SPX S&P 500 Daily Chart; Negative Divergence; Stock Market Awaits AAPL and AMZN Earnings and US Monthly Jobs Report

Stocks receive the start of the neggie d spankdown on the daily basis previously explained. Equities are slapped .... like little Luka was slapped around in the 1980's. He lived on the 2nd floor. The SPX drops 63 points yesterday,  -1.4%, to 4513. Volatility spiked causing the weakness. VIX 15.86 is a key bull/bear line in the sand called out by the Keybot the Quant robot. Bulls have no hope going forward unless they can push VIX back below 15.86.

The indicators remain weak and bleak so more downside in price is expected on the daily basis. Price stopped at the 20-day MA at 4517, which is also the middle band, and is deciding to bounce or die. S&P futures are down -15 but stocks may muddle today since AAPL and AMZN yearnings drop this evening and the all-important US Monthly Jobs Report is released in only 25 hours.

Price gaps lower off the top so it may have to go back up at some point to fill the gap above, maybe today or tomorrow. The orange circles show some gaps below that are ..... all together now ..... big enough to drive a truck through. They will need revisited going forward.

You can see how price was above the moving average ribbon, like mid-June, and required a mean reversion lower further helping to bring price down. The 4450 is price support so that may be a stopping point. The lower band is also in play which is forming a confluence with the rising 50-day MA at 4394 so this is in play as well.

Keep an eye on the SPX weekly chart to see if it is topping out with negative divergence which will confirm a multi-week down move ahead. The utes remain in failure which is a bad omen for stocks going forward. The 4200-ish level is solid price support and may be tested going forward. The tech earnings and jobs report data are needed to plot the course ahead. Keybot the Quant flipped short so it will be interesting to see if the robot remains short of if it whipsaws back to the long side.

The Fitch credit rating downgrade caused a lot of commotion. Will S&P or others downgrade US debt as well?

King Donnie's orange head will be on display today as stocks go into the closing bell. Trump has to appear in court to answer for his latest shenanigans. It is sickening listening to the cheerleaders in both corrupt political parties argue their cases. The republicans say Trump should be treated leniently because nothing happened to Clinton or Biden. Think about that. Do you need a clearer definition for the privileged elite never wanting to answer for their deeds? The correct answer is to prosecute and throw them all in jail. Americans now pledge allegiance to their dirtbag political tribes above the United States as a whole. Such is the crony capitalism system in its final throes.

Do not shed any tears for the orange headed bloviating carnival clown. Trump brought a lot of his troubles on himself. Just think, after the failed 2020 election, if King Donnie would have simply congratulated Biden and left office with the transition teams doing a good job, he would actually be in a great position for the November 2024 election with the country probably backing and rallying behind him (people want relief from inflation).

Instead, the orange head had to be a sniveling conniving little twit unwilling to concede the election to Sleepy Joe. Trump's whining cry baby sore loser stuff led to the Capitol Hill riot. King Cry Baby. The riot would have never occurred if Trump would have accepted his loss and moved on to fight another day. Instead, he ruined his future due to his baby behavior. Trump deserves everything that is coming at him and do not buy the line that he is fighting a cause for the American people. That is dribble. Donnie only cares about one person in life; Donnie.

Some of us older folks remember how Trump screwed the Atlantic City casino workers, middle-class families all; he laughed about it. Karma has a way of coming around even decades later. The dirty secret that Americans do not understand about Trump is that his father always told him that he would be a worthless piece of sh*t and garbage if he ever lost at anything (sports, business, etc...). Can you imagine what went through that orange head after losing the election, the biggest game in town, to Sleepy Joe Biden? In his mind, his dad was standing over him, with pointed finger, calling him garbage and trash for losing.

Even pushing 80, childhood events stick with you your whole life. You carry that cross throughout the decades; it is mental baggage. Trump could not accept the election loss because every morning he sees his dad's face in the mirror calling him a worthless piece of crap because he lost. His dad is ashamed that he has a useless loser for a son. You're a loser. No, no, daddie, I won, they cheated me, see I won daddie, look they miscounted votes, see daddie, the voting machines were rigged, too, I really won daddie, dead people voted daddie, see, I won, I'm King Donnie. What a twisted orange head.

Donnie is in a heap of trouble and needs to go away for the sake of the nation. Neither Trump nor Biden will be the candidates for president next year. The next president will pardon Donnie's orange butt so he does not have to worry too much about the lawsuits no matter what the outcomes. Biden should be the one worrying since his alleged crimes of bribery and selling access are far more serious and would require mandatory jail time. Human greed destroys everything. It always did throughout world history and always will. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

Note Added Saturday, 8/5/23: The SPX falls through the 20-day MA at 4526 and then back kisses, ending in failure. If you bring up the daily chart, as price falls printing lower lows, the RSI drops into bear territory below 50%. The other indicators are weak and bleak wanting to see lower SPX prices on the daily basis. This behavior places the lower standard deviation band at 4432 and the rising 50-day MA at 4407 on the table. There's a juicy gap at 4440-4460 that needs filled. The bulls broke their halo's. If you bring up the SPX 2-hour chart, all the indicators are positively diverged as price prints the new low. The SPX wants to bounce now in the 2-hour time frame probably from 4440-4478, more specifically, probably from 4465-4478, starting sometime Monday morning. Typically, one of the indicators on the daily chart would be possie d as well to conspire with the 2-hour but not this time. The SPX remains very weak in the daily time frame. If you bring up the weekly chart, this is the big enchilada that dictates if the top is in on the weekly basis, which would be a big deal. She's good to go on the downside, folks. After the big 4-month AI, Fed and inflation data orgy in the stock market, it is time to jump ship on the long side and play short for the multi-week down move about to begin. Can stocks still float a bit higher? Of course, especially since the chart technicians this weekend at the Federal Reserve are telling Pope Powell what is happening. Positive news may delay the top for a week or two but the news would be absorbed and the neggie d reappear. It will be interesting to see how far down the multi-week retreat takes the stock market. The failure in the utilities says stocks are going to take a serious fall over the coming weeks, way, way down, a bloody carnage-ridden path lower. Plan accordingly. Some analysts are getting worried since a few came out yesterday mentioning a retracement to SPX 4300 may occur but that would be a buying opportunity. The SPX will likely drop into that 4200-4300 zone and bounce from the dip-buyers but then stocks will likely roll over again to seek the lower 3800-4200 range and a retest of the 3500-3600 lows is on the table by the end of the year. The SPX monthly chart is playing coy and may have one more bump higher after the multi-week rally plays out, say in the September/October time frame, but then potentially crash into year-end. No need to guess; the charts will provide the answer and enough warning to position properly. Nothing can change the path ahead except positive news either from the Federal Reserve or geopolitical or otherwise. Negative news will obviously exacerbate the negative forecast on the daily and weekly charts sending stock prices sharply lower faster. Thus, stocks will bottom on Monday morning and rally the rest of the day into Tuesday (on the hourly basis) but then roll over again and die going forward due to the negativity in the daily and weekly timeframes. Plan accordingly.

Keybot the Quant Turns Bearish

Keystone's proprietary trading robot, Keybot the Quant, flips to the short side yesterday at SPX 4518. Volatility and copper are controlling stock market direction currently. Bulls have no hope unless they can push VIX back below 15.86. Bears need CPER below 23.72 (a -0.2% drop in copper futures) to cause more stock market trouble (copper futures are down -0.4% currently creating more negativity).

Keybot the Quant

UTIL (DJU) Utilities Weekly Chart; Sideways Symmetrical Triangle; Utilities Continue Signaling a Bad Outcome for US Stock Market Ahead

It's time for the utilities to sh*t or get off the pot. The prior ute chart explained the dangerous game at play. The weekly closing price 15 weeks ago and the ongoing 50-wk MA are forecasting tools for the broad stock market.

When utilities fail into a weekly downtrend with weekly closing prices below the levels from 15 weeks ago, like now, and fall below or are below the 50-wk MA, at 942, like now, it signals a weekly downtrend for utes that will send the broad stock market lower. If both tools are in failure mode, like now, and the US stock market begins dropping, the pullback in stocks will not be a run of them ill -5% or so instead it will be far more even a potential crash.

The 50-wk MA is at 942 so this is straight forward. Price is at the 919 palindrome below the 942 indicating trouble ahead for the broad market. The closing price 15 weeks ago, that is applicable for this week of 7/31 thru 8/4, is the 969 palindrome. The UTIL price of 919 is far below the 969 needed to reestablish an uptrend. These numbers point to nasty stuff ahead for the US stock market as everyone parties like its 1999. Traders buy stocks with reckless abandon, throwing caution to the wind, even as Fitch downgrades the US credit rating. Investors buy stocks with both fists as they sing and dance to Hava Nagila.

The 919 price where utes begin today, the regular trading session begins within the hour, is smack-dab in the middle of the apex of the blue sideways symmetrical triangle pattern. The vertical side is from 860 to 1000; call it 140 difference. Thus, if price breaks out above, which it tried to do a couple weeks ago, the upside target is 930 trend line break out plus 140 = 1070 which would match the prior highs.

If UTIL breaks down from here losing the lower trend line at 910, subtracting 140 = 770 as the downside target. If price starts to collapse, watch the 200-wk MA at 904 which will tell you all hope is lost. Price will then seek 870-880, then 820 to test the lows from last October. Lots of fun is ahead.

For the week of 8/7/23, the 969 is meaningless and replaced with 960. Then for the week of 8/15/23, the 960 is worthless replaced with 962, then for the week of 8/22/23, the bull/bear line in the sand will be 959. Thus, gathering the numbers into a cluster, UTIL must move above and stay above the 959-969 palindrome range or there will be trouble. Price is down at 919 so the bulls have work to do.

Of course, price will first pierce the 50-wk MA at 942 if it wants to go higher. At that point the numbers from 15 weeks ago will become pertinent. If stocks collapse from here, none of the above will matter. The utes would have done their job at providing an early warning signal for bad stuff to happen to the stock market so it is everyone's fault if they do not understand the game. 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 Evening, 8/3/23, at 5:53 PM EST: UTIL (DJU) drops below 9 hundo to 897. Hey Chopin, play us a few bars.

SPX S&P 500 Daily Chart Displaying -17% Stock Market Crash after August 2011 Credit Downgrade

The US credit rating is downgraded by Fitch a few hours ago. As Yogi said, "It feels like deja vu all over again." The August 2011 downgrade was exciting and the drama is shown in the 2011 chart above. The US credit rating was placed on negative outlook in April 2011 and then the bottom fell out four days after a debt ceiling agreement on the actual downgrade; the first in US history. Stocks were already tanking and the 8/5/11 downgrade sealed the fate of stocks for almost 3 months.

In only 11 days, in late July early August 2011, the US stock market (SPX; S&P 500) crashed -17%. The black circle is the death cross. Will history repeat or maybe rhyme? It is a similar set-up and the same time of the year. Fitch placed the US on rating watch negative in May 2023 (this year). Back then, the stock market fell apart into the October low.

At the low you see all the indicators sloping higher with positive divergence (green lines; price continues dropping but ALL the indicators are sloping higher indicating that they are fueled-up and ready to launch price into the stratosphere). Voila. The possie d shoots price higher off the bottom in October 2011 with a rocket launch as the indicators foretold.

S&P futures are down -15 points right now on Tuesday evening on the US East Coast and were down more than -20 points a short time ago. The bulls plead, "Don't Drag Me Down." Not a big move lower but the credit rating downgrade creates a pall over the market.

King Donnie Trump is also indicted again for more of his nefarious deeds. The orange head was a whining cry baby sore loser after losing his reelection bid in November 2020 due to his own sh*tty campaign, and he unfortunately, for him, chose a bad and baby path forward until he left office 1/21/21. They're all crooked; Trump, Bidens, Clintons, Bush, Obama, McConnell, Pelosi, Schumer, McCarthy, all of them.

The full moon peaked at 2:30 PM EST today. The Canadian fires, that were likely set on purpose by environmental and climate change nutcases, will make the full moon appear orange this evening. The orange moon will match Donnie's orange head. The US government and all of its institutions are corrupt to the core. The crony capitalism system is breathing its final breaths after the last five decades of obscene greed (corruption) and non-transparency. The downgrade is a bombshell dropped on Tuesday Afternoon. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

SPX S&P 500 Weekly Chart and Citi Surprise Index

The Citi Surprise Index is quoted by many analysts and television pundits and commentators. Why? It is worthless.

The Citigroup index is shown above the chart is courtesy of MacroMicro and annotated by Keystone. The Citi Surprise Index, that analysts quote as if it is something important, is a junk index that simply takes the US stock market (SPX; S&P 500) price chart and flattens it out.

The green and red circles highlight some key highs and lows over the last couple decades and these prices exactly match the surprise index so all you are looking at is the stock market price behavior presented as a sideways graph. Citi calls it a surprise index since the chart has no predictive value or worth so it is given an obscure name so it can be whatever you want it to be. Ignore it. It's junk.

When stocks sell off and are down in the dumps, lo and behold, the so-called surprise index is down at its low. When the stock market is at its peak so is the surprise index. It has no predictive value.

In fact, it is beyond worthless since it can provide bad signals that make you put on bad trades. The blue line in 2007 corresponds to the SPX rising. The surprise index is rising so that tells you the bull trade is on and has legs. Wrong. Stocks topped-out and fell like rocks. Joe Sixpack is a great sucka and bag holder.

In 2009, stocks tank and are down in the basement so the so-called surprise index is as well. Again, lower lows are occurring in the stock market and on the surprise chart indicating more weakness ahead. Wrong. Stocks rallied when the Federal Reserve started printing money like madmen to protect the wealthy in America's dirtbag crony capitalism system.

In 2018, the surprise index has its one stint of glory. The stock market was making higher highs but the surprise index dropped, a negative divergence, so that hinted at a top which occurred. Generally, however, ignore the surprise index. It is junk. It is the stock market stretched out in a horizontal graph. If you want to know where the surprise index is at, simply look at the stock market; if stocks are going down, so is the surprise graph and if stocks are rallying, the graph moves higher.

Comically, it is a chart that the smart money can use to get the dumb money to keep buying stocks as distribution is occurring. Wall Street is a great money-maker if you know all the corrupt games.

This just in..... Citi proclaims that the SPX (S&P 500) will hit 5K by the middle of next year (within next 10 months). 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; US Jobless Claims Remain in a 10-Month Uptrend

US Unemployment Claims are released every Thursday morning at 8:30 AM EST. The steady narrative over the last weeks and few months is that Claims are not rising so there is no sign of a recession ahead. Granted, the numbers are not rising at a sharp and fast rate as would be expected going into a recession, however, look at the chart folks.

US Jobless Claims are trending higher, as per the 4-week MA, since last September now 10 months along. What part of that don't you understand?

Everyday you hear about how great the job market is but why is that the case when Unemployment Claims have been rising for over 10 months?

The 4-wk MA is at 234K moving higher since September and the trend is higher since the chart is non-stop with higher highs and higher lows. The 4-wk MA remains in an uptrend despite the moving average dropping over the last 4 weeks. The entire 4-wk MA trend line has a pulse behavior starting in September it is 8 weeks up then 6 weeks down, then 8 weeks up then 7 weeks down, then 4 weeks up now 5 weeks down. Each of the up surges are similar in magnitude but the last pulse ran higher in 4 weeks instead of 8 weeks.

The next data point is Thursday of this week, 8/3/23, and that, along with the following week on 8/10/23, will provide valuable insight into the path forward. Rising Claims are standard as the US slips into recession. Will the uptrend falter going forward or accelerate higher guaranteeing a recession?

If Claims come in very light this week and pull the 4-wk MA lower, that may finally be a lower low that jeopardizes the 10-mth trend line. However, Claims will need to take out the prior support lows to wave the all-clear flag.

Commentators, analysts and traders are sanguine about Unemployment Claims saying they are not rising so there is no need to worry about a recession. Hey dolts, Claims are rising for over 10 months. Capiche? 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.

NYXBT Bitcoin Weekly Chart; Negative Divergence Developing

The bitcoin weekly chart above looks like a Jackson Pollock.  Bitcoin has shelled-out a lot of drama over the last few years. Keystone called the Fall 2021 top. Remember that? Everyone was off the charts bullish expecting nothing but big numbers ahead. Folks talked about bitcoin 100K, 200K, 600K. It got out of hand. You never want to be contrarian for the sake of being a contrarian but all it took was a look at the neggie d on the weekly chart (red lines) to know that bitcoin was cooked. It was an easy top call. Nothing to it. Child's play.

So bitcoin receives the neggie d spankdown in late 2021 and pukes its guts out in 2022. All the guys bragging to everyone at Thanksgiving dinner 2021 that they hold bitcoin and are an expert in trading cryptocurrencies had their heads handed to them during Thanksgiving 2022 dinner. Uncle Johnny asked Timmy Trader about the bitcoin he owned and was bragging about last year but Timmy kept his head down eating mashed potatoes pretending he did not hear the question.

But, conversely, bottoms tend to occur when everyone is negative and wants nothing to do with the stock, ETF, bitcoin or whatever you are trading. 

The green lines show bitcoin price continuing lower in Oct-Nov 2022 but ALL the indicators are positively diverged (sloping higher) signaling that the indicators are fueled-up with bull juice and ready to launch. Voila, price rallies higher at the end of last year into this year and now everyone is proclaiming a new beginning for bitcoin heading higher. Not so fast.

Price pops above the upper trend line of the blue sideways symmetrical triangle a bullish indication. However, the red lines show that the indicators are all sloping down. A red down arrow is not drawn on the chart for the current price action because price did not quite make it back up to the prior high in April, on the weekly basis, at 30600. You cannot have negative divergence if price did not yet make a higher high. Bitcoin is at 30140 in the neighborhood. 

Thus, watch the price in the days ahead. If bitcoin runs higher above 30.6K, check the chart indicators above. If they remain negatively diverged, the top is in for bitcoin on the weekly basis. Bitcoin bulls need the indicators to regain strength to send price higher but they are spent on the weekly basis.

The Aroon shows the majority of bitcoin bulls expect it to continue higher forever while humorously, the majority of bitcoin bears also expect the digital currency to rally higher. This is a contrarian indicator showing that the boat is loaded to one side with bitcoin bulls.

The ADX shows that the first push higher in 2019 was a strong trend, but that petered out, then the big move up in 2020 and 2021 evolved into a strong trend higher but that petered out in 2021. The low ADX verifies that bitcoin price is staggering sideways and directionless like a drunk in Times Square on Saturday night.

If you see bitcoin above 30.6K this week and the indicators remain neggie d, you can call the top in bitcoin on the weekly basis (a multi-week down move begins). Keystone does not hold any bitcoin. 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.

UST2Y US 2-Year Yield Monthly Chart; Overbot Yield; Negative Divergence; Expansion (Megaphone) Pattern; 2-Year Yield Has Topped-Out for the Year

The US 2-year yield has printed the highs for the year. Whatchu talkin' 'bout Willis? Everyone knows that yields will move continually higher from here. What's this guy talking about?

The charts do not lie folks. The UST2Y 2-year yield chart is shown above. The red lines show universal negative divergence across all chart indicators. There is no more fuel available to take yields higher. Stick a fork in the yields; the 2-year yield is cooked for the year and topped-out. Can the 2-year yield sneak a bit above 5% again if news hit the wires? Of course, but on the monthly basis, the top in for the 2-year yield. Neggie d is a powerful force. The old adage that you do not fight the Fed is only superseded by the more important adage that you do not fight the powerful forces of neggie and possie d.

Humorously, Wall Street is consumed by the inflation data and actions of the Federal Reserve under Pope Powell's guidance. The universal consensus is that if the Fed keeps hiking rates, the economy will crack, a recession will begin, and stocks will sell off. Conversely, these so-called smart people believe that when the Fed stops hiking, that will confirm a soft landing without a recession, and stocks will soar. Thus, when there is a hint of higher inflation, that means the Fed will continue to hike, and stocks sell off. When inflation data subsides, as it has recently, that creates the soft landing narrative and investors and traders buy stocks with both fists.

Won't they all be surprised when yields fall lower and stocks sell off at the same time? It will be fun to watch. It will probably be a credit crisis in US banks a la March or economic failures and defaults in other countries that serve as catalysts for the pending fun.

The RSI and stochastics are overbot agreeable to a pullback in yields. The expansion, or megaphone, pattern is clearly visible in the yield behavior since the back half of last year (red lines) to present. Yield violated the upper band from late 2021 through mid-2022. The middle band, which is also the 20-mth MA at 3.45%, is on the table and this target forms a confluence with the lower trend line of the megaphone pattern providing some street cred as a future landing area (3.45%-4.00%).

Remember, this is a monthly chart so think long term as in months and a year or two although huge moves lower may occur in yields in far shorter time periods like the pandemic. Also remember that note and bond yields move opposite to price. For the COVID-19 pandemic, investors and traders ran to the perceived safety of Treasuries so note and bond prices were driven higher and the corresponding yields dropped faster than a prom dress at midnight.

Once the corrupt Federal Reserve and Congress started pumping monetary and fiscal stimuli into the economy to recover from the pandemic (the opposite of capitalism), traders received the all clear to buy stocks with the easy money and shun notes and bonds (Treasury prices drop so yields drive higher). The Fed is also in a raising mode pumping yields higher.

Unrest in the world, ongoing and future wars, and rumor of wars, geopolitical problems, and the US presidential race will heat up each week and month ahead. Any fear or worry would only drive yields lower since people will be seeking the perceived safety of US Treasuries (higher prices as demand for Treasuries increase which sends yields lower).

If you plug in UST5Y, UST7Y, UST10Y and UST30Y, you can see that those charts all show the indicators sloping lower, however, the yields have not come up for a matching or higher high. Thus, the 2-year yield is the only one with negative divergence so far. This behavior hints that the yields for the other durations may have to float higher in early August to lock in their neggie d. You can also see this with the TBT ETF. As the yields for the other durations move higher, if they do, the 2-year may sneak above 5% again. This does not have to happen but may be on tap in early August as the stock market tops out.

If the stock market rolls over and dies, which is expected on the weekly basis going forward due to the developing negative divergence (stocks are topping out in the days ahead and week or two), the fear will send investors and traders into the perceived safety of notes and bonds (prices up yields down)).

The green lines show the positive divergence that launched the 2-year yield in 2021. Interestingly, the stochastics and ROC remained flat to a hair negative hinting that no matter how high yields went, they should weaken at some point and move lower again. Contrast this with the current neggie d in play where ALL the indicators are sloping lower (red lines) as yield moves higher and there is no ambiguity. Look at that. Keystone used a ten dollar college word.

The Aroon shows the boat clearly loaded to the higher yield side with the party (note and bond negativity expecting lower prices and higher yields) in full swing. The Aroon green line shows that 84% of the note bears are convinced that yields will move higher forever in the long-term time frame. Comically, the Aroon red line shows that 100% of the note bulls, that expect higher note and bond prices with corresponding lower yields, believe that yields will actually continue to move higher. Every one of them. That is funny.

In other words, there are no note and bond bulls remaining; everyone is a Treasury bear, even the Uber driver, shoeshine boy, doorman and cafeteria lady, expecting lower note and bond prices and higher yields. You know what happens when everyone is loaded on one side of the boat, right?

The SPX daily chart is cooked with neggie d so there is no oomph or need for it to move higher in that time frame. The SPX weekly chart, however, still has a long and strong MACD so the top on the weekly basis for the stock market is still likely a few days or week or two away (see previous charts).

Thus, mixing all the analyses together and sprinkling on some voodoo dust, the US stock market is expected to top-out on the weekly basis any day forward and begin a multi-week downturn. The weak utilities indicate that it will not be a run of the mill downturn of -5% or -10%; it will likely be double or triple that. This meshes perfectly with the top in the 2-year yield since traders will be running into Treasuries buying with both fists sending note and bond prices higher and yields lower as the chart above forecasts. Stocks and yields will drop (Treasury prices higher) into the Fall and year-end. The Drop. 

Are you ready for the festivities into year-end as every Wall Street analyst tells you that stocks are going to catapult higher while yields remain steady? Who do you think is correct for the back half of the year? Keystone or all of Wall Street? 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 Wednesday Morning, 8/2/23, at 5:22 AM EST: The longer duration yields such as 10's and 30's drop 6 to 8 basis points yesterday while the 2's on the front end retreat a couple of points. Same vibe this morning with the 2-10 spread dropping into the -80's range. Fitch downgrades the US credit rating last evening reminiscent of August 2011.

Note Added Thursday Morning, 8/3/23, at 4:00 AM EST: The yields are 2-yr 4.89%, 5-yr 4.28%, 10-yr 4.15%, 30-yr 4.26%. The 2-10 spread is dis-inverting up to -74 basis points. For today, the 2's are up 1 bip, the 5's gain 4 bips in yield, the 10's are up 7 bips and the 30's are up 8 bips. Yields climb on the long end.

SPX S&P 500 Weekly Chart; Overbot; Rising Wedge; Negative Divergence Developing; Upper Band Violation

The US stock market snaps back to the upside on Friday after the outside reversal on Thursday but unable to print new highs. The daily chart is topped-out with negative divergence but the dip-buyers remain anxious to go long stocks for fear of missing out on the rally everyone is boasting about.

Stocks should be weak for a few days due to the neggie d in the daily time frame, but should recover again for another matching or higher price high due to the long and strong MACD line and RSI on the weekly chart. The overbot RSI and stochastics in the weekly time frame will conspire with the neggie d on the daily chart to create a few days of weakness. The 20-day MA support is at 4501 and the 50-day MA support is at 4371.

The full moon peaks at 2:31 PM EST Tuesday, the Sturgeon Moon, so stocks may lift higher from Tuesday into Wednesday. July was a big up month for stocks and typically when you see stocks running higher like that the last 2 or 3 days of the month tend to finish lower. Monday is EOM. New money tends to float into the stock market the first couple days of a new month. The US Monthly Jobs Report is Friday at 8:30 AM EST.

The SPX weekly chart is important since a multi-week down move will begin once it tops out with neggie d. Sometimes it is like herding cats waiting for ALL the chart indicators to turn down as price moves higher. The MACD was the only remaining parameter that was long and strong but you can see that the RSI has now eked out a tiny higher high which provides more strength for price to come up again on the weekly basis.

The histogram, stochastics and money flow are negatively diverged and want the multi-week downturn to begin now. Ditto the overbot RSI, stoch's and money flow. You know the drill. Price will need to jog (down-up) for the RSI and MACD to go neggie d. Price may also jog once, and the RSI returns to neggie d, but the MACD line may still be long and strong so it will need another jog (down-up on the weekly basis). For now, let's say that the weekly chart will top out after one jog move.

The Aroon green line indicates that 100% of the stock market bulls believe 100% that stocks will go up forever especially in the many weeks ahead and the red lines shows that nearly 80% of the bears believe stocks will go up forever. This is rampant complacency and fearlessness with owning stocks and you know what happens when everyone is puffing their chests out on the long side.

The ADX pink boxes show that the downside collapse in the SPX was a strong trend lower in 2022 but that strong trend ended last Fall in the October/November time frame. Stocks bottomed and rallied ever since. The ADX moves higher and is about to indicate that the up move in the stock market is a strong trend. The bulls may cheer but that should be tempered since you typically want this ADX set-up when the chart is set up like last Fall or early this year. The rally is long in the tooth as the indicators show.

The SPX has violated the upper band so the middle band, also the 20-wk MA at 4250, is on the table as well as the lower band down at 3889. These targets can be further explained and discussed after the weekly chart tops out in the days and couple weeks ahead.

The orange circle shows a gap big enough to drive a truck through (it is mandatory to say this cliché when talking gaps). The bears would be smart to root for price moving up to 4620-4650 to fill that gap and button-up all loose ends above. This housekeeping would then allow price to fall in earnest going forward.

Keystone's 80/20 Rule says 8's lead to 2's on the way up so this is why the bulls wanted that close at 4582. It is only one day but 4580 opens the door to 4620 so the 4620-4630 target may be the top in a week or two. The 4578 opened the door to 4582. A move to 4588 would open the door to 4592.

The bullishness is off the charts. Bears are as rare as hen's teeth. Mike Wilson at Morgan Stanley, that has been bearish on the market this year, throws in the towel and joins the bull party. This is funny since he may have capitulated only a week or two before the top on the weekly basis. Goldman Sachs's David Kostin is a bull. Of course, permabulls such as Neil Dutta and Professor Jeremy Siegel say stocks will rally the remainder of the year. CNBC commentator Jim Cramer cheers the upside in stocks proclaiming that it is "too early for the new bull market to end." There are only bulls remaining on Wall Street. All these folks will be girding their loins in a week or two.

Investors, traders, analysts and commentators are obsessed with the Federal Reserve and Pope Powell's rate decisions and the inflation data. Minds are locked into the thinking that if the Fed raises rates, stocks will drop and the economy will fall into recession. Conversely, if the Fed is on hold with rates, a soft landing is achieved, and all is groovy with stocks going forward.

In reality, what is most likely going forward, is a credit crisis like March and more bank drama. Won't everyone be surprised when yields drop (investors and traders will be buying Treasuries for perceived safety so price up yield down) as stocks tank?

Let's weave a mosaic for the trading path ahead from the chart and time information above. The month of July probably ends down on Monday with weakness into Tuesday morning, then a lift in stocks from Tuesday into mid-week, then more down on the daily basis for a few days. The sogginess in stocks for the week ahead will then likely peter out as the week ends or the following week begins, and price should then rally for another high on the weekly basis (say, the week of 8/7/23) and at that time, all the chart indicators above should line up with negative divergence so the spankdown on the weekly basis would begin with many weeks of downside ahead. Simply watch the RSI and MACD above and you will know when to call the top on the weekly basis.

The Keybot the Quant algorithm remains long the market through the recent turmoil with the robot focused on utilities, copper and volatility as the key drivers of market direction currently. Keystone is holding index shorts that are underwater currently. It will be interesting to see when Keybot flips short 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.

Note Added Tuesday Morning, 8/1/23, at 5:30 AM EST: The bulls keep flapping their gums. Bespoke's Paul Hickey proclaims that stocks will be higher from here into the end of the year. He is a two-handed analyst that then opines about multiple headwinds but proclaims that stocks will be higher than current levels one year from now. Oppenheimer's permabull John Stoltzfus, that did not predict the top in the stock market at the end of 2021, now decrees that stocks will run higher and hit 4900 this year. The future's so bright you have to wear shades. Timbuck 3.

$INDU Dow Jones Industrials Index Daily Chart; Dow Prints 13 Consecutive Up Days Not Seen Since 1987; Overbot; Rising Wedge; Negative Divergence Developing; Upper Band Violation; Winning Streak Ends at 13 Days

The Dirty Thirty (Dow Jones Industrials; INDU; DJI) rally for 13 consecutive days a streak not seen since 1987. The orgy is in full swing with Dow futures indicating a positive start for day 14. Timmy Trader is waving around fistfuls of cash profits from the rally enjoying his new life as a Chick Magnet. What happened in 1987? Oh, don't worry, it's different this time.

The previous SPX daily chart, which is the US stock market, is topped-out on the daily basis (depending on what news comes across the wires) but you can see that the Dow stocks are still displaying long and strong RSI and MACD that want to see another high in price.

The histogram, stochastics and ROC are all neggie d wanting the Dow stocks to begin a multi-day selloff. The RSI and stochastics are overbot agreeable to a pullback. The red rising wedge is bearish. Dow stocks may slump for a day then come back up (a jog move down-up) and at that time check the RSI and MACD. If they are neggie d then the top will be in; it should occur anytime over the coming days, the chart will signal when.

The Aroon shows 100% of the bulls believe stocks will go up forever and comically nearly 90% of the bears believe stocks will go up forever. That's funny. Price is extended above the moving average ribbon so a mean reversion lower is needed. The upper band is violated so price will need to back check the middle band, the 20-day MA, at 34581, and the lower band at 33473 is also in play going forward.

Look at the volume candlesticks; 13 up days but the biggest up volume day during the rally is nowhere near the two largest volume selloff days a few weeks earlier. Price will need to come down to test the price levels corresponding to the two big selloff days in late May and mid-June.

The blue lines show the textbook 2-leg bull flag pattern. First leg up is 31740 to 34070, you can fine tune the numbers if you want, Keystone is eyeballing off the chart, so that is a difference of 2330. The sideways consolidation period occurs (flag or pennant), with a slight downward bias, and a second leg higher looks like it wants to begin from 32800-ish so adding 2330 is 35130. Bingo. Old guys say bingo a lot. The 35130 upside target is achieved satisfying the 2-leg bull pattern.

Will the Dow be able to log 14 days of upside or does it stop at 13? The negatively diverged indicators want price to receive a spankdown now in the daily time frame so that should begin today or tomorrow, but, as stated, price will want to come up again due to the long and strong RSI and MACD, and then likely top out with universal neggie d anytime during the days forward. Simply watch the chart and you can call the 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.

Note Added 6:37 PM EST: The Dow pukes 237 points, -0.666%, to 35283 with an outside reversal candlestick. The winning streak ends at 13 days. If the Dow was up today for 14 days, it would have been the longest winning streak since 1897 (126 years ago), back when politicians Biden, Trump, McConnell, Pelosi, Feinstein, Grassley and Schumer were born; fossils all. The Dow started in 1896. Wooo, doggie, well look at that. The Dow price makes a matching and higher high today and ALL the chart indicators go neggie d. Both the RSI and MACD line are sloping down as price went up so the neggie d spankdown was on tap, identical to the SPX daily chart that is posted, and the Dow was spanked down today and should remain weak on the daily basis ahead.