Look For Your Big Fat Home On the Range

Stock Market Trading Setup for Wednesday, March 4, 2020

Hourly ES S&P 500 Futures Chart

As of 7:50 ET, the S&P futures are slopping their way higher. The target looks like 3097. The momentum and cycle indicators show no sign of a rollover Beethoven yet.

If the market falters and starts to pull back around or below 3097, the first test should be the lower trendline now at 3048. If that subsequently breaks, Katy bar the door.

Conversely, if they clear 3097, then a test of the high around 3135 would be in order. If they get through that, the next target would be 3200 and a solid reversal pattern would be in place.

China Stock Market Overnight

The rebound in China has stalled. The Shag High needs to clear the trendline now at 3011 for it to resume. Otherwise, back down the crapper it goes.

So far this is just a classic Return to the Scene of the Crime (support break) pattern. These are common, but if the downturn resumes, the downturns are usually protracted.

For now, it’s an ambiguous setup. A rollover here should lead to a dramatic drop toward a retest of the low. Conversely, a holding action near the trendline should lead to a renewal of the rally, heading for 3100.

S&P Futures Daily Chart

Yesterday’s rally in the fucutures was a perfect fiber nacho 50% retracement. But we must be careful not to consume too much of the fiber nachos. You know what happens.

So let’s also consider the new downtrend channel. The upper trendline is around 3080. Look for another 50 or so points of upside if they take that out. Then we’ll see.

On the other hand, if 3080 proves impenetrable, then I think we get to see a full test of the low at 2855. If that breaks, put on your crash helmet.

S&P Cash Index Hourly Chart

The green rectangle at the far right is where the futures have been trading this morning. The rebound came from the trendline established by yesterdays low.  The lower trendline is at 2994 as of the NY open. It rises to 3037 at the close.

Break that trendline, and the bears get the ball back. Otherwise the target would be 3120 initially. Then there’s a mass of trendlines indicating resistance between there and 3160.

The 5 day cycle was still in a down phase at the close. There is not yet a projection for the down phase. So far it has played as a flat consolidation, which has bullish implications.

Note: Earlier I posted the chart from yesterday. This is upated as of 10:30 AM ET. 

“And that’s the way it is, Wednesday, March 4, 2020.”