Stock Market Trading Setup for Thursday, March 12, 2020
Hourly ES S&P 500 Futures Chart
The calamitous triangle break that was pending yesterday morning, happened. We got the usual result. Badda bing, badda boom.
This morning the futures traded limit down again after the NBA announced that it was suspending its season. Or something. Don Trump woke up from his afternoon nap and banned all air traffic from all nations who don’t speak English.
Give me your tired, your poor, your huddled English speaking coronavirus carriers.
The fucutures have come off their down limit slightly, as I write at 7:20 AM NY time. They’re now down 4.7% at 2612. Meanwhile the Dow has shed another 1500 points of light or so.
The slight uptick off the lows has broken the downtrend channel from yesterday, but not by much. If it stalls here, I suspect it will drop back within the channel and head for a couple of the other lower channel lines. Targets look like 2570, 2530, 2500, and 2440.
Momentum and cycle indicators are buried. This is absolutely abysmal. There are no signs of the positive divergences that should crop up at a good low. So after any bounce, count on at least one more lower low. At least…
The alignment of the 3 day and 5 day cycles suggests the possibility of a low today. Signs of a turn from any of the above mentioned support targets should be good for a one or two day rally. But again, a lower low should follow.
Our watchword for the past week: “There are no ‘oversold’ parameters in a crash. Indicators may rebound while prices have a dead cat bounce, then they both crash again.”
I think this cat will bounce again, maybe late today, maybe tomorrow. With the same result.
China Stock Market Overnight
Still no useful info on the Shag High chart. I’ll keep an eye on it for you.
S&P Futures Daily Chart
So the major averages have fallen 20% and the Wall Street mob is declaring an “official bear market” from the Wall Street Bureau of Weights and Measures. Who cares about the semantics? The question is how much more money the bulls will lose and the shorts will make.
Oh wait. There are no more shorts. They’ve all covered and missed the last few days of the crash. Bears. Can’t win for losing.
But hey, that’s why they’re crashing. Think about it. Not enough shorts left to cover and drive a short squeeze that turns into sustained long side buying.
But the purpose of these reports is not to divine the longer term, just the day. If you want longer horizons, join me at Liquidity Trader.
The daily chart indicators are truly breathtaking. They 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. There are no positive divergences on the daily chart yet.
The S&P is at the bottom of the crash channel right now as I write. It can’t break down because the futures are limit down. The limit drops another 2% at the open in New York. If the cash open is down the limit, as I suspect it will be, then we’d be looking at an open around 2550. That should be good enough for a bounce.
If not, then look for one from the next major support level at 2440. 2317 is the December 2018 low on the futures. I wouldn’t rule that out either, although other circuit breakers may prevent that from happening today. But delay is not denial.
Meanwhile, the 2700 area should now be resistance if by some miracle the market rebounds today.
S&P Cash Index Hourly Chart
The red bar at the far right is where the futures have been trading this morning. The range is 2601 to 2741. The upper downtrend line starts the day at 2741 and ends at 2635. That’s the number the bulls have to beat today to break out of this collapse.
On the downside, 2600 is key support. If they lose that, the initial target would be around 2550, then 2500. I’ll stick my neck out on a preliminary 5 day cycle projection of 2475, but it’s not ideally due until Friday.
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, Thursday, March 12, 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 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.
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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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Suddenly the trend of Federal Withholding tax collections is in critical condition.
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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
