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What This Massive Overnight Rally Accomplishes, Finally

Shallow Thoughts

OK, so I’m worried about the potential for hyperinflation.

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

Yesterday’s post.

Hourly ES S&P 500 Futures Chart

The answer to the headline question is: So far, nothing.

The rally has carried right up to the crash trendline, but no further. A pop through 2330 will finally break the crash trend. But I wouldn’t get too excited about that either. There’s a resistance cluster around 2385-2400 that needes to be cleared to put the market in position for a move to 2500.

Intraday cycle remain on the buy side, but they’ve reached the level where they topped out on the last big intraday pop. So we are again at an inflection point. That’s become an everyday occurrence. 

The pivot low was 2167. A rollover below 2330 would make that the target.

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

You can also see on the daily chart that the initial crash channel has been broken at 2260. But there are layers of resistance at 2360, 2385 and 2440 that would need to be cleared to get the market into the clear for a much bigger pop.

If this rally holds, then the 2315 area would become support. If it doesn’t hold, the old upper crash channel line would hardly be support. A failure to extend the rally could result in rapid deterioration. 

The condition of momentum and MACD are hardly the basis for expecting much of a rally.  Positive divergences should show up before a sustained rally begins.

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 ES Futures Chart

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 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 2240 and 2385 at the open.

The upper trendline drops to 2340 at the close. There’s another crash trendline at 2400 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, Tuesday, March 24, 2020.” 

From earthquake rattled 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. 

S&P 500 Hourly Chart

Here are More Short Chart Picks as New Projection Points to 1300

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.

Technical Trader subscribers, click here to download the report.

Not a subscriber? Try Lee Adler’s Technical Trader risk free for 90 days!  

 

“I Am the Greatest!” Muhammad Ali Financial Crisis KOs the Fed

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.

Subscribers, click here to download the report

Not a subscriber yet?

Get this report and access to all past reports risk free for 90 days!

 

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.

Subscribers, click here to download the report.

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:

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 

Try Lee Adler's Technical Trader risk free for 90 days! Follow the money. Find the profits!

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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