Stock Market Trading Setup for Tuesday, April 21, 2020
The ES futures have broken the uptrend line from the March low. Is it healthy or ominous?
S&P Futures Daily Chart
The futures have been trading in a between 2750 and 2833 overnight and in the pre market, down 47 at 2760 at 8:30 AM in New York.
This decisively breaks the trendline of the uptrend channel from the March low. It also breaks a shorter trend at a lower angle that evolved over the past week. However, it is still holding above a support level at 2745. I would look for a bounce from here, but if this level breaks, either this morning or later, the selling will probably increase.
The next support level would be around 2705-10. Then there’s air to about 2620-25.
In the event of a rally, look for resistance around 2800.
Rate of Change tuned to an 8 week cycle has edged to the sell side. MACD tuned to the same cycle looks toppy. Sell signals come typically on the first hard down day of a new down phase. Barring a miracle, these signals will become clear today.
If this is still a bear market, we’re getting to the point that that needs to be proven by a real downturn. That could happen today.
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 downtrend has been orderly on the hourly chart since the breakdown of the downsloping range last night. The decline has reached support at 2750. There should be a bounce here, but it will probably be short lived, if it even happens.
The 5 day cycle projection on the futures is 2720.
If 2750 holds, then we’d look for downtrend resistance coming down from 2790 to 2760 between now and 4 PM in New York.
Hourly indicators tuned to a 5 day cycle frequency are still bearish as of 8:45 AM. They have reached levels where recent minor lows have occurred. But the key is whether support at 2750 holds. A brief rally would result in short lived buy signals that return the indicators to near neutral, where they might roll over again. Such a setup could open the jaws of hell.
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 2750 and 2833. The futures suggest a cash open around 2740. That would crush the uptrend line from the March low, which is now situated at roughly 2790. That would be resistance if there’s a rally. The 2760-70 area should also be resistance.
The next support level is around 2720. If trading in the first hour is around 2750-60, then the 5 day cycle projection would be roughly 2730.
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, April 21, 2020.”
From coronavirus locked-in Zagreb, Croatia, good morning!
Where have you gone Walter Cronkite? Our nation turns its lonely eyes to you.
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