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How To Trade This Pregnant Market Depends On What Comes Out – Stock Market Trading Setup for Monday, February 10, 2020

This morning’s hourly chart of the ES futures looks a lot like yesterday’s. But boy is this thing pregnant. The question is, with what?

A little bit lower here and bears gonna get some action today. But if this sucker peeks out above 3329, it’s gonna blow. As in sky high. 20 hour momentum is in a very bullish pattern… potentially.

Liquidity moves markets!

Follow the money. Find the profits! 

ES Futures Hourly Chart

What will happen, I don’t know. And it doesn’t matter. The market will tell us by the direction it takes out of this tiny range it’s been in for the 2 days.

Meanwhile over in China, we continue to see the free market at work…

OK. I kid.

The Shag High Composite is now at 2890. I said yesterday that it looked headed for the broken uptrend line at 2925. “That would be a perfectly “normal” rebound from a technical perspective. Then we’ll see. A rollover from there could lead to a test of the low or worse.”

China Stock Chart

Meanwhile, back in the US the S&P fucutures (ES) have essentially regressed to the trend mean. That usually results in congestion around that area. Momentum and True Strength are absolutely inconclusive. Do I know what will happen? Hell no. I’ll wait for the market to break out of the congestion area before I pretend to have a clue.

3333 holds the key. If it breaks, the trend centerline at 3320 would be likely support. If either of those levels holds, then the rally would resume and would target 3400+. Looks like there’s a trade on the long side if they clear 3333, and short below 3300. Potential upside is 3400. Downside, 3340-50.

But it is more likely that they’ll mush around in a tight range- a meat grinder that just chews up cash unless you’re really good at trading minute bars.

S&P Futures Chart

Below is the S&P index (cash) hourly chart. That little green oval at the far right is where the futures have been trading this morning. The futures are at 3325 as I write at 8:30 AM ET. The trendline currently around 3330 is the Maginot line for the bears. Above that, bulls can ram it up. If that holds, bears get the ball, with the goal line at 3310-15. That’s not the whole game, just one drive.

The 5 day cycle oscillator has been falling since last Wednesday. That cycle is primed for a low today. We should get a bounce, but hard to say if it comes out of the gate, or the PM.

S&P 500 Hourly Chart

That’s today’s take on the intraday stuff. For the big picture on weekly and monthly swings, and the long term, plus my tactical recommendations, see the weekly Technical Trader report. Try it risk free for 90 days! 

Meanwhile, here’s my latest on the Fed balance sheet, or Fed BS for short.

Not QE? The Financial Times Is Either Stupid or Lying

The pause in the growth of the Fed’s balance sheet over the past 6 weeks isn’t what the pundits are telling you. Some are saying that it’s evidence that the Fed is not doing QE. They’re either gaslighting, or clueless. But we know what it is, and we know what happens now.

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Lee Adler

I’ve been publishing The Wall Street Examiner and its predecessor since October 2000. I also publish, and was lead analyst for Sure Money Investor, of blessed memory. I developed David Stockman's Contra Corner for Mr. Stockman. I’ve had a wide variety of finance related jobs since 1972, including a stint on Wall Street in both sales, analytical, and trading capacities. Prior to starting the Wall Street Examiner I was a commercial real estate appraiser in Florida for 15 years. I was considered an expert in the analysis of failed properties that ended up in the hands of bank REO divisions, the FDIC, and the RTC. Remember those guys? I also worked in the residential mortgage and real estate businesses in parts of the 1970s and 80s. I have been charting stocks and markets and doing analytical work since I was a teenager. I'm not some Ivory Tower academic, Wall Street guy. My perspective comes from having my boots on the ground and in the trenches, as a real estate broker, mortgage broker, trader, account rep, and analyst. I've watched most of the games these Wall Street wiseguys play from right up close. I know the drill from my 55 years of paying attention. And I'm happy to share that experience with you, right here. 

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