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Here’s Why Rangebound Market Should Break Out

Shallow Thoughts

Treasury issuance will go through the roof over the next 5 days while the Fed has decided to cut back its support. That’s a bad combination.

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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.

Market Trading Setup for Wednesday, April 8, 2020

Yesterday’s post.

Hourly ES S&P 500 Futures Chart

The S&P ES fucutures are up 22 points at 2663, at 7:20 AM in New York, 1:20 PM in most of Europe. The futures have been rangebound mostly between 2630 and 2675 overnight and in the pre market.

The breakout from this range should set the tone for the rest of the day. Hourly oscillators have turned bullish, suggesting an upside breakout. But a couple of trendlines converge around 2690 in the early going. If they get through that, it should be good for another run at 2730-40. And if that’s cleared, the target would be 2875.

Conversely, if they drop through the bottom of the range, I’d look for 2500.

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. Overnight and pre market trading has been in a range of 2620 to 2680. This is below the centerline of the uptrend channel. The top of the channel is at 2900. The bottom of the channel is at 2555 today.

The ES has broken out of a range with a measured move target of 2825-50. The next resistance level is 2860. The 50% fibo retracement level of the crash is 2785.

S&P 500 ES Futures Chart

Rate of Change and MACD tuned to an 8 week cycle remain bullish. Momentum is very bullish, suggesting that the bias remains to the upside. 

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’s between 2620 and 2680. Resistance is indicated at 2680-2700.

The 5 day cycle oscillator is on the sell side but both a 3 day and 5 day cycle low are due today. Support is around 2650. If it holds, then an upside breakout and a run at 2750 would be likely. If the range breaks down, then trend support from the March low comes into play at 2550.

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, Wednesday, April 8, 2020.” 

From 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. 

No Different than Venezuela or Zimbabwe

Macro liquidity measures have absolutely gone through the roof, blown the lid off, set off a tsunami, as US government spending skyrockets to the moon and worlds beyond. US bank deposits aren’t just soaring, they are exploding.  These deposits are backed mostly by US Treasury paper, future claims on American taxpayers. These claims for which there’s no reasonable expectation of repayment, other than with severely depreciated dollars. Your stocks may soar, and they may still be worthless.

As the stock market began to rebound, one indicator shows the banks started buying shit like crazy. Like the South Park’s Kyle, the kid who always believed in Mr. Hankey the Christmas Poo, the banks believe in Mr. Powell.

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Rebound! How to Trade It

Futures in the pre-market signal an end to the crash. Here’s what’s needed to maintain that and a few trade suggestions to take advantage.

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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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