, which will turn his orange head red. The Republican and Democrat Tribes are playing their typical baby games. The dirtbag republicans are hiding the president's mistakes in the Ukraine scandal. Trump pressured newly elected Ukraine President Zelensky to dig up dirt on Joe Biden who is likely the president's top democrat challenger in the November presidential election. Trump withheld military aid for Ukraine, that was approved by Congress, until Zelensky would make the announcement of the Biden investigation.
Trump is preventing his top nine cabinet and department officials from testifying on the matter since they are the ones involved. They all either hang together as one, or they may hang (figuratively) separately, to paraphrase Benjamin Franklin. Boiling the Ukraine scandal down into its simple components, Trump could have easily directed the DOJ or other department publically to begin investigating Ukraine corruption and the Biden's. Ukraine would have gladly obliged and everything would have been out in the open from day one. However, Trump would have received a lot of heat from the press and accusations that he is targeting Joe Biden.
Therefore, Donny decided to covertly pursue dirt on Biden to help him win the upcoming election and as the scheme fell apart (Adviser Bolton described the Ukraine situation, which also involved President Trump's Attorney Rudy Giuliani, as a drug deal and said it was a hand grenade that was going to blow up), the military aid was quickly released and the nefarious tracks of the scheme covered-up by the nine co-conspirators. America will never know the truth until one of the group spills the beans.
Chief of Staff Mulvaney already admitted to the nefarious deed in public at the Whitehouse press conference. Bolton will release a book in the future that will shed light on the matter. President Zelensky got screwed. He is a young leader trying to do good for his country but has to deal with the Trump strong arm tactics and reality television drama; it is trial by fire for Zelensky.
The dirtbag democrats are no better than the republicans. Democrat presidential candidate and former Vice President Joe Biden stinks to high heaven over the Ukraine scandal. His son Hunter was on the board of an energy company shoving money into his pockets his only function was allegedly to provide access to daddy. Crony capitalism is on full display daily in America; simply open your eyes and you will see it glaring at you. The political parties are two sides of the same corrupt Washington, DC, coin; demopubicans and republocrats. You do not want to associate yourself with either tribe.
To shed more light on America's ongoing headaches, 50% of Americans want to see Trump impeached and removed from office. 70% say that they think he did something wrong but not all these folks want to see him kicked out of office. Trump's approval numbers remain consistent in the 35% to 45% range, low as compared to other president's, but steady.
A couple-few decades ago, to make things simple, America used to be 40% democrat, 40% republican and 20% independent. That was when the Democrat Party was a proponent for the poor and disadvantaged but now the Democrat Tribe has been taken over by the arrogant West and East Coast progressives that could not care less about the poor just like the republicans. Being an independent 20 and 30 years ago was looked at as odd. Fast forward to the present and now the split is more like 30% democrat, 40% independent and 30% republican. The independents dictate who wins the elections. The women also dictate who wins since they vote about 55% to men at 45% during elections.
Considering that breakdown, it is easy to understand the polls. The base 30% republicans are always for Trump no matter what. In addition, about 5% to 15% of the independents lean in the president's direction providing the consistent 35% to 45% presidential approval rating for Trump that never moves from this range. The 50% in favor of impeachment and removal makes sense since it is all the democrats, 30%, and about half the independents, 20%, which is 50%.
The impeachment numbers do not move much because the distribution of the repubs, dems and independents. For the 70% of Americans that believe that Trump did something wrong, that also makes sense. It is all of the democrats at 30% and the independents at 40% with the republicans only seeing a golden halo above Donny's head. This stuff is not rocket science. President Trump should worry about that statistic (pulled out of the air by Keystone) about most all independents thinking he did something wrong in the Ukraine scandal. When it comes time to vote, independents will have to search their soul about re-electing someone they know is an alleged crook and has the impeachment Scarlet letter tattooed on his chest.
In the last election, the crookedness factor is one of the reasons President Trump won. Voters, in their heart of hearts, especially the women, could not bring themselves to vote for the scandalous lying crook in the pantsuit so they voted for the orange-headed bloviating carnival clown instead. Trump labeled Clinton as "Crooked Hillary." Considering the Ukraine scandal and impeachment, Donny may adopt that moniker for himself going forward. In the November presidential election, Americans may be making a similar decision.
The most interesting thing is that perhaps the so-called 'deep-state', that is actually made up of the establishment democrats and republicans and not just dems as the repubs constantly tout, wants both Trump and Biden to go away and how beautiful it is to take them both out together with the Ukraine scandal. Trump is damaged with the impeachment stain and labeled a crook while Biden and his son are exposed as crooks as well. This paves the way for something else.
The democrat presidential candidate field is weak. If the lefty's were smart, they would pump Amy Klobuchar higher in the polls and set her up for the top spot. She checks the female box, would be the first female president, which the ladies would be inclined to vote for, and she is a moderate, that would bring the independents into her camp. In addition, she is boring, which is something that Americans may want after four years of daily reality television drama and tweeting. The US presidential election is less than 11 months away and the primaries begin in only about 8 weeks. If Trump cannot go the distance in 2020, Vice President Pence would be the likely top man for the republicans on the ticket unless a challenge is mounted.
The 2-hour chart just started to print the new candlestick. Remember, we were in neggie d but the happy China data, PBOC pumping, trade hype, UK election and global central banker backstop provides more stock market life. The SPX prints a new all-time high at 3197.71. You did not think the market makers would allow a '666' print, did you? The stock market is a "Goddess on a mountaintop, burning like a silver flame, the summit of beauty and love, and Venus was her name" as Shocking Blue would sing. Everyday is joy and effortless bullish fun in the stock market.
The stock market is taking on momentum which creates further lift but the 2-hour chart remains toppy. You see this morning's gap-up candlestick, then the 10 AM to noon candlestick, and now the ongoing candle for noon to 2 PM. The MACD line and money flow are trying to squeeze out a sliver more of strength but you can see that the chart remains in universal negative divergence.
The two-leg bull flag pattern is playing out in textbook fashion (green). The first leg was the rally from 3080 to 3150 which is a difference of 70 points. The sideways consolidation flag is formed with price action that moves sideways to sideways lower; pure textbook. The second leg starts at 3130 so the target is 3200 and voila, it's there satisfying the two-leg bull flag pattern.
Keystone's 80/20 Rule says 8's lead to 2's (on the way up) and 2's to 8's (on the way down) so the breach of 2800 opened the door to 3200. The breach of 3180 opens the door to 3220. A breach of 3198 opens the door to 3202. Stocks are topping-out due to the complacency but in the coming days we will see if the SPX can make it to the 3220-3230 level. Price came this far; it is only another 20 points.
The RSI and stochastics are overbot agreeable to a pullback. The rising wedge remains ominous. Price has violated the upper band, look at that parabolic price action running right up the flagpole, so the middle band at 3156.66, is on the table as well as the lower band at 3114. Price is extended requiring a mean reversion lower. it is the same song and dance the last couple weeks. Stocks are toppy and want to retreat but good news extends the fun a wee bit longer.
The RSI is neggie d again over the last couple candlesticks with the higher high in price although as this is typed it is trying to squeeze higher. If the RSI does move higher by 2 PM then that will extend the top for another jog move zero to 4 hours. The MACD line may try to squeeze out another down-up, so a top continues to be expected in here anytime over the next 4 hours which would be this afternoon and bleeding into tomorrow's first half hour of trading. Keep watching the neggie d since it will identify the top. Remember, the low put/call ratios signal uber complacency and today's activity is obviously euphoric. Watch your wallet. 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 1:17 PM EST: The SPX is up 27 points, +0.9%, at 3196 printing a new all-time record high at 3197.71. VIX 11.87. Copper +1.1%. The VIX sports an 11-handle; the central bankers are holding the volatility beachball underwater today so stocks float higher. The RSI is flat-lining currently which would be negative divergence if it remains this way for another half-hour.
Note Added 2:09 PM EST: The new 2-hour candlestick begins for the 2-hour chart a few minutes ago and it begins at the same elevated and record price highs at 3197-3198 so the indicators can be assessed to see if they are in negative divergence. The RSI, histogram, stoch's and money flow are in neggie d. Ditto the MACD line over the 6-week period, however, it is trying to create a tiny bit more strength in this immediate hour-by-hour time frame. The chart should top out anytime forward as long as the central banks and other market cheerleaders remain quiet. The SPX all-time record high remains at 3197.71.
Note Added 2:14 PM EST: SPX 3194. VIX is above 12.00 to 12.02 trying to move higher. 10-year yield 1.89%. Traders are selling off notes and bonds sending yields higher and then using some of that dough to buy equities. Bears that had placed shorts expecting the big pullback ran for cover this morning creating a mini short-covering rally.
Note Added 2:28 PM EST: SPX 3193-handle. VIX 12.08.
Note Added 2:37 PM EST: SPX 3193. VIX 12.15. Copper +1.0%.
Note Added 2:41 PM EST: SPX 3192-handle. VIX 12.14. Bears will need higher volatility if they want to send stocks lower. Bulls will be happy seeing the VIX flatten-out. Interestingly, we are only minutes away from the start of the last of the six 65-minute trading segments for the day that runs from 2:55 PM EST to 4:00 PM EST. There may be interesting price action occurring over the next 10 or 15 minutes as the robots close out the fifth segment and begin the trading programs for the sixth segment.
Note Added 2:48 PM EST: SPX 3194. VIX 12.11.
Note Added 2:55 PM EST: Time to see if the bears got anything. SPX 3193. VIX 12.14. What say you, robots? Typically, about 80%of the issues traded are computerized programs but considering the goofy erratic action these days it is probably closer to 90%.
Note Added 2:58 PM EST: SPX 3192-handle. VIX 12.17. Equities remain buoyant.
Note Added 3:01 PM EST: SPX 3193. VIX 12.15. The bulls are saying nothing to see here, move along, move along.
Note Added 3:43 PM EST: VIX spikes to 12.33. SPX 3192.
Note Added 3:45 PM EST: VIX spikes to 12.35 but stocks remain buoyant. SPX 3193.
Note Added 3:46 PM EST: There she goes. SPX 3191. VIX 12.40. There is only 14 minutes of trading remaining in the session. The uber important Housing Starts are released in the morning. Stocks remain supported.
Note Added 6:39 PM EST: The SPX finishes the day up 23 points, +0.7%, to 3191.45 a new all-time closing high and 3197.71 a new all-time record high. Sound the Seven Trumpets! VIX 12.14. Copper +1.1%. UTIL jumps +1.2% a huge plus for bulls. Utilities move higher despite the higher yields. The SPX 2-hour chart remains in negative divergence so a top should be in now or anytime ahead, say, by tomorrow lunchtime; this should be plenty of time for the MACD to roll over lower. S&P futures are down -3.
The BPSPX remains on the double-whammy buy signal verifying the upside bullish price action for equities. The SPX prints another all-time record high last Friday at 3182.68. For the BPSPX, the 6 percentage-point reversals and the 70% level are key.
In early October, stocks bottomed and the BPSPX ran higher from 52 to 58 issuing a stock market buy signal. Then price went above 70 kicking in a double-whammy buy signal for stocks. That is where we sit. The bears tried to push lower from 74 but only made it to 71 and then price popped higher again on the happy US-China trade deal news.
At 75, a 6 percentage-point reversal is 69. The 70 level is key and if the BPSPX slips below here, stocks are in trouble. Lumping these two together, the 69-70 level is for all the marbles so watch it closely in the week ahead. If stocks sell off and the 69 level is lost, look out Nellie, Katy bar the door, equities are going to collapse lower and the BPSPX will be on a double-whammy sell signal. If stocks sell off or bump along sideways and the BPSPX remains above the 69-70 level, the bulls will be fine and stocks will recover and move higher. Easy-peasy. 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 Monday, 12/16/19, at 1:23 PM EST: Interestingly, the BPSPX is dead flat at 75 and not moving higher despite the wildly higher move in the stock market today. The SPX prints a new all-time high above 3197.
Do not forget the downtrodden and less fortunate people during this holiday season. Many poor kids need warmer coats so clean your closet out and take the coats, gloves, knit caps, ear muffs, sweaters and other winter clothes to your local thrift shop. Do not donate them to the large nation-wide chain store thrift stops, instead, search out one of the local thrift shops in your area ran by the blue-haired gal's and silver-haired gentlemen. They are far more active at directly helping the disadvantaged folks in your local area.
Clean your pantry and kitchen shelves of canned goods. Place them in a bag and drop them off at the food bank or at a local thrift store (most take the food donations).
Local thrift shops and other charitable organizations always need volunteers and would be happy to see you there one day a week to help out. Hospitals and senior centers are always grateful for volunteers. Volunteering is a lot of fun, you meet a lot of people, you help people, it is all-around good stuff.
Encourage the company you work for to start a Paid Volunteer Program if they do not already have one; place a note in the suggestion box at work if you are shy. The program allows employees to volunteer one day per month at a place of their choosing and in return, the company still pays the employee for a regular day's wages. It gives the worker a breather day away from the office or shop while at the same time helps a local charity or hospital. The company can brag that they are a steward of the community. The employee typically makes a commitment to the program for one year so that would be volunteering 12 times, but a company can set things up anyway they want; do only 5 or 6 times if you are a smaller business with less employees.
The other day, a lady came into the local thrift store with a bag full of crocheted winter hats. Keystone asked what the story was on the hats. She explained that all year she knits the hats and then distributes them to churches and thrift shops in December for them to give to the needy or if they want to sell them to make some money to help folks. This lady does not have any money, she is as poor as a church mouse, and yet she spends a few hours each day during the year in a selfless act to help other people. That is amazing.
Compassion, empathy and patience is lost in today's society. Young and middle-aged folks, thinking they are big-shots, with eyes and attention glued to computer and smartphone screens, must realize that fellowship among other humans is a necessity for a balanced mental life and not an option. Helping others makes you feel good. Merry Christmas, Happy Holidays and Good Luck to All.
The S&P 500 prints a new all-time record high at 3182.68 and new all-time closing high at 3168.80. The bulls are shiny happy people dancing and singing, buying stocks without a care in the world. The euphoric joy is evidenced by the low put/call ratios and VIX sporting a 12-handle. Traders are throwing darts at the stock pages placing client's money in any stock with a heartbeat. Everyone is celebrating since even if the stock market sells off, the Federal Reserve and other central banks will step in to save the day. Even Johnny the shoeshine boy is telling everyone that the 'central bankers are the market'.
It is interesting to note that the discussions on 'moral hazard' began in 2009 after former Fed Chairman Bernanke began QE 1 to save the stock market and protect America's wealthy class. Over one decade later, and now everyone expects rich Uncle Fed to always save the day, picking-up the check for our ongoing financial misbehavior. The Fed can print money forever, or can they?
The happy US-China trade deal talk jump-started the Friday rally in stocks. S&P futures jumped +10 handles on the news that the US and China agree to a Phase One trade deal. President Trump used to say he wanted a big deal or no deal. You will not hear him say this anymore since now it is sliced into phases, how many, no one knows. Donny does not know. Perhaps Phase 18 will be the final final deal.
Futures were joyous on Friday morning until shortly before the US opening bell. China announced that a press conference will take place at 9:30 PM their time which is 9:30 AM EST exactly when the stock market opens. It is hilarious to see nations learn from Trump and then use his same methods to counter punch. King Donny gooses the markets with happy tweets timed with the stock market opening; now the communists create angst ahead of the US opening bell. You have to love it.
S&P futures tank from up +14 to down -5. Interestingly, the Chinese presser is then delayed until 10 AM local time which is 10 AM EST. Keystone bets dollars to doughnuts that Soybean Donny got on the horn to talk to ole Dictator Xi and find out what is up with the presser. Of course he did because you do not hear any Whitehouse comments about the delay. That means Trump called Xi not the other way around since Donny would have bragged if Xi had called him. This stuff is not rocket science.
So the communists hold their presser at 10 AM EST and the stock market oscillates to and fro as it did for the remainder of the Friday session. Investors and traders are in a quandary because a great trade deal is announced in Trumpian braggadocio fashion but as the lady said in the hamburger commercial many years ago, "Where's the beef?" President Trump brags that the deal forces China to buy $50 billion in ag goods but he will not provide a definitive timeline for when these Chinese purchases will occur. Donny says, "Soon." Then the president says the $50 billion ag number may include equipment and manufacturing purchases. That's comical. Trump is saying the number does not apply solely to soybeans and grains; that's news.
Trade Representative Lighthizer is quoting a $40 billion number for the deal instead of $50 billion; perhaps he needs to talk with Soybean Donny so they can recount the bushels. The left hand does not know what the right hand is doing. Fox News reports that the deal is $50 billion over two years which contradicts the president saying that commitment will be met shortly by China. There are few details available on the trade deal and surely over the next few days they will come to light. Now both sides are talking about a signing of the phase one deal in January so again, the deal is not actually done yet, it may not be signed for another month. It is nauseating to watch. Today's society revolves around politician's half-truth's and bull-sh*t. In America, the public understands this fact more each day.
Over the last few years, the peak ag imports to China are $27 billion running say from the low 20's to 27 each year. Trump's trade war harpooned this industry. China retaliated against tariffs by attacking the US farmer and reducing soybean and other ag purchases. The communists know that the US farmers voted for Trump and make up a big portion of his base (if Trump is not re-elected in 11 months, China may figure that their trade problems go away). China now acquires soybeans and other ag products from Brazil and Argentina and will obviously remain diversified here forward since the US supply has proved unreliable.
President Trump wanted a trade deal badly since he is concerned about the erosion of support from the farmers. Over one-half of the states in the US are now experiencing farm bankruptcies. Trumpster is trying to make things right to smooth his path to reelection. If the $50 billion is over two years, that is $25 billion per year imports to China exactly where the US was at before the trade war. In other words, Donny has received buptkis. Trump wants to lump in purchases of expensive DE tractors and CAT and CMI equipment so he can brag about the billions and billions of ag products he gained in the deal. It is only games and illusions by the magician politicians. Always remember, truth does not matter, only perceptions matter.
Soybean Donny thinks he can hike tariffs against China again in the future and keep playing the trade war game, however, no, he cannot. Trump has taken tariffs in reverse so as far as the markets are concerned, the drama is over. Tariffs will no longer increase and will only be reduced which could only help, albeit marginally in the near-term, to boost global GDP. If Donny expects to be reelected, and then begin the tariff game again, that is likely a losing proposition. Now that the tariff game has ended, traders and investors do not expect to see an escalation again. If that is Trump's plan, it will likely tank the stock market in the future.
At the same time that the trade saga continues, Prime Minister Boris Johnson wins the UK election creating a happy tone across global markets. Stocks were soggy and flat-lining all day Friday as the trade deal news was digested. The Trump administration needs to put some meat on the bones of the deal with specific details. Nothing has changed with the 2-hour chart. It was very popular by all of yinz in cyber space so Keystone figured an update would be useful.
The same ominous rising wedge pattern is in play. The RSI and stochasitcs are at or coming off overbot territory agreeable to a pullback in price. The red lines show universal neggie d across all indicators wanting to see a spankdown in price. The MACD line has the tiniest bit of bull fuel in the tank (tiny green line), it looks like fumes, which may be able to create a jog move of down-up, but that would be it. The MACD is negatively diverged across the two-week and six-week period so this could fail at any time. The stock market has topped-out, or, it will top-out within 4 hours of trading on Monday that would be between 9:30 AM EST and 1:30 PM EST.
Keystone's 80/20 Rule says 8's lead to 2's and 2's to 8's so the record high above 3180 is key. If one or two closes occur above 3180, the door will be wide open to 3220. Remember that the breach of 2800 opened the door to 3200. Conversely, if the SPX is unable to ever close above 3180, then the very long-term, multi-month, and multi-year stock market top, is likely in. Pay attention to the 3180 level.
The SPX violated the upper standard deviation band (purple) so the middle band at 3149 is on the table as well as the lower band at 3120. The chart is cooked. If you did not sell the long/s you were planning to sell on Friday afternoon, you made a mistake. The only thing that can save the day is more happy news over the weekend. The happy trade news appears priced-in.
Copper was up over +1.0% overnight Thursday into Friday morning but lagged ever since turning negative finishing down -0.4%. The happy trade deal occurs and copper sinks -1.5% intraday; that's not good. Doctor Copper was feeling better each day this month considering the trade deal hype but now feels woozy and lays back down on the gurney. Once the US-China trade deal details are released, probably in a drip-feed, that may create market negativity.
Traders are complacent and euphoric for the last month and the daily and hourly SPX charts have been topping out for the last couple weeks or so. The happy trade talk and central bank easy money promises always save the day. The trade deal news is known now, and this year, that was goosed by over 20 global central banks, is ending, but what is the plan for 2020? Earth to Suzy. There is no plan.
Perhaps a Black Monday is in our future? The market is very erratic and unstable so it would not be surprising to see a flash crash or some other crazy event come out of left field. Santa may deliver coal in Wall Street's stocking over the coming 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.
The stock market rallies higher on Soybean Donny's talk of an imminent US-China trade deal. The SPX prints a new all-time record high at 3176.28; you see it with that spike in price, that long upper shadow on that red candlestick. Usually rally moves like today have legs, however, the 2-hour chart is already in negative divergence again and out of gas. Soybean Donny better stack up some more happy tweets keeping them at the ready going forward.
The red rising wedge is a bearish pattern. The red lines show the negative divergence in play. The tiny green lines show a sliver of bullish juice remaining so that may create a jog move down-up before the top is placed, 2 candlesticks, in other words, a top should occur anytime over the next 4 hours. This would be the remainder of today's 90 minutes of trading and 2-1/2 hours tomorrow morning, say until noon or early afternoon Friday. This would be the window for the stock market top.
It appears the stock market rallies generated by President Trump, the Federal Reserve, and other global central bankers may be receiving less and less bang for the buck. Watch for a top in the SPX in the hours 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.
Note Added 2:32 PM EST: News reports say the US has reached a trade deal in principle with communist China. Soybean Donny delivers with those happy tweets. The SPX is up 25 points, +0.8%, to 3166.66. VIX drops to 14.14. Bulls are singing songs and carryin' on as they drink Fed whiskey and Chinese rice wine buying stocks with reckless abandon.
Note Added 2:43 PM EST: The SPX is up 23 points, +0.7%, to 3165. Banks are joyous. XLF +1.8%. KRE +2.7%. Regional banks celebrate higher yields and a steepening yield curve. VIX 14.24. 10-year yield 1.90%. Traders are swigging back Fed wine singing, "Happy Days Are Here Again." The future is so bright you have to wear shades.
Note Added 3:34 PM EST: The SPX is up 25 points, +0.8%, to 3166.66. News reports say a budget agreement is reached in Congress to avert a government shutdown. The joyous news knows no bounds. The VIX slips sub 14 for a few minutes.Copper +0.8%. Humorously, the President Trump theatrics and entertainment continues. The news wires say the US-China trade deal is a done deal, however, Trump apparently has to review the deal and see if he agrees to the deal, or not. Say what? Apparently, Soybean Donny is not involved in the trade discussions but then after Mnuchin and Lighthizer finalize the deal it is given to King Donny for his approval or disapproval. This stuff is hilarious. It is only actors on a stage. It will be interesting to hear more details in this so-called imminent trade deal.
Note Added 3:41 PM EST: The SPX gains 26.66 points, +0.9%, to 3169. VIX 13.93, check that, 13.86. The bears are running for their lives. VIX 13.83.
Note Added 4:16 PM EST: The SPX finishes up 27 points, +0.9%, to 3168.57 a new all-time record closing high and 3176.28 a new all-time high. VIX 13.94. The bulls walk around with their chests puffed out.
Note Added Friday Morning, 12/13/19, Friday the 13th, at 3:48 AM EST: After the US stock market closed, the news agencies report that President Trump signed-off on the trade deal. S&P futures pop from +9 to +15 and remain in this range overnight now up +12. VIX prints a 12-handle. Copper was up nearly +1% but now only +0.2%. The reaction is somewhat subdued. Boris Johnson remains prime minister with a strong victory in the UK election. Johnson won on the motto of 'getting Brexit done' while voters were put-off by Corbyn's alleged antisemitism. The pound rallies and UK stocks rally despite stronger sterling. European stocks rally. The US-China trade deal lacks details. All we know is that the Sunday tariffs will not be implemented and some amount of current tariffs will be rolled back. As the story develops, it is learned that the US and China agree on the terms of the deal but there is no text written for the deal. Pause for laughter. It's more of the same adolescent drama and theatrics that is getting old. S&P futures are at their overnight highs up +14 with the VIX trading at 12.97. Nothing has changed with the SPX 2-hour chart that remains in negative divergence and wanting to selloff. The positive news bites maintain stock market buoyancy.
Soybean Donny sends stocks wildly higher this morning and early afternoon after promising that a US-China trade deal was imminent. The SPX shot-up almost 40 points higher intraday. The SPX prints a new all-time record high at 3176.28. The VIX falls below 15, below 14, and down to a 13 handle but then recovers as stocks recoil and come off the highs.
Do you think the 15.12-15.20 level is important that Keystone is talking about today? Look at the chart. The bears were jamming the VIX higher to stop the rally in its tracks but as soon as the VIX threatened to pop above the 15.12-15.20 bull-bear line in the sand, volatility was spanked lower again. Poor Uncle Vix. Each time he pokes his head up and out of the foxhole, and he is ready to jump up and leap higher, Chairman Powell is standing over him with a Louisville Slugger baseball bat whacking Uncle Vix in the head. Nonetheless, it is tough to keep that energetic Uncle Vix down; he will keep trying to pop himself up out of that foxhole.
The important 200-day MA is at 15.12 which is a key bull/bear market signal. Keybot the Quant remains long the market and is tracking VIX 15.20 as the key bull-bear line in the sand. Thus, VIX 15.12-15.20 is for all the marbles. You can watch this and ignore everything else.
Very simply, bulls win big if the VIX remains below 15.12. Bears win if the VIX climbs above 15.20. It's not rocket science. 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 1:14 PM EST: The SPX is up 19 points, +0.6%, to 3161. VIX is dropping to 14.39 so stocks should experience a bit more buoyancy. UTIL -0.4. Copper +0.3%. The trade deal is priced-in to copper. The red metal has rallied strongly over the last week and appears uninspired today despite the euphoric trade talk.
Note Added Friday Morning, 12/13/19, Friday the 13th, at 5:37 AM EST: Volatility tumbles lower pumping stocks higher. The VIX is trading at 12.64. S&P futures are up +16, at the overnight highs, on news of the US-China trade deal and happy UK election results.
The S&P 500 prints a new all-time record high at 3176.28. S&P futures were soggy this morning on news that Apple iPhone sales may be sluggish in China. AAPL -0.8%. Also, the PBOC said they would support their economies and markets with whatever it takes (paraphrasing) which created a little angst that they may be willing to walk away from the trade deal.
But as soon as the opening bell rang, Soybean Donny tweets that the US-China trade deal is "very close. They want it, and so do we." The 'so do we' is an uncharacteristic phrase for Donny so it sticks out like a sore thumb. It sounds like King Trump wants the deal as bad as Dictator Xi. Surprisingly, the US may cut the existing tariffs by 50% and cancel the tariffs that are supposed to go into effect on Sunday, 12/15/19. This sounds like a large concession so America must be receiving safeguards on IP theft, forced transfer of technology, as well as the deal having enforcement mechanisms worked out. Details will have to be announced within a couple days since the tariff deadline is on Sunday.
The bulls take the trade ball toss from President Trump and run down field sending stocks higher. The stock market complacency increases daily. Timmy Trader confesses that he does not even pay attention to the companies he picks to go long anymore; he simply picks some letters and buys that ticker symbol since everything goes up all the time. Isaac the investor is slurring his speech due to too many shots of BOJ sake but is coherent enough to say that everyone should go long the market since stocks always go up and even if a selloff occurs, the central banks will step in to save the day and pump them higher again. The Fed wine and ECB champagne are flowing like water on trading floors everywhere. Have another drink Isaac.
The chart shows the big pop on President Trump's proclamations that he wants a trade deal, so does China, and the deal is very close. Unfortunately, this is the 58th time (joking) he has made similar promises. Price pops to the new record high but then the wind comes out of the sails. The SPX comes back down, through the 38% Fib retracement and now bouncing around at the 50% Fib at 3157 deciding to bounce, or die. Stocks trade for another 3-1/2 hours today, and the regular 6-1/2 hours tomorrow and that is it before the Sunday tariff deadline. Tic, toc.
Soybean Donny promises a joyous trade deal. The stock market now expects a bright shiny trade deal under the Christmas tree either tomorrow morning or Saturday morning. The market had better receive its bright shiny trade deal. 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 12:42 PM EST: The SPX takes out the 50% Fib so it ventures to the 62% Fib at 3152, but bounces, then back up through the 50% Fib again now printing at 3159. The 38% Fib is at 3161 so it will be important to see if price has the juice to go above 3161, or not. The VIX is at 14.666 below the critical 15.12-15.20 bull-bear line in the sand so the bulls are celebrating. Bears need the VIX above 15.20 or they got absolutely nothing. The move higher in yields is sharp. 10-year yield 1.89%. UTIL -0.4%. Copper flat. Euro 1.1113. USD 97.40.
Note Added 1:18 PM EST: The SPX is bumping around 3161 deciding to bounce or die.
