Stock Market Trading Setup for Thursday, March 5, 2020
Hourly ES S&P 500 Futures Chart
As of 7:15 AM ET, the S&P futures have edged below trend support, which is at 3066. The 3050 area is also a support level. If there’s no immediate recovery above the trendline and 3050 is broken, the first target would be around 2955.
Momentum and cycle indicators suggest, but do not guarantee, a break. We’ll wait for the verdict of the market. If they lose 3050, I think we’ll see brown pants syndrome take hold.
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If they hold, the range from 3085 is critical resistance. Bulls would need to clear that to be in control. Otherwise the bears have it.
China Stock Market Overnight
China broke out of the short term downtrend last night. It’s now aiming for 3100 on the Shag High. It’s one thing to cross a thinned out range, and another thing to break out of it.
The levels to watch are 3100 and 3122. One of those should stop the rally. If they then stick around that level and consolidate, that market could roar higher. If they roll over from there, LOB.
But if China goes ballistic, Wall Street should too.
S&P Futures Daily Chart
The rally in the fucutures has so far been a perfect fiber nacho 50% retracement. It also flirted with breaking out of the sharp downtrend channel, and has pulled back overnight and this morning.
If China is any indcation, we’d have a breakout. But the US and China don’t correlate well. In fact, I don’t even know why I should bother reporting it. 😄 But for now, I’m curious. If I continue to write these updates daily, I’ll report the Shag High, when it’s interesting.
But back to the ES fucutures, clearing 3100 today would be a breakout from the channel. But if it did not extend from there, I’d give it another day to prove it wasn’t a breakout fakeout.
If 3090 proves impenetrable, look out for cow diarrhea. We’d see 2980 fast. If that breaks, then back to 2850 we go.
S&P Cash Index Hourly Chart
The green rectangle at the far right is where the futures have been trading this morning. They are locked between 3 day trend support and multiple trend resistance.
Break 3040 and all hell will break loose. There’ s a support vacuum to roughly 2965.
On the other hand, the upside would be a much tougher slog above 3110, and particularly above 3130.
An hourly close below 3060 would suggest a 5 day cycle downturn. It could be a very bearish day or two if that happens.
“And that’s the way it is, Thursday, March 5, 2020.”
From Zagreb, Croatia, good morning!
Where have you gone Walter Cronkite? Our nation turns its lonely eyes to you.
Meanwhile, here are the latest reports from Liquidity Trader. Note that I called the Fed emergency rate cut last weekend.
Suddenly the trend of Federal Withholding tax collections is in critical condition.
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The patterns on the charts of T-bills and the 10 year note are unprecedented. Something terrible has happened in the market. The Fed will have to cut on Monday. Tuesday at the latest.
It has implications for stocks, too. Here’s what to expect next.
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