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

Good morning! Twitter has banned me for using bad words (moi? 😱) 😄. 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! – Lee

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.

Liquidity moves markets!

Follow the money. Find the profits! 

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.

ES Futures Hourly Chart

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 Futures Chart

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.

S&P 500 Hourly Chart

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

Lock Limit Down

The S&P futures are trading limit down at 2812 as I write this at 2:50 AM Eastern Time in the US.

I suspect that the PPT will be in action over the next few hours. Whether they’ll be able to get it above support at 2850 or not is the question. And if they do, can they keep it there? If they fail, then we’re in line for an epic crash.

The cycle lineup suggests a low now, at least after this morning’s crash burns out. Here’s what to look out for.

Technical Trader subscribers, click here to download the report.

Not a subscriber? Try Lee Adler’s Technical Trader risk free for 90 days! First time subscribers only.

Dealers Smelling Like A Rose, But Elsewhere the Smell of Death

Investors and leveraged speculators instead took the coronavirus panic straight to the bond market. Dealers, bless their little hearts, were long up the wazoo. Talk about smellin like a rose.

But somebody was short. Big somebodies. They’re dead. We don’t know where the bodies are buried yet, but the Fed will need to exhume them and fill the graves. We watching for the exhumations to see who the dig up, and what they fill the graves with.

Meanwhile, there’s plenty of liquidty in dealer accounts and more on the way.

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Lee Adler

I’ve been publishing The Wall Street Examiner and its predecessor since October 2000. I also publish LiquidityTrader.com, 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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