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Remembering The Charge of The Light Brigade

Shallow Thoughts

Last week’s Fed intervention reminded me of The Charge of the Light Brigade.

Today’s trading setup is below. Follow my Deeper Thoughts, with tips on how to preserve, protect, and defend your investment and trading capital, at Liquidity Trader.

Liquidity moves markets!

Follow the money. Find the profits! 

Market Trading Setup for Monday, March 30, 2020

Friday’s post.

Hourly ES S&P 500 Futures Chart

Last night the futures broke the 3 day uptrend channel, but they’ve recovered back to the lower channel line. 2566 is the key level to watch on the futures. If cleared, the uptrend remains intact and the market should make a run at the crash channel trendline from the market top in early March. That line is currently around 2615.

Looking down, 2522 and 2497 are the key minor support trendlines as of the open. If they break then we look for 2450 as the next support area.

This all conducive to trading range of roughly 2385 to 2600. All trading within that range is noise. A breakout from the range would have significant running room either way.

ES Futures Hourly Chart

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 daily chart gives a broader perspective of the two uptrend channels. In addition a tighter trading range of 2498 to 2567 is possible. A drop below 2498 would suggest a move back to 2400.

The crash trend upper line is around 2610 today. The bulls aren’t out of the woods until that’s broken. If it is, the first target would be to test last week’s high of 2636. Clearing that would then clear the way to 2700.

Rate of Change and MACD tuned to an 8 week cycle frequency are on still buy signals. The bulls have that going for them. However, RoC is at the level where it peaked in early March. Beware of weakness from here. 

S&P ES Futures Chart

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.

S&P Cash Index Hourly Chart 

The red bar at the far right shows where the futures traded overnight. It is within a slight downtrend channel on the hourly chart of the regular trading hours cash S&P.

It needs to clear 2600 to break out of that channel.

There’s still an unmet 5 day cycle projection of 2485 in the cash market and the 5 day cycle oscillator was still on the sell side at the open. An up phase is due today.  But if they don’t clear 2600, then 2485 would still be in the cards for today.

S&P 500 Hourly Chart

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, Monday, March 30, 2020.” 

From earthquake rattled, coronavirus locked-in 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 Charge of the Light Brigade

The Fed injected around $600 billion into the markets and the banking system last week. That’s about $2,000 for every American, and it was just one weekly installment. All in the valley of Death rode the 600. We are the 600 and the Fed is leading us into the valley of Death.

Meanwhile banking indicators suggest that the sickness is getting worse, not better.

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Was That A 4 Year Cycle Low?

Massive Fed intervention turned the market, although cyclicality was favorable. The 6 month cycle low was overdue. But is it something more than that?

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Fed Hyperinflates Its Balance Sheet But It’s Only A Holding Action

On March 3, the Fed converted Not QE into Panic QE. Since then it has pumped $766 billion in cash into Primary Dealer accounts. At the same time the US Treasury issued “only” $147 billion in new debt. So in essence, the Fed issued $619 billion in excess cash.

Other than the hyperinflationary implications, what good has it done? What does it mean for us looking ahead.

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Already Soaring Federal Outlays are About to Explode and Boy Is That A Problem

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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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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