Stock Market Trading Setup for Monday, March 16, 2020
Hourly ES S&P 500 Futures Chart
The Fed pretended to fire a bazooka on Sunday with its announcement of $700 billion in market intervention in outright purchases. But it was really a popgun. The Fed had committed to the $500 billion in outright Treasury purchases. The only thing new was the $200 billion in MBS.
But even this doesn’t matter, because the Fed is really operating on a reactive, ad hoc basis. The truth is, we don’t know what they’ll do tomorrow, because they don’t know.
The fact is that so far at least, nothing the Fed does has worked.
The S&P fucutures have been limit down since the opened last night. That limit is now 100 points, putting the ES at 2555 before the New York open.
An hourly bar that ends the hour below 2555 will break the incipient uptrend channel. Then where is support? Maybe 2400, where it bottomed last week. If not there, then we’d be looking way back in time for support, to the 2018 low of 2330 or thereabouts.
And where do they need to be to break the crash. I’d say an hourly close above 2600 for starters.
Momentum and cycle indicators have just rolled over. There’s no law that says they can’t turn back up instantly, but until they do, this won’t be good.
Reminder- I’m only talking a day or so. This is not the big picture. If you want that story, you must subscribe. Risk free trial and all.
S&P Futures Daily Chart
On the daily chart, we can’t even see today’s trading because of the fact that it has been locked at one price for the entire overnight session. Again, this is for the perspective of one day only. The purpose of these reports is not to divine the longer term. If you want longer horizons, join me at Liquidity Trader.
So the latest and sharpest crash channel remains intact. It’s so sharp that it’s hard to tell just what the market would need to do today to clear it, but let’s say 2650 give or take 10. Anything less than that, and the crash will continue, and will set new lows.
“Support” is suggested around 2450 If they drop under 2400, then 2317 would be the target. Below that, abandon hope, all ye who enter.
The daily chart indicators remain cataclysmic. The tiny uptick in momentum is meaningless at this level. It needs a much bigger upturn to matter.
Department of Wash, Rinse Repeat – There’s no oversold parameter in a crash. Positive divergences are almost certainly necessary to form a good swing low. There are no positive divergences on the daily chart yet.
S&P Cash Index Hourly Chart
There’s no red bar today to show where the futures have been trading because they have only traded at 2555. If they stick to the rules, then I’d expect the SPX to open around 2500-2515. Support would be at 2480. If it holds, we should get a strong rally, and maybe the bottom of this phase of the crash.
But if it breaks down, then I’d look for 2350. There’s also another circuit breaker around that level. The next would be around 2200.
Join me on the Capitalstool.com message board today and I will update you there occasionally during the day. Feel free to join the fun.
“And that’s the way it is, Monday, March 16, 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.
The SPX has broken out of its original crash channel to the downside. It’s in a new channel with a slope of -46 points per day. Long term signals are already extremely negative, and are on the verge of turning catastrophic, cataclysmic, and apocalyptic.
I’ve run out of adjectives.
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With no prior announcement or clue, the Fed bought $37 billion in Treasury coupons from Primary Dealers on Friday. To pay for them it deposited $37 billion into dealer accounts at the Fed.
It was the largest single day POMO (Permanent Open Market Operation) purchase since the days of TARP and QE 1 in 2009.
It came without warning. I was so glued to the intraday live charts on Friday, I wasn’t even aware that the Fed had taken this emergency action until after the close.
We sure as hell saw the result. But this is only the beginning of this story.
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And now, a note from the church rector:
Good Morning!
Twitter has banned me for using bad words (moi? 😱) 😄. I had tweeted an emotional criticism of a so-called financial news outlet of Newscorp/Dow Jones.
Banning me for throwing a few cuss words at Rupert Murdoch’s propaganda minions is like banning David for slinging a rock at Goliath. Only I didn’t kill anybody. Besides, they’re impervious to rocks or reason.
But alas, Twitter’s playground monitors stomped their feet and pouted, “Take it back, or we won’t let you play!”
But they also said that, instead of taking it back, I could formally appeal.
I’ll never retract the truth, so I took the second option. My appeal went like this, in the immortal words so often heard from a street kid from Philly: “Stick it up your ass!”
Good bye Twitter. I never believed in you anyway.
So if you like this post or anything else you see on Wall Street Examiner, please give it a link on your favorite financial social media site, with my thanks! And please join us at our own little social media playground, Capitalstool.com for my occasional intraday blurtouts. You can add your very own blurts too. – Lee
