Futures Limit Down Leaves Bulls Shitting, and Fed Has No More Kaopectate

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Stock Market Trading Setup for Monday, March 9, 2020

Hourly ES S&P 500 Futures Chart

The S&P seems to have a bead on 2700.

As of 7:15 AM ET, the S&P fucutures were limit down some 147 points. It has been this way virtually since the open in Asia last night.

I have drawn a new channel on the chart below. But since trading has essentially been halted, there’s no way to know whether it will be accurate when trading reopens.

Momentum and cycle indicators remain extremely weak. Furthermore, there are no “oversold” parameters in a crash. Indicators may rebound while prices have a dead cat bounce, then they both crash again.

So when any of these support levels on the chart holds whether it be 2700, or 2740, or somewhere off the bottom of the chart, beware the dead cat bounce. Look for broken support to become resistance. When the market starts breaking through those levels on the upside, then we can think about a real rebound.

China Stock Market Overnight

The Shag High rally reversed on another huge gap. The downtrend line it broke last week was no support at all. China is back within an extremely thin trading range. It can race from top to bottom on nothing. And it just may if the MACD rolls over.

The levels to watch are now 2860 and 2870. If they break, the selloff will get much worse, and likely be bad news for Wall Street to. If those levels hold, then that could signal a rebound in the US.

S&P Futures Daily Chart

The market is trading below the October 2019 low despite not trading. Any continuation from here would target the bottom of the trend channel at 2696 today. A close below the October 2019 low would also signal a bear market.

Forget the stupid 20% “official” bear market.  Who made it official? Some asshole one day 20 years ago on CNBC. Dow, Hamilton and Rhea roll over in their graves every time they hear that. And if you don’t know who they are, Google them.

The indicators still show no sign of a bottom whatsoever. There’s no oversold parameter in a crash. Positive divergences are almost certainly necessary to form a good swing low.

S&P Cash Index Hourly Chart

The green rectangle at the far right is where the futures have been trading this morning. Support is suggested around 2820 and 2770. The market should open around 2825. At the 8 AM futures price, the market would open at support trend support at 2820. If that breaks, then we’d be looking for 2775 and below that 2725.

Because of the trading halt, the 5 day cycle projection is dicey, but I’ll call it 2725 for now. It could just as easily be 2525. We won’t know until we see a few real trades. Join me on the Capitalstool.com message board today and I will update there.

By the way, the first market circuit breaker would be activated for a 15 minute trading halt if the market reaches -7% which would be right around 2720.

“And that’s the way it is, Monday, March 9, 2020.”