In case you missed it, I already gave instant reaction to the Fed’s all in gambit today.
Today’s trading setup is below. Follow my Deeper Thoughts, which tend to be a bit more well researched and supported, and are therefore often right, at Liquidity Trader.
Liquidity moves markets!Follow the money. Find the profits!
Market Trading Setup for Monday, March 23, 2020
Hourly ES S&P 500 Futures Chart
The last few remaining shorts ran for cover on the Fed’s announcing that it was going Conehead this morning. That drove the ES futures up 100 at one point. It was a cool 210 poins off the low. A nearly 10% move in an hour.
Isn’t that special.
What’s even more special is that it come exactly to the top of the downtrend channel that has contained almost all of the action since March 3. The CRASH CHANNEL IS STILL INTACT!
There are buy signals on the intraday cycle oscillators and the ES only needs to clear 2387 in the next hour, or 2372 by the end of the day to break the channel.
God help us if they fail. Because the next step would require the Fed to actually buy stocks, and the Fed would end up owning everything.
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
You can also see on the daily chart that the crash channel is intact. Something above 2350 would be a breakout. But it would also need to close the day above 2400 just to return to the initial crash channel. It would need to clear 2500 to break the centerline of that channel.
There are still no buy signals on cycle or momentum indicators. A good bottom would normally require at least a tiny positive divergence.
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 – Not Yet Updated. Please check back at 9:25 AM
The red bar at the far right shows where the futures have been trading overnight. The range again neatly corresponds with the upper and lower trendlines on the hourly chart of the cash market in regular trading hours. That’s between 2386 and 2170 at the open.
The upper trendline drops to 2365 at the close. There’s another crash trendline at 2440 that they’d need to clear at the close to signal an end to the crash for now.
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 23, 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.
It looks that way, but it’s not out of the woods. The same goes for the mining stocks. This report shows what needs to happen.
This market is a different breed of cat. Cycles have little or no influence. This is a fundamental collapse of liquidity. Traditional technical analysis is more useful. In that regard, the conventional measured move implication of the breakdown below the December 2018 low is 1350. Other techniques point to that area.
I’ve added a few new shorts to our trades list this week. Our initial pick now has a gain of 32.6% since entry on March 3, using no leverage. Short sale margin is 50%. You can do the math.
Not a subscriber? Try Lee Adler’s Technical Trader risk free for 90 days!
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.
Get this report and access to past reports. Read Lee Adler’s Liquidity Trader risk free for 90 days!
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