Capital seeking shelter in stock markets with each sliver of Goldilocks hopium is growing weary as the Federal Reserve and Western central banks remain hawkish on concerns over inflation. Visceral vibes of lethargy in financial markets, a recessionary global economy, societal ill, online partisan interactions, and the real threat of a wider WW3 kinetic exchange amidst rhetoric over the Ukraine proxy war have every politico and awake individual on edge. Wrongthink or dissent in the current atmosphere of opposing points of view are strictly prohibited while driving among road rages, Karens shopping, relatives and friendly gatherings, and the “meat grinder” battlefield surrounding the Donbas. Even when you are blessed to not be in less fortunate shoes, nothing feels copasetic, and economic statistics are wack. Consider the following economic data points for the United States:

The Accelerating Countdown to Armageddon… “Because the U.S. will be coming up on a double deadline of debt and deficit inflection points… And the more debt we add, the faster the day of reckoning will arrive. Got gold?” – Jim Rickards, Feb. 27

 

“The U.S. Now Has: 1) Record $16.5 trillion in household debt. 2) Record $11.9 trillion in mortgages. 3) Record $1.6 trillion in auto loans. 4) Record $986 billion in credit card debt… Total mortgage debt is now more than double the 2006 peak. Meanwhile, 36% of Americans have more credit card debt than savings with balances rising at the fastest pace since 1999. This is all while mortgage rates just hit 7.1% and credit card debt rates hit a record 24.9%. We are ‘fighting’ inflation with debt. This cannot end well. Meanwhile, interest rates are rising at their fastest pace in history. The average payment on a new mortgage has risen by 61% in just 18 months. The average American is spending a record 46% of their income on house payments. Debt is being used to purchase necessities. The US government now has $31 trillion in debt (in a technical default). That is expected to hit $50 trillion within the next 10 years.” – The Kobeissi Letter, Mar. 5

Annual interest on the U.S. national debt has already crossed $850 billion while Congress fetters over raising the debt ceiling by this summer:

All Roads Lead to Hard Landing and Higher Inflation… “We keep getting number after number that disappoints to the weak side on manufacturing. This flies in the face of a soft landing narrative, because it suggests that if we land at all, it’s not going to be soft. But maybe this is one of the reasons that investors are believing that we’re nearing the end of the rate hike cycle, and we’re going to get a pause followed by a pivot where we get our first cut.” – Peter Schiff, Mar. 6

Inflation dynamics in the U.S. slowed into the new year and the dollar pulled back until it rallied again starting in mid-February. It appears that inflation is entrained, and the Fed is squawking that interest rates may remain elevated and additional incremental increases are on the horizon. The overall situation is prolonging the #TaperCaper game. The current monetary policy holds water until something breaks that’s unfixable since the U.S. national debt is already deep into fantasy land.

The major stock market indices continue to trend downwards with dead cat bounce rallies in a market dominated by automated linguistic algorithms and A.I.-generated trading decisions. No market sector is immune to the “flash” mayhem. Note that the CME Group shuttered most human-driven futures pits 8 years ago, and the current U.S. Treasury securities market is wrought with fragile liquidity supplied by high-frequency trading (HFT) platforms. As each day passes, technical analysis carries more weight than fundamentals, and that’s why fusion analysis is more important than ever with a focus on old-school technical analysis of the stock charts.

“This is a market that is not driven by fundamentals as much as it’s driven by technicals and relative valuations. The Fed is looking for the labor market to cool down, otherwise they’re going to have to press ahead with even more aggressive hikes.” – El-Erian on Squawk CNBC, Aug. 2022

 

Let’s go to the Dow, S&P 500, Nasdaq 100, and Russell 2000 charts and see what’s happened since the new year. Keep in mind that when or if the Fed returns to full-blown quantitative easing or some other mode that provides liquidity to the recessionary West and/or a stock market crisis, markets would rally until the global debt endgame is played out. To view a larger version of any chart below, mouse over it to select or right-click and choose a “view image” option.

$DJI Dow Jones Industrial Index weekly chart as of Mar. 6, 2023 at 4pm ET…

Excerpt from the Dec. 29, 2022 weekly chart analysis:

“The Dow’s price action tapped 34,596 one week after the previous analysis, then rolled over for two weeks. The next candlestick had a long wick that printed a higher high at 34,712 but ended the week with a bearish Plunger Candle (aka Shooting Star) following Jay Powell’s Fedspeak during his FOMC monetary policy announcement. Support was found at the 50 Exponential Moving Average (EMA), the Descending Broadening Wedge’s topside trendline, and the 23.6% Fibonacci at a 32,573 low. Tomorrow is the last trading day of the week and for 2022. This week’s candlestick will remain in indecisive Doji land (aka Rickshaw Man) unless tomorrow’s price action transforms the candle to a bullish or bearish signal. The DMI-ADX is transitioning and may trend bearish, the StochRSI was overbought and threatens to rollover into bearish territory, and buy Volume trended downward into the rally off an Adam & Adam Double Bottom (see daily chart) that’s indicative of more downside or consolidation. If the price action remains above the 50 EMA and consolidates, a rally might resume, but seasonality and economic indicators suggest downside into early 2023 that could probe the October lows. The chart is neutral and a scalping environment for professional traders.”

The Dow has not made a new high since a mid-December high of 34,712 with a Plunger Candle close. The current price action is choppy and remains above the Descending Broadening Wedge’s topside trendline and 23.6% Fibonacci while riding along the 50 EMA and forming a Loose Flag that’s not bearish or bullish. The Flag’s lower trendline was slightly breached in a price plunge to 32,500 last week that followed three indecisive Spinning Tops (aka Long Legged Doji) in the first half of February. If the price breaches 32,500, the next intermediate levels of support are 31,400, 30,500, and 29,800 before testing the Double Bottom lateral support from early October. The DMI-ADX is trending neutral and leaning negative, the StochRSI has rolled over but is not yet in decisive oversold territory, and the Volume is steady and unremarkable. The chart remains neutral and a scalping environment for professional traders. Upcoming economic news, geopolitical developments, and the Fed’s FOMC policy decision on the spring equinox will all determine the near-term direction of all market indices.

$SPX S&P 500 Index weekly chart as of Mar. 6, 2023 at 4pm ET…

Excerpt from the Dec. 29, 2022 weekly chart analysis:

“The SPX tapped 4,101 one week after the previous analysis, then stalled at the overhead 50 EMA and Descending Broadening Wedge’s topside trendline. The subsequent Plunger Candle has a long wick that printed another 4,101 high, and its low bottomed at 3,828 following Jay Powell’s Fedspeak during his FOMC monetary policy announcement. Last week’s Doji candle closed just above the 38.2% Fibonacci level after spiking to its 3,764 low. So far, this week’s low is 3,781 within another indecisive Doji unless tomorrow’s price action transforms the candlestick… If the price action remains above the 38.2% Fibonacci level and consolidates, a rally might resume, but economic indicators favor more downside in early 2023… The chart is neutral and a scalping environment for professional traders.”

The SPX consolidated for a few days while printing another Doji during the first week of January, rallied off the 38.2% Fibonacci, then breached the Descending Broadening Wedge’s topside trendline and 50 EMA. A high of 4,195 tapped the overhead 23.6% Fibonacci and was followed by two Spinning Tops in mid-February, then briefly fell below the 50 EMA and printed a Hammer Candle last week. Today’s price action closed slightly above the 50 EMA at 4,048. The red trendlines draw attention to a possible Rising Wedge that would not be a bullish development if it continues. Support rests at the lower red trendline and 38.2% Fibonacci confluence just above 3,800. Resistance is also at a Fibonacci confluence at 23.6% near 4,200. The DMI-ADX is trending neutral, the StochRSI is in partial overbought territory, and the Volume is steady but unremarkable. The chart remains neutral and a scalping environment for professional traders.

$NDX Nasdaq 100 E-Mini Futures weekly chart as of Mar. 6, 2023 at 4pm ET…

Excerpt from the Dec. 29, 2022 weekly chart analysis:

“The technology weighted NDX Futures is more bearish than the Dow and SPX. A brief rally after the November analysis printed a high of 12,339 and faded into a bearish Plunger Candle going into the FOMC announcement. Resistance was firm at the Descending Broadening Wedge’s topside trendline and the price action never challenged the overhead 50 EMA. Last week printed a 10,870 low, and this week’s indecisive Doji has a 10,759 low. If tomorrow doesn’t transform the Doji into a bullish candlestick, a breach below the Ascending Broadening Wedge’s lower trendline is likely to probe support at the 61.8% Fibonacci level… The chart is bearish and a scalping environment for professional traders.”

The NDX consolidated for a few days with another Doji during the first week of January, then rallied above the Descending Broadening Wedge’s topside trendline and 50 EMA to a 12,950 high in early February. That upside move was followed by a bearish Gravestone Doji. Last week’s price action printed a low of 11,832 and closed on the 50 EMA at 12,311. Momentum did not follow through today, and the price remained stuck on the 50 EMA. Near-term support rests at the 50% Fibonacci at around 11,628 and the Ascending Broadening Wedge’s lower trendline near 11,000. Overhead resistance is clear on the 38.2% Fibonacci at 12,824. The DMI-ADX is positive but indecisive, the StochRSI is in overbought territory, and the Volume is steady but unremarkable. The chart remains neutral and a scalping environment for professional traders.

$RUT Russell 2000 E-Mini Futures weekly chart as of Mar. 6, 2023 at 4pm ET…

Excerpt from the Dec. 29, 2022 weekly chart analysis:

“RUT could not break above the 50 EMA for six long weeks that ended with a Plunger Candle following the FOMC announcement. The most recent high printed in mid-November at 1,913, and this week’s Doji low at 1,731 matched last week’s Doji low of 1,730. Further downside price action could probe the 50% Fibonacci level or 1,640 support at the Adam & Eve Double Bottom… The chart is bearish and a scalping environment for professional traders.”

RUT rallied along with the other indices and took out the high from November and 50 EMA. The price action during the first week of February printed a 2,017 high, then rolled over to a low of 1,874 at the 50 EMA while morphing into a tight Half-Staff Flag. Support rests at the 50 EMA and 38.2% Fibonacci. If the price breaks below the 50 EMA with heavy sell volume, the next support level is just above the 50% Fibonacci at around 1,710. The DMI-ADX is positive, the StochRSI is rolling over, and the Volume is unremarkable. Despite the rally and flagging pattern, the chart remains bearish to neutral and a scalping environment for professional traders.

Nouriel Roubini: “Perfect storm of recession, stagflation and debt” ahead: – ABC News Australia, Mar. 2

 

Plan Your Trade, Trade Your Plan

TraderStef on Twitter, Gettr / Website: TraderStef.com