USD US Dollar Index Daily Chart; Positive Divergence Setting-Up; Greenback Loses Key 101-105 Support Channel; Drop in Dollar Creates Stock Market Rally

The green box shows the melt-up rally in the US stock market. The collapse in the dollar pumps commodities, copper and tech stocks higher. Multi-nationals rejoice. People become more excited and want to join the AI orgy. Short-sellers give-up and leave town creating more rocket fuel for the upside in stocks (short-covering rallies).

The bullishness for stocks is off the charts. You cannot find a bear. And comically, the bulls are proclaiming nothing but upside in stocks for the remainder of the year and say everyone is bearish. Wrong. The party is in full swing with everyone on the bull side of the boat cheering the AI orgy on the main stage.

The dollar collapses out of the 101-105 range convincingly but give it a few days to sort things out. Bank earnings begin today, in a couple hours, and then on Tuesday and Wednesday. It is interesting that the new moon peaks Sunday into Monday (stocks are typically weak). The Ukraine War may ramp-up since the side with superior night vision technology will take advantage of the pitch-black darkness.

Early May Keystone highlighted the possie d in play with the dollar and voila, the dollar bounces higher moving towards the 105 as forecast but did not quite get there; the dixie made it to 104.60. The red lines show the neggie d that formed as price continued to make matching or higher highs, so a spankdown was on tap and slap, down she goes. The down move is a 2-leg bear flag pattern so 3 sticks down, then consolidation with an upward bias, then she starts down again from 103 so the target is 100 that is achieved with USD now at 99.46.

So you know the drill. You have to wait for the possie d which will forecast the bounce in the dollar and that will likely begin the rollover in stocks. The RSI and stochastics are oversold agreeable to a relief bounce higher. Note how the MACD, stochastics and ROC are positively diverged across the last 6 months despite the drastic collapse in the dollar in recent days (hinting that more sideways is likely ahead instead of a further collapse).

The histogram is possie d wanting to see the dollar bounce, along with the oversold conditions, so a day of up would be expected, however, the RSI, MACD and ROC are weak and bleak over the last couple days reflecting the downside momentum. They want to see another lower low in price before giving the okay for the dollar to rally higher in the daily time frame.

Today's candlestick has to print but this is an end-of-day chart so this evening you can check the chart. The RSI, MACD and/or ROC may turn possie d today. At any rate, the bottom in the dollar (likely top in the stock market) is only a couple days or so away. The banks will set the mood this morning.

The dollar will likely bounce today and perhaps Monday, so stocks may be weak into and through the weekend, then back up next week as the dollar rolls back over due to the weak and bleak indicators. Next week is OpEx so a Tuesday low typically leads to a Wednesday high (professional traders will be playing this so it is likely that stocks will recover mid-week, in concert with the dollar dropping to put in its final low). From there forward, say mid to late next week, the US stock market will likely start to receive its comeuppance as forecasted by the put/call ratios exhibiting rampant, out of control complacency and fearlessness in the stock market.

Expect more sideways chop in the dollar rather than continued weakness. Price will also need to come up to test the key 101 resistance at some point forward. The dollar is currently trading at 99.76 receiving the lift from the oversold conditions and possie d with the histo. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

Note Added Saturday, 7/15/23: USD 99.96. The buck tags 100.02 yesterday. If you bring up the USD daily chart, the RSI is oversold and possie d, the histogram is possie d, ditto stochastics with oversold conditions and also the ROC (all bullish). The MACD line is positively diverged over the last half-year, however, it has that downward momo over the last few days. Thus, the buck will either continue higher here and the MACD line turns up on Monday, or, a jog move is needed (down-up) where the dollar may slump for a day or so printing matching price lows again, and then the upside for the greenback on the daily basis begins in earnest (with stocks dropping). If you bring up the USD weekly chart, despite the humongous -2.3% move lower in the buck (a big currency move) last week, the RSI, histogram, MACD and stochastics are all positively diverged. There is downside momo so USD may languish in this area going forward for a few weeks or couple months, the 200-wk MA is at 98.18 and may want to be touched, but the projection forward through the end of the year and beyond is more sideways and sideways up for the dollar. This makes sense since the recession will be in play, stocks will be trending lower, and the dollar will be flat with an upward bias into year-end. The USD monthly chart wants to see some further lows so that maintains the 98.18 in play and also the 50-mth MA at 98.11. Perhaps stocks sell off over the next month with buoyancy in the dollar and then the buck rolls back over again to print its low for the year in August/September at 97-98 then up from there into year end (that would set up stock market ugliness for October-December).

CPC and CPCE Put/Call Ratios and SPX S&P 500 Daily Charts: Rampant Complacency Signals Significant Top in United States Stock Market; Expect a Substantive Collapse in US Equities Going Forward

The CPC and CPCE put/call ratios are signaling ongoing complacency and fearlessness in the US stock market and now they have completely fallen out of bed at multi-year lows. The stock market is printing a significant price high right now and about to begin a substantive collapse. Sell your longs going forward, otherwise, you will be hosed bigtime as the days and weeks ahead play out. 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, 7/14/23, at 6:05 AM EST: The bulls are running proclaiming nothing but upside ahead for stocks. Ed Yardeni says SPX 4800 is coming. Goldman Sachs analysts say all-time highs for the SPX are on tap. RBC's Lori Calvasina proclaims joy ahead for US stocks. CNBC business news celebrity Jim Cramer is telling investors not to short stocks. Open your eyes folks. Do you see the rampant complacency? None of the jackasses called the top in the US stock market. Keystone did. Who do you believe going forward? The business news punditry and corrupt financial institutions or Keystone? You have to decide over the coming days.

Note Added Saturday, 7/15/23: TPW Advisory's Jay Pelosky is uber bullish telling folks to buy China, emerging markets, commodities and cyclicals. He decrees to take profits on tech stocks and put that dough into the other sectors. It is all nothing but blue skies and rainbows ahead. Things are going great and only getting better. It's so bright that you gotta wear shades as Timbuck 3 sing. Are you at the bull party drinking Fed wine and Congressional champagne?

META Meta (Facebook) Daily Chart; Overbot; Negative Divergence; Weekly Chart Setting-Up with Neggie-D

Here is the META (Facebook) daily chart. It's cooked. META is about to droop lower like the droopy breasts logo. The red lines show universal negative divergence across all indicators calling a top in the daily time frame. Watch the RSI to see if it squeezes out a tiny new high tomorrow which may provide a couple more days of elevated prices but the indicators want to see a spankdown going forward in the daily time frame.

The RSI and stochastics are overbot agreeable to a retreat in prices. META rings the bell with the upper standard deviation band at 299 with a 3 hundo print today. Bingo. Old guys say bingo a lot. The upper band violation places the middle band, that is also the 20-day MA at 285 firmly on the table as well as the lower band at 270. The chart also has a rising wedge vibe (bearish pattern).

It is reasonable to expect a pullback to 260-270 going forward. Once the US stock market sh*t pile begins collapsing, stocks have a long way to fall and do not be surprised if the gap down at 150-170 is filled at some point over the next year or two. When that happens you will look like an *sshole considering that you just went leveraged long at 300.

Meta started a 'Threads' app that is supposed to rival 'Twitter', however, there has been other challengers. Comically, no one is talking about 'Truth Social' where King Donnie holds kangaroo court with his Burger King crown on his orange head throwing french fries at Jester Giuliani. Truth Social is a dud and that was supposed to be the answer to Twitter. People, companies and news folks are on Twitter and that is how news is disseminated and it is a tall ask to expect people to move to a new site. People are lazy bastards; that is one of the reasons the country is falling apart. The lazy bastards will remain at Twitter, including Keystone.

The META weekly chart was previously posted with the discussion of the "Tan-Mama" stocks (Tesla, Apple, NVIDIA, Microsoft, Amazon, Meta (Facebook), Alphabet (Google)) also known as the "Magnificent 7."

On the META weekly chart, the RSI is dead flat but trying to sneak out a slightly higher high as price makes the new high. The MACD line is still long and strong as previously highlighted so META needs another down-up (jog move) on the weekly basis to top-out.

So mixing the daily and weekly time frames together, META is set for a pullback in the daily time frame (coming days going forward) but after a move lower this week perhaps next, price will likely recover again and then top-out on the weekly basis as the month ends (anytime over the next couple weeks). This will usher in a multi-week decline probably targeting the 200-week MA support down at 237.

Bring up the 2-hour chart to see if we can pinpoint the top better. Price prints higher highs today up at the 3 hundo level, nose's are bleeding, and the indicators are all neggie d so the top is in on the hourly basis. There is some VST mojo because of the push higher with stocks into the closing bell today so that could add an hour or few of buoyancy tomorrow morning, but overall, expect META to be at a top now on both the hourly and daily basis so she should start dropping. Is META 'feeling like a dead duck' as only the musical master Ian Anderson can sing and perform?

Remember, the weekly chart has a long and strong MACD so watch that closely to determine when the top is in on the weekly basis which will be anytime this week or next. Keystone does not own META long or short but will consider entering short. 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.

NVDA NVIDIA and META Meta (Facebook) Weekly Charts; Overbot; Negative Divergence in Play or Developing for the "Tan-Mama" ("Magnificent 7") Stock Market Leaders

The stock market rally is driven by only 7 stocks. Bloomberg calls this group the "Magnificent 7" but Keystone calls them the "Tan-Mama" stocks (Tesla-TSLA, Apple-AAPL, NVIDIA-NVDA, Microsoft-MSFT, Amazon-AMZN, Meta-Facebook-META and Alphabet-Google-GOOGL). It is summer after all and Mama and the other beautiful and lovely ladies are tanned and toned displaying their colorful bikinis.

The AI orgy creates the big rally in the stock market the 7 stocks above accounting for most of the gains. Other equities languish in no man's land wondering when the recession ax will fall on their heads. NVIDIA ignited the AI frenzy move in stocks so it would make sense that it may top out first.

The NVDA weekly chart above shows price printing matching or higher highs for the last 5 weeks. The chart indicators can then be assessed for potential negative divergence and the red lines show universal neggie d across all indicators. She's cooked on the weekly basis.

NVDA is expected to top-out now since there isn't any more fuel available to push price higher. News may come out of left field that helps the stock but it would then set up again with neggie d in quick order. A multi-week down move is about to begin in NVDA so if you just bought the stock and was bragging to family and friends at the cookout about how smart you are, and perhaps you are the next Jesse Livermore, instead you will look like an *sshole in a few weeks.

The META (Facebook) weekly chart is shown above and it is setting up with neggie d in the weekly time frame. Price is making higher highs week after week but note that the chart indicators are out of gas (red lines) sloping down (neggie d). The MACD is a tiny hair higher so it has some fumes to try and push price back up but the writing is on the wall like NVDA. META will top out now or next week and then begin a multi-week down move.

That is 2 of the 7 that are cooked on the weekly basis going forward so we may as well check the rest of the Tan-Mama's. NVIDIA is the Leader of the Pack and the others should follow. TSLA is similar to META in that it has a week or 2 to top-out and begin its multi-week slide lower. AAPL topped-out 2 weeks ago, however, if you bring up the weekly chart, you see that the MACD line was still long and strong, so Sapple likely has another 1 to 2 weeks for price to come back up and for it to top-out and begin the multi-week move lower.

Mr Softy was also a leader, along with NVDA, and MSFT has topped-out. There is no reason for it to come up again on the weekly basis. AMZN needs the additional week or 2 to top-out since the Scamazon MACD line is still long and strong. Wow. Alphabet (Google: GOOGL) has already sh*t the bed and in a 2-month drop trending lower on the weekly basis.

Summing up, all of the Tan-Mama's, that have led the way higher the last few months, off the October low, are topped-out, or topping-out, on the weekly basis, within the next couple weeks and beginning a multi-week drop lower. GOOGL leads the way lower on the weekly basis followed by MSFT and NVDA. The other Tan-Mama's, TSLA, AAPL, AMZN and META, are also topping-out over the next week or two and will begin their multi-week downward slide. Plan accordingly. Keystone does not own any of the Tan-Mama's long or short but obviously would enter short if any are played. 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.

UTIL Utilities Weekly Chart; Sideways Symmetrical Triangle; Utilities Forecast Doom and Gloom Ahead

The utilities are forecasting Hard Times ahead; doom and gloom. When UTIL loses the 50-wk MA and also is below the closing price 15 weeks prior establishing a weekly downtrend, the US stock market will top out within 0 to 8 weeks and begin a devasting collapse lower.

The utilities are in failure mode right now so that zero to 8-week clock is already in progress. Considering the goofiness of the stock market these days, a top may occur any day or week ahead for US equities and, as per the utes, a serious multi-week slide will begin that will crush stocks.

The 50-week MA is at 948. The 15-week lookback number is 939.79, call it 940 (blue circle). Utes are in a weekly downtrend forecasting the doom and gloom ahead for stocks but the bulls can save the day if they push UTIL above 940 this week. That is a tall ask considering price is at 903. The two goals that UTIL needs to attain over the next 4 days are up at 940-950.

It only gets harder for the bulls. For next week the week of 7/17/23, beginning on a new moon (stocks are usually weak moving through the new moon peak each month), the UTIL 15-week lookback comparison number jumps to 970.79 call it 971. That is a very tall ask. And note that for several weeks after, the 15-week lookback numbers remain elevated at 960-ish and higher. Start digging in and preparing your bunker.

Price is down at 903 right now and must rally above 940 by Friday, then next week continue higher to rally above 971 to save the day. Do you think this will happen? You never know in these markets but the betting money would say it is not likely. Utes typically move higher on lower rates and move lower when rates rise. Utilities fund long-term projects for billions of dollars so rates are important.

The stage is set. If UTIL languishes around the current number of 903, and drops below 9 hundo, that portends a bad future ahead for stocks exactly when everybody and his bro, even the Uber driver, is long the stock market.

The stock market rally is driven by only 7 stocks. Bloomberg calls this group the "Magnificent 7" but Keystone calls them the "Tan-Mama" stocks (Tesla-TSLA, Apple-AAPL, NVIDIA-NVDA, Microsoft-MSFT, Amazon-AMZN, Meta-Facebook-META and Alphabet-Google-GOOGL). It is summer after all and Mama and the other beautiful ladies are tanned and toned in their lovely colorful bikinis.

The UTIL 200-day MA is at ..... wait for it ........ wait a bit longer for it .......... 903. Obviously, price is making a bounce or die decision this week at the 200 that is for all the marbles.

UTIL is in a sideways symmetrical triangle pattern and not yet tipping its hand. Price is testing the lower trend line of the triangle deciding to bounce, or die. The thick vertical line of the triangle is from 870 to 1010 that is 140 points. Thus, if price collapses from 903, which will bring on doom and gloom, the downside target for UTIL would be 763 (903-140). Say price bounces and recovers and in a couple-three weeks is up to 940 ready to break-out higher, that outcome would target 1080 on the upside.

Summing up the mumbo-jumbo, utilities are in failure mode currently predicting that the US stock market will top out any day or any week ahead and begin a long and dramatic downfall (potential crash). The SPX weekly chart previously posted indicates that a multi-week top is near so the stars are aligning. Time will tell if the Federal Reserve steps in to save the day, as they always do since March 2009, in America's rigged crony capitalism system.

If UTIL loses the 903 support and is heading lower, it would be prudent to get out of your longs. You will hear Chopin playing his famous tune. The inflation data and bank earnings are on tap this week and will impact market direction. 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 9:37 AM EST: UTIL (DJU) begins trading and is sitting at the 200-day MA at 903 and bottom trend line of the sideways triangle at 903 making the bounce or die decision.

SPX S&P 500 Daily and Weekly Charts; Double-Top or M-Top; Overbot; Negative Divergence Developing in Weekly Timeframe

The SPX receives a near-term spankdown as previously explained with the hourly and daily charts. You can see that the 2-leg bull flag pattern plays out. The first leg is 3830 to 4170 or 340 points. The sideways to sideways lower consolidation takes place and then the second leg begins from 4055 so adding 340 is a 4395 target. Bingo. Old guys say bingo a lot.

Also, for sh*ts and giggles, if the second leg begins at 4110, that targets 4450 also achieved so the 2-leg bull is satisfied. The price action then forms the double-top or M-top. No, not a MMMBop, it is an M-top.

The red lines show the negative divergence in play forecasting the neggie d spankdown as previously forecasted for the near-term. Price prints the new high but it comes with all the indicators sloping lower (neggie d) showing that they are out of gas, hence, price drops since there isn't any more fuel remaining in the tank to push the price higher.

Trading is playing multi-dimensional chess so the neggie d spankdown is in the daily time frame. This tells you nothing about other time frames. You have to look at them individually then gather them together for a path forward for price. The indicators remain weak and bleak on the daily chart so further lower lows, on the daily basis, are expected. However, the money flow is flat as price made a lower low so that is positive divergence that hints at a potential bounce setting up (price does not move every day lower until it reverses and then moves every day higher; price has fits and starts as it continues in the direction the divergences dictate).

Note that price has not yet touched the middle band, which is also the 20-day MA at 4382 so it remains firmly on the table as well as the lower band at 4293 that is rising sharply. The SPX daily chart remains bearish but do not be surprised if a touch occurs at 4382 and then price bounces for a day or so to catch its breath.

Expanding the chess board to the weekly time frame, you see price printing matching highs for 3 out of the last 4 weeks. The red lines show negative divergence at play with all the indicators except the MACD which remains long and strong (it still has some fuel, perhaps fumes, in the tank to nudge price back up to the highs on the weekly basis).

The top 2 weeks ago came with the RSI, histo, stochastics and money flow neggie d on the weekly chart so this helps create last week's down move in stocks. However, the MACD is long and strong and says the top on the weekly basis is not yet in.

Thus, the weakness in the daily time frame will need several more days to play out, and then price should come back up due to the long and strong MACD on the weekly basis. When price comes back up in 1 or 2 weeks, the MACD line should go neggie d on the weekly chart, and as long as the other indicators remain weak and bleak, the top will be in on the weekly basis. This is a big deal since it means a multi-week down move is about to begin anytime over the next couple weeks.

Of course, the Federal Reserve may try and save the day as usual, or some other corrupt positive news in the crony capitalism system may occur, which delays the top but that is all it will do; only delay the top by days or another or week or two.

The SPX has not come back to touch the middle band, which is also the 20-wk MA at 4163, in 4 months so it is on the table especially after the top band was tagged. The lower band down at 3841 moving sideways is also on the table for the multi-week down move that is coming. Interestingly, the 200-day MA support is at 3835 moving sideways to sideways up so the 3830-3850 may be a downside magnet over the coming weeks and couple months or so.

The blue and purple lines show the potential outcomes ahead on the weekly basis. The blue path sees price recovering in the week ahead back up to the prior highs, or near there since the chart is weak, and the MACD going neggie d, that will identify the top and then the multi-week down move begins. The purple path shows the continued weakness in the daily time frame making the week ahead a red candlestick and weak week, but then price will recover due to the long and strong MACD and come back up for the multi-week top the following week (if the MACD goes neggie d when price prints the matching or higher high).

So you can see that the daily time frame will be providing continued weakness encouraging the bears but as the daily chart bottoms again, the bears will panic and jump ship, and the dip-buyers will enter, creating the likely up move again. Then, once all the indicators are neggie d on the weekly chart, it's over. Price will fall for many weeks.

Watch utilities. UTIL (DJU; Dow Jones Utilities Index) has to regain 940 this week as a last-ditch effort to prevent a major crash ahead. UTIL begins at 906. Pay close attention. If UTIL languishes in the days ahead, and drops under 9 hundo heading lower, the US stock market will be toast. The multi-week down move will not be a run of the mill -3% pullback, or -5%, or even a -10% correction. The drop will be far more severe, perhaps one for the record books that will have its own Wikipedia page. If UTIL recovers above the 940-950 area over the next week or two, that tells you that the multi-week down move in the SPX will likely not be crash-worthy and instead more minor in nature something like a -3% or -5% pullback.

It will be fun. Let It Drop. In trading, you do not give a sh*t what direction the stock market goes. All that matters is being on the right side of the trade. Take advantage of the crony capitalism system as it breathes its last breaths. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

Note Added Tuesday Morning, 7/11/23, at 5:54 AM EST: UTIL cannot get out of bed falling to 903 continuing to cast a dark shadow over the US stock market for the weeks and months ahead. The SPX drops to the 20-day MA at 4388, almost; the LOD yesterday was 4389. Dip-buyers jump in on the test of the 20-day so the session ends on the positive side. Bulls win above 4388. Bears win below 4388. The 50-day MA support is at 4258 and has not been tested since March.

Keybot the Quant Turns Bullish

Keybot the Quant flips back to the long side on Friday at SPX 4425. Commodities, copper, utilities and banks are all that matter. Stay alert for a potential whipsaw.

Keybot the Quant

SPX S&P 500 2-Hour Chart; Overbot; Negative Divergence; Potential Island Reversal

Yesterday, Monday, was busy despite the early close to US stock trading at 1 PM EST. The upside bull rally continues into the July 4th holiday today. Happy Independence Day, as Martina sings Gretchen Peter's grammy-winning song, that had a resurgence in popularity after the 911 terrorist attacks (Roll the stone away! Let the guilty pay! It's Independence Day!), that is actually a tune about spousal abuse and domestic violence (Some folks whispered and some just talked, But everybody looked the other way).

The SPX 2-hour is topped-out so tomorrow will be interesting. The MACD line has a couple of fumes in the tank that may keep price elevated for the first half-hour or so of trading but, barring any positive news, the SPX should peak-out in the near-term right now. The daily chart is also displaying full negative divergence across all indicators and agreeable to short-term weakness.

So as long as the Federal Reserve does not step in again, or data or inflation-news hype does not create joy, or the AI orgy hype does not goose more tech stocks, the technicals want price to roll over lower in the near-term.

The blue island formed when price gapped down and then an island reversal pattern occurred with price flying back up through the same gap. Now price is on the yellow island and time will tell if another island reversal occurs where price would slump lower to 4425, and then collapse, gapping-down to 4400 and trending lower. That is a tall ask and probably would not occur unless some bad news hit the wires. Who knows these days? It may happen tomorrow.

The other outcome is that price simply begins trailing lower due to the neggie d in the hourly and daily time frames and comes down to fill that gap at 4400-4425 that is 'big enough to drive a truck through'. That cliché had to be written into today's analysis. Eventually, all gaps are filled.

The RSI and stochastics are overbot agreeable to a pullback. You can see that even with the very near term strength in the RSI, MACD and money flow, the last couple hours of trading on Monday, those highs remain below the highs from 2 weeks ago (bearish).

The full moon peaked on Sunday/Monday helping to goose stocks. The new moon is on Monday, 7/17/23, when stocks may be weak. Stocks are typically bullish into a holiday and that occurs on Monday. New money typically flows into the stock market to begin a new month (July) especially new quarter (Q3) and second half of the year (H2). So the bulls have a lot going for them into today and the Fed happy talk, happy inflation data and ongoing AI orgy party is more icing on the bull's cake.

Going forward, the bulls will either prove that they actually do got game, or, crumble like a 99-pound weakling. Utilities created the upside in stocks yesterday as per Keybot the Quant robot so focus on the UTIL 910.67 bull/bear line in the sand tomorrow morning. It will tell you who wins. UTIL price begins at 912 in the bull camp above 910.67 creating lift in stocks. Bears desperately need UTIL below 910.67 to stop the upside rally.

UTIL is at a major inflection point right now. If utes rally and UTIL moves up towards 940 and higher, that tells you the rally in stocks will continue. If utes fail below 911 this week, and trend lower, and take out 9 hundo, look out going forward since the US stock market will likely crash during the weeks forward.

Bring up the SPX weekly chart. You can see price creates a matching high for 3 of the last 4 weeks. The RSI, histo, stochastics and money flow are all neggie d. The MACD line is long and strong and wants one more matching or higher high in price that will probably occur either this week or next. This is significant that the weekly chart is also aligning negatively setting-up the start of a multi-week down move likely beginning the week of 7/17/23, maybe sooner.

Again, happy talk and news can change the picture and the charts will quickly adjust. At the same time, if negative news occurs, it will exacerbate the negativity in play or forming in the hourly, daily and weekly time frames, and accelerate the downside. There is going to be fun ahead this month and next.

Bring up the SPX monthly chart. You see the matching high in price so the indicators can be assessed. Remember, the last candlestick is still in progress on the monthly and weekly charts and can change as can the indicators. The MACD line on the weekly chart may turn neggie d this week which would be an extremely negative development for the stock market going forward. On the monthly, the RSI is flat, which is neggie d, but the MACD line, stochastics and money flow are long and strong. After the multi-week down move, stocks will want to come back up again on the monthly basis which hints at more choppy slop for July, August and September.

However, July only just started. If the negativity explained above kicks in, and then the weekly negativity kicks in, the price candlestick on the monthly chart will turn red and drop and the indicators may slump over forming a much more dire outcome ahead where a top in July would be a major top.

Summing up, stocks should pull back in the hourly and daily time frames, and then perhaps some buoyancy late next week only to top out on the weekly basis and begin a multi-week move lower. The monthly chart will dictate if the top is a major top where stocks may slump into year end, or, if stocks come up again one more time, say in September/October setting up the major top. 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.

YC2YR 2-10 US Treasury Yield Spread Weekly Chart and FRED Long-Term Yield Curve Chart; Yield Curve Most Inverted Since 1981

The yield curve reinversion fake-outs continue. Huh? Say what? As prior yield curve charts show, the hook pattern brings on the recession. It is truly different this time with many fake-out moves higher off the low points of the inversion but none managing to reinvert all the way.

A recession appears generally 6 to 24 months after the yield curve inverts, 18 months is a rule of thumb, but of course, some come on fast and some are slower to arrive, like now. The yield curve keeps spending time with Godot unwilling to commit to the recession as yet.

Each time the hook pattern was ready to guarantee the recession, whammo, it is smacked lower and prints down at -110 basis points (bips) this morning 7/3/23 at the start of Q3. The 2-year yield is 4.94% and the 10-year yield is at 3.84% so the difference is -1.10% or -110 bips. The yield curve inversion occurs when the 2-year is higher than the 10-year and the first taste occurred in March 2022 a long 15 months ago.

The hook pattern hinted at a recession beginning early this year but that was nullified and the inversion drops to -105 bips give or take in March 2023. The positive divergence reinverts the yield curve and it looked like the recession was coming fast in March. Whammo. The yield curve is spanked back down nullifying the hook pattern.

Another attempt is made to reinvert but that ends in May with the -40 bip level formidable resistance.

This morning the record -110 bips occurs and the blue lines show the positive divergence remaining in place. The yield curve will want to bottom again in the coming days or week or two and then begin a multi-week move higher. Will this be the hook pattern that brings on the recession? We'll see.

The ADX pink box shows that the downward move in the yield curve was a very strong trend lower during 2022 and into April but that is where the strong trend lower ended bolstering the idea that the yield curve wants to recover higher again.

Obviously, as the yield curve reinverts, watch the -40 bips level. It will probably be tested in July (this month). Once the -40 bips is taken out to the upside, the recession will rear its ugly head.

Companies continue announcing layoffs but the US economy is supported by the upper middle class and wealthy elite, that benefitted greatly from over a decade of Federal Reserve and Congressional money-printing, that keeps spending money. 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 Thursday, 7/6/23: The 2-year yield is at 5.00% and 10-year yield at 4.06% for a -94 basis point inversion well off the lows and dis-inverting.

Note Added Friday, 7/7/23, at 8:48 AM EST: The US Monthly Jobs Report is weaker than expected at 209K jobs with a 3.6% unemployment rate. The 2-year is at 4.96% and 10-year at 4.05% for a -91 bip inversion. Remember, the rubber hits the road, and a recession is at hand, when the hook pattern moves up through the important -40 bips resistance.

Note Added Saturday, 7/8/23: The 2-year is at 4.95% and 10-yr at 4.06% for a -89 bip inversion. The yield curve dis-inverts over 20 basis points in a couple days but it is chop suey drama unless the hook pattern continues higher and takes out that -40 bip resistance to announce the US recession.

Note Added Monday, 7/10/23: The 2-10 spread dis-inverts to -85 bips.

Note Added Tuesday, 7/11/23, at 4:24 AM EST: The 2-year yield is at 4.83% and the 10-year is at 3.96% for a -87 bip inversion.

Note Added Thursday Morning, 7/13/23, at 4:00 AM EST: The 2-year yield drops to 4.64% on the inflation data (less inflation; dollar drops) and the 10-year is at 3.82% for an inversion at -82 bips. The yield curve (2-10 spread) continues dis-inverting to -82 basis points.

SPX S&P 500 Daily Chart; Textbook Island Reversal Pattern

The SPX prints an island reversal pattern. Those do not occur too often. Price fell through the orange gap mid-month and then staged a recovery rally into month-end on Friday.

Price likes to fill gaps so the bears actually want price to come up to fill that gap at 4400-4410 because that buttons up the gap, and nicely seals the gaps permitting price to then move lower in earnest. However, instead of filling the gap, price catapults up through the gap taking out the mid-month highs.

When price moves up and jumps back through the same gap that printed on the way down, that is called an island reversal pattern. The pattern can also occur when price gaps higher, forms an island, and then falls back through the gap heading lower. You can see that price spent the back-half of June on the green island with the palm tree. Price now jumps off the island gapping higher on the Fed Chairman happy talk, inflation data and AI orgy.

The big gap from Friday morning at 4400-4420 will need filled at some point 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.