Market Trading Setup for Thursday, March 19, 2020
Hourly ES S&P 500 Futures Chart
It seems like the market wants to base out here. But I have a sense of foreboding when I look at the hourly chart. Maybe that’s bullish. I’m often my own best contrary indicator.
Liquidity moves markets!Follow the money. Find the profits!
I really don’t like the looks of this. It looks like we’ve been in a 5 day cycle up phase since Friday. An up phase that hasn’t gone up. That’s not bullish. The downturns from weak up cycles are often very sharp.
2262 is now the failsafe support level. If that goes, 2200 would be next. Then 2150 and 2100. Ultimately the market likes big round numbers. 2000 could be it. That would probably take until early next week.
The futures are trading down 73 points at 2330 at 8:25 in New York. The 5 day cycle projection isn’t firm but it could plausibly be 2075 or lower. If they take out 2260, then the 5 day cycle projection starts to look sub 2000, with a low due Monday.
Momentum and cycle indicators are fibrillating in a flat pattern slightly below their zero lines. That’s bearish until proven otherwise. To be positive, it would require a pop into positive territory. The alternative is yet another catastrophic decline. That could be a washout low, but the damage would be extraordinary.
I’d call it a capitulation low, except that dead traders can’t capitulate. They’ve already been carried out in body bags.
Reminder- I’m only talking patterns for a day here. This is not the big picture. If you want that story, you must subscribe. Risk free trial and all.
S&P Futures Daily Chart
The ES is now in the upper half of the crash channel on the daily chart. It needs to clear 2450 to break the crash. Or at least this phase of it. That would only put it in the broader crash channel coming from the market peak. Breaking out of that isn’t in the cards in the short run.
2300 remains obvious support. There should be a bounce to the centerline of the broarder crash channel at 2600 if it does. But if the market breaks down, the target today would be the bottom of the sharper crash channel at 2150.
This is still grossly bearish until these channels are broken. The cycle and momentum indicators are in truly hideous shape. There needs to be a positive divergence before a decent rally takes shape. It means that this decline won’t be done until these indicators make higher lows.
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.
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
The red bar at the far right shows where the futures have been trading. The range neatly corresponds with the upper and lower trendlines on the hourly chart of the cash market in regular trading hours. That’s between 2450 and 2275.
Until they break out above the upper trendline that starts the day at 2450 and ends at 2400, nothing has changed.
There’s no 5 day cycle projection and the phase isn’t clear. So we fall back to the old standard. The trend is your friend. Until proven otherwise.
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, Wednesday, March 18, 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 Fed has undertaken so many rescue programs since Friday that my head is spinning. It’s hard to keep track of it all. A schedule of repo offerings for the next month reads like the Old Testament. Even the rabbis are arguing over it, the underlying question being, “Where is G-d already?”
I’ve tacked it to the butt of this report.
Anyway, it’s irrelevant. The dealers can’t borrow a fraction of what the Fed is offering. Here’s what’s relevant. The markets are now a mass grave filled not with COVID19 victims, but victims of the greatest bubble in history. A bubble built by the Fed.
Here’s what’s coming next, and what you can do about it to preserve your capital and maybe even profit from the big moves that lie ahead. Assuming that trading systems continue to function at all.
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Even before COVID-19 the trend was clear that the Treasury would need to keep borrowing money hand over fist. Now the deficit will explode. This is a hideous problem for financial markets in this condition.
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Last week’s indications that gold was going higher failed miserably. A collapsing credit bubble takes no prisoners. When the margin man comes to your door, you sell whatever you can. Gold was sold. It was no insurance policy. There was significant technical damage. We look at where gold and the mining stocks are headed next.
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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And now, a note from the church rector:
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