Stock Market Trading Setup for Friday, April 24, 2020
The market is on easy street today. It’s getting its usually daily injection from the Fed, while the Treasury is sidelined, not doing any borrowing today. So all that cash gets to sit around for a whole 4 days until a new wad of Treasury supply hits.
Meanwhile, at the Dear Leader’s suggestion, Trump supporters inject themselves with bleach or isopropyl alcohol to stave off infection with the virus. That’s a good thing. Let’s hope it’s the start of a trend that flattens the curve so we can all get back to normal lives.
S&P Futures Daily Chart
The futures have been trading between 2755 and 2807 overnight and in the pre market. They’re up 20 at 2801 at 8:35 AM in New York.
This uptrend channel at a slightly lower angle than the previous meltup channel from the March low is still intact. The bottom of that channel is at 2756 today. 2743 and 2705 are also support levels. Below that is air space to the next support level at 2627.
The closest resistance is around 2835 and 2855.
Rate of Change tuned to an 8 week cycle is inconclusive. Direction is uncertain, but absolute level is still positive, indicating that the uptrend remains intact.
MACD tuned to the same cycle has looked toppy for a couple days, but it’s inching highe. A market decline today could trigger a downturn, and thus a sell signal. Otherwise, the uptrend would remain on day to day status.
If this is still a bear market, we’re at the point that that needs to be proven by a real downturn.
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.
Hourly ES S&P 500 Futures Chart
The 5 day cycle is in a down phase that is moving sideways. That’s usually a sign that the next move will be up.
An hourly close below 2755 would be needed to activate the potential for a potential right shoulder in a potential top. That’s still a lot of wishful thinking for bears, even more than yesterday.
On the other hand, an hourly close above 2808 could trigger a move to 2825, where they’d start to run into resistance again.
Hourly indicators tuned to a 5 day cycle frequency were bullish at 8:45 AM ET. Really, really bullish.
The key to the next move is the resistance cluster at 2800-08. If market rolls over in the early going, that would give the bears a shot. Otherwise, blastoff!
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 Cash Index Hourly Chart
The red bar at the far right shows where the futures traded overnight. It’s between 2755 and 2807.
There’s a downtrend line at 2825 early that represents important resistance. If it’s cleared, the initial target would be 2845. If they don’t clear it, bears get the ball back.
On the downside, there appears to be a lot of air between 2800 and 2750. 2735-50 is critical support.
The 5 day cycle oscillator had just gone to the sell side in late trading yesterday. The futures are overriding that.
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, April 24, 2020.”
From coronavirus locked-in, and earthquake-ridden 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 Fed has taken its foot off the gas pedal. We’ve been watching this for a couple of weeks now. Crunch time is almost here. Be afraid. Because the Fed doesn’t have a clue what to do next.
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Gold has pulled back after breaking out of its trend channel. That’s usually a sign of a top. Now what?
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Short term cycles are due for tops and little pullbacks at least. If it doesn’t happen, it would be another sign that the long term cycles are back in up phases. But are these cycles, or just the manifestation of the power of the Fed to create the illusion of a market?
How do you trade it? With one eye on the ground and the other to the sky. Walk this way.
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The Fed’s massive bailout of Primary Dealers and its alphabet soup loan programs for all other big financial players, have now made moral hazard permanent and structural. Why worry about risk when you know that the Fed will always take you off the hook when the shit hits the fan?
How can we know how this will play out? How can we know if these loans can ever be repaid? Will they be repaid through inflation, perhaps hyperinflation? Or will the borrowers simply default if the markets and economy recover too slowly?
Then who will be on the hook for the Fed’s guarantees when the Fed must assume the losses? Who pays? Taxpayers? Depositors? Everyone, again through massive inflation?
Of course, there’s always a chance that everything turns out just fine. The world returns to normal in a few months. The economy bounces back, and all the trillions lent by the Fed gets repaid timely, with no financial price to be paid.
We don’t know, but there will be telltale signs in the weeks ahead that will give us a heads up.
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We expected the worst, and we’ve gotten it. But that does not mean that things will get better. The revenue trends had been strong. Now they’re awful, and spending is unimaginable. How can this be sustained? In this report, I’ll show you the data, and discuss how to handle what’s to come.
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