KRE Regional Banks ETF Weekly Chart; H&S; Regional Banks Slapped by Contagion After Silicon Valley Bank and Signature Bank Failures

KRE, the regional banks ETF, is taking the pipe after the Silicon Valley Bank and Signature Bank failures. America's crony capitalism system is under stress with the H&S (head and shoulders pattern) failing at the neckline last week.

The neck is at 57 and top of head at 77 so that is 20 difference. If the neckline at 57 fails, the downside target for the H&S pattern to play out is 37. Price drops to 42 so far.

The chart indicators on the KRE weekly chart remain weak so the expectation is that the 37-40 area will be visited in the days or couple-few weeks ahead. Price is in the neighborhood. If you see 42 lost, then 37-38 will be on the table as per Keystone's 80/20 Rule.

The US Housing Market has been in recession since Christmas. Interestingly, the regional banks write most of the US mortgages. It is like two drunks trying to hold each other up in Times Square on Saturday night. The housing market is sick because people are running out of money and their jobs are shaky so their house plans are on hold, while at the same time, someone ready to buy a home has to deal with banks under stress and may be seeing their bank of choice name dissed and plastered across a television screen. Housing Starts hit at 8:30 AM EST Thursday morning so be there or be square.

KRE will likely provide a buying opportunity going forward but for now it is a no-touch. If sub 40 occurs, and especially the 37-38 H&S target, that would be a better time to go sniffin' around the regionals for opportunities. 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.

EEM Emerging Markets ETF Daily Chart; EEM Round-Trips on the Year Thus Far Losing All Gains Returning to the Flatline

EEM, the Emerging Markets ETF, drops to where it began the year at 38. In January, traders were filled with wide-eyed optimism for emerging markets. Well, now they have buptkis. EEM is flat on the year testing critical support.

The purple lines show a H&S pattern in play that would target the October support. Head is 42.5, call the neckline 37.5 to make the math easy. That is a 5 difference so the downside target is 32.5, call it 32-34, if the 37.5 neckline fails.

The green lines show positive divergence at play. The falling green wedge is also bullish. The stochastics are flat and may dip negative but the other indicators are likely enough to create a bounce in the daily time frame. Price may want to back kiss the 200-day MA at 38.47 in the days ahead. However, the weekly chart is weak so the expectation would be for EEM to roll over and fail through the neckline on the multi-week basis ahead.

The gold circle shows the golden cross that formed after the October bottom. As Keystone always tells you, when a golden cross occurs, look for price to retreat, and it does. The 50-day MA is flat and the last 20 or more days are all prices below the 50 so it will be pulled lower going forward for a potential death cross in April or May (50 falling down through the 200).

If you own EEM long, you may want to consider selling on the potential pop during the days ahead and git out of Dodge. The biggest fool went long late January and is now holding the bag. Keystone does not hold EEM long or short and has not played it in a year or more. 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.

SIVB Silicon Valley Bank Financial Group Weekly Chart Crashes into Insolvency

The United States and world remains concerned about fallout and potential contagion from the collapse of the Silicon Valley Bank. Judging from the bikinis on the West Coast beaches, however, there appears to be plenty of demand for silicone.

On the serious side, you lost your shirt, and shoes, if long SIVB. There are lots of incompetent unqualified people in responsible positions these days creating terrible outcomes. SIVB drops from 287 to 100 last week a -65% crash and near -90% crash from the peak, and then it collapsed into nothingness. Officials shuttered the bank on Friday when SIVB was down to 40 in the pre-market.

President Biden, Treasury Secretary Yellen, Federal Reserve Chairman Powell and television pundits are shouting from the rooftops, with arms waving frantically, yelling at people to not panic. Don't panic! Don't panic!

The Federal Reserve and US government step in as usual to save the day promising to make all depositors whole even if over the 250K limit. Such is America's dirtbag crony capitalism system that is collapsing under its own corrupt weight. Be glad that crony capitalism is in its final throes; it only serves to make the wealthy richer since they control the game.

Signature Bank also fails as global markets continue assessing contagion. A lot of smart people say there is no concern going forward but these are the same a-holes that never saw the Silicon Valley Bank problem developing even as the stock was in a steady downtrend for 16 months. The human corruption runs too deep to fix. 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.

US Unemployment Claims Weekly Chart; Claims Rise for 6 Weeks Hinting at Recession Ahead

The Unemployment Claims increased substantively on Thursday to 211K well above the 200K level a big 21K increase for the prior week that was unrevised at 190K claims. Analysts are quick to blame a surge in New York teachers claims but even taking away 15K would still be a 6K increase and continue to send the 4-week moving average higher.

The 4-week moving average is up to 197K claims per week from 193K per week for the prior week. The moving average is up for 6 weeks again signaling that a recession is on the come and likely approaching far faster than anyone realizes.

Considering the fits and starts, however, do the old metrics at predicting oncoming recessions still carry water? In this era of 14 years of Federal Reserve money printing (monetary stimulus) and 3 years of COVID-19 government spending (fiscal stimulus), no wonder the signals are mixed and switching back and forth. One thing is for certain, however, the free money from the government is pretty well spent.

Instead of preparing for the oncoming recession as young people should be doing right now (read this if you need a reality check on how a recession will change your life), the naïve dolts are buying boats, and fancy clothes, and gadgets, and costly dinners, and video games and posting their latest 'experience' on Facebook. Experience this. Young folks need to prepare for the oncoming recession especially since most of you have not experienced a hard couple-year recession in your life. A lot of you will grow-up over the next couple years.

Each week the 4-wk MA moves higher is another week that you come closer to receiving the call from the boss telling you to come back to his/her office where you will be sh*t-canned, told to pack-up, and get out of the building within 15 minutes. You will also need to hand in your badge and card so you can no longer enter the building. 'But boss, you said the company could not survive without me'. 'You little twit, that is what you tell all employees to squeeze more work out of them'.

The prior Claims chart from 3 weeks ago is linked here for further discussion and explanation. 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 on Thursday Morning, /16/23, at 8:49 AM EST: Claims are 192K coming in less than expected but the 4-week MA remains at 197K claims per week. Next week's claims will either roll the 4-wk MA over to the downside making those not believing in recession happy, or, the moving average will resume the move higher after the flatness reinforcing the theme that the recession is coming. The mixed market signals continue. For next Thursday, 3/23/23, if claims are above 197K, the recession is on its way, if the claims fall below 197K, the recession will be delayed and the economy will be deemed okay.

NYA NYSE Composite Weekly Chart; Battle at 40-Week MA at 15060 Dictates Cyclical Bull or Bear Market Going Forward

The NYA 40-week MA cross is a key cyclical market signal. In November the bull was on. This morning, the bears are stabbing at the critical 40-wk MA at 15060 and drawing blood. As this is typed price is trying to recover back above 15060.

This is all that matters today and going forward. Stock market bulls will be slaughtered if the NYA does not recover back above 15060 heading higher.

Bears will win big if the NYA remains below 15060; there will be nothing but carnage ahead. Sunday, Bloody Sunday. The drama will likely spill into next week when the inflation data drops. 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 10:13 AM EST: The NYA pops to 15094, then dies back below 15060, now back above at 15080. The drama will continue. Whoopisies daisies, back below 15060.

Note Added 11:12 AM EST: The NYA pops to 15091 so the bulls are puffing their chests out again.

Note Added 11:44 AM EST: The NYA jumps to 15131 so the bulls are throwing confetti. Nothing to see here, move along, move along, nothing to see here. Bears know that this battle at 15060 is not done and will likely be revisited in the days ahead if not today again. 

Note Added 11:58 AM EST: The NYA dies, back below 15060, bears cheer.

Note Added 12:27 PM EST: NYA 14995.

Note Added 1:21 PM EST: NYA 14919.

Note Added 1:27 PM EST: NYA 14880.

Note Added 1:41 PM EST: NYA 14866.

Note Added 1:48 PM EST: NYA 14855. I've fallen and I can't get up..

Note Added Monday Morning, 3/13/23, at 5:11 AM EST: The NYA died on Friday to 14894, below 15060, watch 15060 today and it will tell you the story on the stock market.

YC2YR 2-10 Yield Curve Daily Chart; Inversion Drops to -110 Bips but Un-Inverts with Hook Pattern Signaling Recession Ahead

It has been interesting following the 2-10 yield curve watching for the hook pattern that will usher-in the US recession. Here is the first chart that shows the past recessions brought on by the hook. Then another chart showing fake-out moves. Then the prior 2-10 yield curve chart that was set up with a bottom with positive divergence but Pope Powell laid an egg promising higher rates forever.

That brings us to today with the US Monthly Jobs Report about to drop. The 2-year yield has dropped from a peak of 5.08% only a couple days ago to 4.82% as low as 4.76%. The 10-year yield is at 3.82% so the 2-10 spread recovers higher to -94 bips.

The jobs number drops and the 2-year yield drops below 4.70% to 4.69%. The 10-year yield is at 3.77% so the 2-10 spread moves higher to -92 bips. You can smell a whiff of recession in the air.

The green lines show positive divergence wanting the yield curve to move higher (become less negative). Ditto the Aroon where those that believe the yield curve will drop are almost 100% convinced it will drop further and those that do not believe it will drop are also convinced nearly 100% that it will move lower. This is a contrarian signal hinting that the bottom is likely in or extremely near for the yield curve (no one believes that he yield curve will move higher). The spread is also below the moving average ribbon requiring a mean reversion higher and the lower standard deviation band is violated wanting the spread to move higher.

Time will tell. If the hook pattern continues higher (2-10 yield spread (yield curve) becomes less negative moving back up toward the zero inversion line), the US recession is a lot closer than anyone thinks. 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 9:18 AM EST: The 2-year yield is at 4.71% and 10-year at 3.78% for a 2-10 spread at -93 basis points.

Note Added 9:30 AM EST: The 2-year yield is at 4.69% and 10-year at 3.77% for a 2-10 spread at -92 basis points.

Note Added 9:34 AM EST: The 2-year yield is at 4.66% and 10-year at 3.75% for a 2-10 spread at -91 basis points.

Note Added 9:39 AM EST: The 2-year yield is at 4.61% and 10-year at 3.73% for a 2-10 SPREAD AT -88 BIPS. The hook expands higher telling the recession to step forward.

Note Added Monday Morning, 3/13/23, at 5:15 AM EST: The US yields plummet on the Silicon Valley Bank failure; 2-year 4.35%, 5-year 3.80%, 10-year 3.61%, 30-year 3.67%. The 2-10 SPREAD UN-INVERTS UP TO -74 BASIS POINTS. IN ONLY 3 DAYS, THE 2-YEAR YIELD FALLS OVER 70 BIPS THE MOST SINCE THE 1987 STOCK MARKET CRASH. THE 2-10 SPREAD HOOK PATTERN LAUNCHES HIGHER FROM -110 BIPS TO -74 BIPS SIGNALING THAT THE US RECESSION IS LIKELY CLOSER THAN ANYONE REALIZES. 

UST2Y 2-Year Treasury Note Yield Weekly Chart; Negative Divergence

Remember the tight bands (pink arrows) on the 2-year yield chart? Tight bands tell you a big move is coming but they do not predict direction. Keystone was skeptical a couple weeks ago that up would be the resolution due to the negative divergence in play (red lines).

But alas, the Federal Reserve, led by Pope Powell, proclaims that the sky is the limit for rates going forward so the 2-year yield explodes higher out of the tight bands running up the top standard deviation band and now piercing above. Powell is pumping yields higher. The 2-year yield explodes higher to 5.05% testing 2006 highs.

Now that the bottleneck is clear, the chart remains in neggie d. The upper band is violated so a move back to the middle band at 4.44% is on the table going forward as well as the lower band at 3.96%. You may think that sounds ridiculous but it is not. If the stock market collapses, traders will be buying notes and bonds for perceived safety so price up means yields down.

Get to the point buddy, what's all this mumbo-jumbo mean? The 2-year yield should top out over the next week or two, in this area, perhaps 5.05%-5.17%, and then a multi-week downtrend in yields begins with 4.44% likely and 4.00% on the table. This will likely occur in concert with stocks collapsing. 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 10:30 AM EST: The 2-year yield drops to 4.98% back below 5%. If you bring up the daily chart, the MACD has some more gas although the chart in general is topping-out like the weekly chart above, so the top in yields is likely occurring over the coming days.

Note Added Friday Morning, 3/10/23, at 7:14 AM EST: The US stock market collapses. The 2-year yield received the negative divergence spankdown in quick order losing 20 bips in a flash an unbelievable move. The 2-year yield is at 4.82%. The 10-year is at 3.85%. The 2-10 spread is at -97 bips becoming less inverted after the -110 basis point drop. A new hook pattern forms and heads higher for the 2-10 spread ushering in the US recession going forward, unless the yield curve becomes more inverted and drops below -110 bips which is already rare multi-decade lows.

Note Added Friday Morning, 3/10/23, at 7:26 AM EST: The 2-year yield drops to 4.80%. The 10-year is at 3.84%. The 2-10 spread drops to -96 bips now un-inverting over 14 basis points from the -110 low. The hook pattern is alive and moving higher telling the US recession to get ready for its appearance.

Note Added Friday Morning, 3/10/23, at 7:39 AM EST: The 2-year yield drops to 4.78%. The 10-year is at 3.83%. The 2-10 spread drops to -95 bips.

Note Added Friday Morning, 3/10/23, at 8:00 AM EST: The 2-year yield drops to 4.76%. The 10-year is at 3.82%. The 2-10 spread drops to -94 bips.

Note Added Friday Morning, 3/10/23, at 8:02 AM EST: The 2-year yield drops to 4.75%. The 10-year is at 3.82%. The 2-10 spread drops to -93 bips.

Note Added Monday Morning, 3/13/23, at 5:18 AM EST: The US yields plummet on the Silicon Valley Bank failure; 2-year 4.35%, 5-year 3.80%, 10-year 3.61%, 30-year 3.67%. The 2-10 SPREAD UN-INVERTS UP TO -74 BASIS POINTS. IN ONLY 3 DAYS, THE 2-YEAR YIELD FALLS OVER 70 BIPS THE MOST SINCE THE 1987 STOCK MARKET CRASH. THE 2-10 SPREAD HOOK PATTERN LAUNCHES HIGHER FROM -110 BIPS TO -74 BIPS SIGNALING THAT THE US RECESSION IS LIKELY CLOSER THAN ANYONE REALIZES. 

UST2Y 2-Year Treasury Note Yield Weekly Chart; Expansion Pattern (Megaphone) Ends; 5.05% Yield Comparing Back to 2006; 40-Year Bull Bond Market Ends with Pandemic

The 2-year yield jumps above 5% to 5.05% comparing back to the summer of 2006 when yield was at 5.17% with a high at 5.24%. This level, 5.00% to 5.24%, offers strong very long-term resistance (a ceiling for yield).

It would be reasonable to expect a back kiss down to the breakout trendline at 2.5%-ish. No one expects this to occur. If the stock market collapses, people will be buying notes and bonds for perceived safety driving yields lower.

It is a big deal that yield breaks out of the megaphone but it may face a few months or years of resistance at 5.24% until the big explosion higher in yields occurs.

A Gary Shilling deserves credit for calling the long-term bond bull market back in the 80's and 90's. Analysts scoffed at his call ridiculing his analysis but as the century changed over, Shilling was proven right; everyone else was wrong. Wall Street is a group of greedy lemmings. 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 10:34 AM EST: The 2-year yield drops to 4.98% back below 5%. If you bring up the daily chart, the MACD has some more gas although the chart in general is topping-out like the weekly chart above, so the near-term top in yields is likely occurring over the coming days. 

Note Added Friday Morning, 3/10/23, at 7:18 AM EST: The US stock market collapses. The 2-year yield received the negative divergence spankdown in quick order losing 20 bips in a flash an unbelievable move. The 2-year yield is at 4.82%. The 10-year is at 3.85%. The 2-10 spread is at -97 bips becoming less inverted after the -110 basis point drop. A new hook pattern forms and heads higher for the 2-10 spread ushering in the US recession going forward, unless the yield curve becomes more inverted and drops below -110 bips which is already rare multi-decade lows.

Note Added Monday Morning, 3/13/23, at 5:21 AM EST: The US yields plummet on the Silicon Valley Bank failure; 2-year 4.35%, 5-year 3.80%, 10-year 3.61%, 30-year 3.67%. The 2-10 SPREAD UN-INVERTS UP TO -74 BASIS POINTS. IN ONLY 3 DAYS, THE 2-YEAR YIELD FALLS OVER 70 BIPS THE MOST SINCE THE 1987 STOCK MARKET CRASH. THE 2-10 SPREAD HOOK PATTERN LAUNCHES HIGHER FROM -110 BIPS TO -74 BIPS SIGNALING THAT THE US RECESSION IS LIKELY CLOSER THAN ANYONE REALIZES. 

SPX S&P 500 Monthly Chart; Bull/Bear Battle Continues at the Critical 12-Month MA at 3962

The stage is set. It is time to separate the men from the boys. The SPX is testing the 12-month MA at 3962 which decides if the US stock market remains in a cyclical bear market going forward, or, if stocks begin a new cyclical bull market.

As 2022 started, the 10-mth MA failed and it served as an early warning system that something is going wrong with the stock market. The 12-mth fails in early 2022 and it was lights out, the party is over.

The cyclical bear market continues but the bulls have a legitimate chance to right the long ship. In November, the bulls attacked the 10-mth MA that is now below the 12-mth since it follows price more closely. The bulls were rejected handily from the 10 and 12-mth MA's in December receiving coal in their stockings.

The bulls again try to create a cyclical bull market and close above the 12-mth MA in January only to give up the ghost again in February. The bull/bear battle at the 12-month MA at 3962 continues. It is the Gettysburg of markets and instead of the blue versus the gray (union (North) versus confederate (South), respectively), it is the bulls versus the bears.

It is all on the line at 3962 and this dictates the path forward for the year. Obviously, this is not your run of the mill back kiss. It is for all the marbles. Bulls win big if they bounce off 3962 support and trend higher. A big rally will follow.

Bears win big if price collapses through 3962. Armageddon for stocks begins if/when the SPX loses the 10-month MA at 3928. The CPC and CPCE put/call ratios remain low and complacent so the bears have the upper hand to create something ugly going forward.

Note that price already came down this month, and last, to tap on the 10-month support and the back tests are successful for the bulls so they are hopeful for the optimistic outcome. If 3962 is lost, there will be another test of 3928 where the bulls will have one last chance to stop the developing carnage. 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 10:26 AM EST: The SPX gaps higher to 4018 and then drops to 3997 now sputtering sideways at 4000. It is likely all noise until the US Monthly Jobs Report drops at 8:30 AM EST only 22 hours away.

Note Added Friday Morning, 3/10/23, at 7:20 AM EST: The US stock market collapses. The SPX plummets -1.9% to 3918 losing the 12-mth MA at 3957-3960 and 10-mth MA at 3921. Back tests are likely needed going forward. More choppy slop is likely with the US Monthly Jobs Report dropping in an hour and inflation data next week. The 2-year yield received the negative divergence spankdown in quick order losing 20 bips in a flash an unbelievable move. The 2-year yield is at 4.82%. The 10-year is at 3.85%. The 2-10 spread is at -97 bips becoming less inverted after the -110 basis point drop. A new hook pattern forms and heads higher for the 2-10 spread ushering in the US recession going forward, unless the yield curve becomes more inverted and drops below -110 bips which is already rare multi-decade lows.

SPX S&P 500 Daily Chart; Stocks Trading Choppy Sideways With US Debt Ceiling Deadline Looming; Bulls and Bears Battle for Cyclical Market Control; Sideways Symmetrical Triangle

The US stock market remains choppy slop. Since October, the SPX oscillates between 3800 and 4200 a 400-point range. The chart indicators are lining out sideways. Ditto the moving averages with the 150-day and 200-day MA's flatter than a newlywed's souffle.

Price is at 3992 testing the 50-day MA at 3998 choosing to bounce or die. S&P futures are negative so it must like the idea of dying. Why are the markets choppy slop this year?

The US hit its debt ceiling in January and can still pay its debts using other measures into June. Most agree that the start of Q3 (July) is when the sh*t hits the fan. The debt ceiling drama will likely be decided in the June-August time frame. The first few days of August 2011 were ugly as a similar drama played out. Will it be another early August redux (stocks collapse)?

The corrupt lawmakers will wait to the last minute to talk so things will heat up in June and accelerate markedly in July. Is this the reason for the choppy sloppy action this year? Markets are directionless staggering sideways like a drunk in Times Square on Saturday night.

The case can be made with the blue lines that the stock market may simply chop inside that sideways symmetrical triangle pattern until the verdict on the debt ceiling is provided. There are always trading opportunities so the buys and sells may occur going forward as price hits the top and bottom rails of the triangle making its way to the big crescendo when the poor excuse for humans in Washington, DC, make a decision on the debt limit.

The vertical side of the triangle, should it develop and play out, is about 800 points (thick blue line), so the upside breakout targets 4800 and higher while the collapse out the bottom of the triangle would target 3200 and lower. There is lots of excitement ahead.

Keystone uses three key metrics to assess the cyclical bull and bear markets. The NYA 40-week MA cross remains bullish the first metric to flip to a cyclical bull a few weeks ago. The SPX 12-month MA cross is the most important metric and it is at 3962. The SPX price is at 3992 (exactly in the middle of the 3800-4200 range) only 30 points above and S&P futures are negative. It looks like a test of the critical 12-month MA at 3962 is on tap today where price will bounce or die. It will have serious implications on the stock market going forward.

The third metric for assessing the market cyclicality is the slope of the SPX 150-day MA. The chart shows the cyclical bull market continuing in 2021 into the top as 2022 began. The slope of the 150-day MA (pink) then went negative marking the start of the cyclical bear market. The NYA 40-wk MA cross and SPX 12-mth MA cross were in full negative agreement and the cyclical bear market thrived in 2022.

2023 is a more jumbled story. The bulls are trying to wrestle back control but the bloody battle continues. If you go to a shorter time frame for the chart above you will see the 150-day MA sloping back down again identifying a cyclical bear market but this and the 12-mth metric are in flux. The benny of the doubt has to be given to the cyclical bear market until clearly proven otherwise. All three metrics must agree and be firmly committed one way or the other to make the cyclical call.

The US stock market is trying to extricate itself from the cyclical bear market but it is not yet successful. The drama continues. Watch the SPX 3962 bull/bear line in the sand. 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 Friday Morning, 3/10/23, at 7:25 AM EST: The US stock market collapses. The SPX plummets -1.9% to 3918 losing the 12-mth MA at 3957-3960 and 10-mth MA at 3921. Back tests are likely needed going forward. More choppy slop is likely with the US Monthly Jobs Report dropping in an hour and inflation data next week. The 2-year yield received the negative divergence spankdown in quick order losing 20 bips in a flash an unbelievable move. The 2-year yield is at 4.82%. The 10-year is at 3.85%. The 2-10 spread is at -97 bips becoming less inverted after the -110 basis point drop. A new hook pattern forms and heads higher for the 2-10 spread ushering in the US recession going forward, unless the yield curve becomes more inverted and drops below -110 bips which is already rare multi-decade lows.