NYA, SPX, and Jerome Powell Updates

Last update prompted an angry letter from Jerome "the Gnome" Powell, which I will reprint here in its entirety [sic]:

Dear Mister Pretzel Logic,

I sawed ewe said a thing about me.  Its KNOT TREW!  Stop spredding lyes or eye'll be forced to SEW you!

Jerome Powell
Chairmen of the Fed Earl Rezerve
p.s.- STOP CALLING ME "THE NOME"!!111

Of course, it's never the intention of these updates to foster ill feelings among our feckless fearless leaders, so in the interest of goodwill, my lawyers have reached out to Jerome "the Gnome."  Hopefully we can get things patched up, which Jerome can do while he's sewing.

The market has, of course, continued to drift higher, like a balloon filled with lukewarm air.  But hey, NYA's chart is of at least minor note -- which is something, anyway:

COMPQ, INDU, and SPX all display near-term patterns that are similar to the rising wedge on NYA -- so it's worth keeping an eye on -- especially since SPX is still bouncing along the underside of the generational black trend line:

Near-term, the black trendline is still the first to watch -- but now, the UPPER red trend line (dashed) could act as first support, so bears would have to whipsaw that (even if black fails) before they'd have a shot at the solid red trendline:

First support is a little easier to see on the near-term chart:

In conclusion, multiple markets have formed apparent "rising wedges" -- but these patterns are not always bearish and can instead suggest a new (minor) launch pad... so we need to keep an eye on the support zones for further clues.  Trade safe.

SPX, NYA, and Jerome Powell Updates

The market has continued to generally bore everyone to death, leaving me forced to write about unsubstantiated rumors regarding Jerome "the Gnome" Powell.  Who, according to Sources Familiar With the Matter™, is soon almost certainly going to be stepping down... a flight of stairs.  The internet is abuzz with this rumor.  Can Powell handle stairs?  Will he use the handrail?  How many stairs in all?  Everyone has an opinion.  But Experts on Jerome Powell dismiss this as wishful thinking.

"Jerome Powell hates stairs," one Expert with a PhD in Powell opined, "He'll almost certainly use the elevator."

We'll keep a close eye on this story going forward.  Unless I forget, which is likely.

Market-wise, not a lot has happened since the last time we looked at it.  Friday traded in a range.  I did spot one "possible curveball" -- but it's just a potential, there's not really anything concrete suggesting this will happen.  So this is designed to arm readers with this knowledge, in case the market drops on Monday:

Intermediate term, SPX is still holding all its trend lines:

And NYA has now officially captured its next target and potential resistance zone:

In conclusion, SPX remains in its intermediate uptrend for now, so not much else to add.  As I've noted several times: The black trendlines on both SPX charts are the first thing to watch for any signs of possible weakness.  Trade safe.

SPX and NYA Updates

Yesterday, SPX dropped down to test the black trendline that I highlighted on Wednesday:

It also tested the larger black channel:

Finally, NYA has rallied to its next upside target -- which also happens to be the final resistance zone:

In conclusion, no real change from last update, because all we've seen since is additional confirmation of what I wrote then:  The black trendlines on both SPX charts are the first thing to watch for any signs of possible weakness.  Trade safe.

SPX Update: No Country for Bears

A week ago, I noted that 

On the one hand, bears didn't damage the uptrend even a little, so from a technical standpoint, bulls still have the ball.  On the other hand, the potential impulse down does give bears the best shot they've had all month.  And again, north of 5969 invalidates any hope of that last decline being an impulse. 

But as has been its way for the past few weeks, the market wasn't interested in entertaining even the slightest bearish notions.  Probably the first key line (from a near-term perspective) to watch now is the solid black line.

In conclusion, this is the type of market where -- if you're a bear -- you just keep watching the trendlines (black on both charts) and waiting for the next "best shot."  Trade safe.

SPX Update: The Zombie Canary

Here's a chart that made the rounds this weekend that I found interesting.  For decades, corporate profits made up about 6% of GDP. That was the norm -- a stable share of the economic pie.

Then something broke.

Briefly in the mid aughts, and then again near the launch of the first QE programs, corporate profits surged to 10–12% of GDP and stayed there. That’s not a blip. That’s a sea change.

But here’s the catch: profits don’t rise in a vacuum. If corporations are getting more, someone else is getting less -- usually labor, small business, or the public sector.

So what looks like success is really imbalance. 

Cheap debt, globalization, tax loopholes, financialization -- they’ve all propped up margins. But this isn’t just about business thriving. It’s about extraction replacing productivity.

If 6% was the long-term mean, and we’re now at 12%, then either we’ve built a new normal on systemic distortion… or we’re headed for a brutal mean reversion.

What this chart really shows isn’t health. It’s dependency. We've built an entire asset ecosystem, a political cycle, and a fiscal regime on the back of profit levels that may not be sustainable. And if indeed they’re not -- if they even begin to revert -- the ripple effects could be massive.

This kind of chart strongly implies that the system is unbalanced. And that stocks are priced for perfection based on a profit regime that may not hold.

In short, this isn’t a chart of prosperity. It’s a canary in the coal mine. And it’s been dead for years -- but we’ve hooked it up to an air compressor and have convinced ourselves it’s whistling Dixie.

Worth keeping in the back of one's mind as another suggestion that even though bears have taken a lot of beatings in these intervening years of imbalance... things won't stay that way forever.

Market-wise, we're still basically in the same place we were on Friday:

Not much else to add to the past couple updates.  Trade safe.

SPX Update: If I'm Being Redundant, Please Allow Me to Repeat Myself

Since last update, SPX has traded in a tight range, making today's update largely into a "no change" update.  Since I hate repeating myself repeating myself, I'm just going to quote last update directly, to save people from needing to reopen it:

Last update contained a lot of warnings for bulls, then concluded with:

The first warning for bulls would be sustained trade south of the black channel (noted on Wednesday as the first downside target).  If that channel holds, then no harm, no foul.

As those of you who own theodolites have no doubt already realized, SPX then bounced right at the black channel:

So technically the uptrend is still intact and doing just fine -- for now.  That said, the decline looks enough like an impulse that it's worth being very cautious here if you're a bull.  The chart below shows what might happen if this is a bear move within a larger bull wave.  If this is the start of a larger bear wave, then "look out below" -- so things could get much worse than this.  And we're not far from the invalidation level (5969) for bearish things, so...

Then there was this chart, which has been updated with the new price action, though it's almost impossible to tell:

And it concluded with:

In conclusion, on the one hand, bears didn't damage the uptrend even a little, so from a technical standpoint, bulls still have the ball.  On the other hand, the potential impulse down does give bears the best shot they've had all month.  And again, north of 5969 invalidates any hope of that last decline being an impulse.  Trade safe.

SPX Update: Not Clean, but Not Nothing, Either

Last update contained a lot of warnings for bulls, then concluded with:

The first warning for bulls would be sustained trade south of the black channel (noted on Wednesday as the first downside target).  If that channel holds, then no harm, no foul.

As those of you who own theodolites have no doubt already realized, SPX then bounced right at the black channel:

 

So technically the uptrend is still intact and doing just fine -- for now.  That said, the decline looks enough like an impulse that it's worth being very cautious here if you're a bull.  The chart below shows what might happen if this is a bear move within a larger bull wave.  If this is the start of a larger bear wave, then "look out below" -- so things could get much worse than this.  And we're not far from the invalidation level (5969) for bearish things, so...

In conclusion, on the one hand, bears didn't damage the uptrend even a little, so from a technical standpoint, bulls still have the ball.  On the other hand, the potential impulse down does give bears the best shot they've had all month.  And again, north of 5969 invalidates any hope of that last decline being an impulse.  Trade safe.