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The Cure and Off to the Races.

S&P 500 ES Futures Chart

Market Trading Setup for Friday, April 17, 2020

Yesterday’s post.

That was a perfect setup for a launch at the bell yesterday. A lot of big boys knew what was coming and how to position for it. Then just after the bell news came out that a drug being tested for treating COVID19 was showing good results. BOOM!

Let’s look at the daily chart first. Perspective is critical today so the big picture first.

S&P Futures Daily Chart 

The futures have been trading in a tiny range between 2851 and 2884 overnight and in the pre market, with trading currently at 2866 at 8:00 AM in New York.

Isn’t it interesting that trading is pinned in the tiny range that marked a key support/resistance zone on the way down.  Obviously, a extension of the move beyond 2884 would open the way for a massive move to 3135, very quickly.

That, by the way, would be a 78.6% fibonacci retracement of the crash. Before that would be the 61.8% retracement at 2929. Wouldn’t that be special if it topped out there.

On the other hand, if the rally stalls here, considering that the trend is your friend, it would be downright unfriendly. In that case, expect an immediate pullback to the uptrend line at 2785.

By the way, check out where yesterday’s pullback stopped. I pointed this out yesterday morning.

“The overnight bounce began after the futures came exactly, EXACTLY, to the trendline from the March low. Funny how that works.” 

They tested that area several times during the day, and each time, it held. That was the giveaway that this thing was headed higher.

S&P 500 ES Futures Chart

Now, I don’t know how many days in a row I have not needed to rewrite the next paragraph, but it’s annoying, to say the least.

Rate of Change and MACD tuned to an 8 week cycle remain very bullish, but stretched.  If this is a bear market, we’re getting to the point that that needs to be proven by a real stall in the rally.  The benefit of the doubt still goes to the bools here.  

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 S&P ES has traded in a very tight range overnight as the traders await the verdict of the judges at the New York trading desks. That range is 2850 to 2885.

Trend resistance is slightly above at 2890, so don’t get too excited if they clear 2885. If they get through 2890, then the next target is resistance at 2904.

The 5 day cycle projection is 2910-20.

If they fall below 2850 early, trend support is just below that at 2845, then 2850 around 11 AM. There are actually multiple support lines in the 2840-45 area. If that doesn’t hold, then the big trend support comes up at roughly 2820.

Hourly indicators tuned to a 5 day cycle frequency surged after the close in New York yesterday and have marked time since then. The pattern is actually slightly bearish now, but it could resolve either way once New York opens.

ES Futures Hourly Chart

I think it’s likely that the trend is still your friend and that they’ll attack the 5 day cycle projection. If they clear 2900, it’s hard to envision this not continuing within the bigger uptrend channel.

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 2850 and 2885. There’s a resistance cluster on this chart around 2870-75. Watch how the cash market behaves around that. If it holds above, then resistance at 2910 would be the target, then 2920, and 2950 above that.

Trend support is around 2850. If they break, then we’d be looking at the 2750 area for trend support. The trendline from the March low is around 2700 today.

The 5 day cycle oscillator is turned to the buy side in the last 2 hours yesterday. It was a timely signal for a change. The question is how much of the implied gain will be realized on the open today. My overall impression of this chart is that it looks like a catapult to at least 2950.

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, Friday, April 17, 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. 

Expecting The Worst and Getting It

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.

Subscribers, click here to download the report.

Get this report and access to past and future reports.  Read Lee Adler’s Liquidity Trader risk free for 90 days!

 

Fed Takes Its Foot Off the Gas

I warned about it last week when the Fed’s POMO schedule first showed a reduced purchase rate. The Fed is taking its foot off the gas pedal. Here’s what that means for your stocks and bonds.

Subscribers, click here to download the report

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90 Days Risk Free If You Join Now!

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What’s the Context, Bear or Bull?

What happens this week could tell us whether we’re in a bull or bear market.

As of 4:15 AM ET on Monday, virtually all of Thursday’s market gain has been wiped out. The S&P futures were trading at 2742, which would put the S&P cash index back below the centerline of the trend channel. Bears would have a foothold, but it’s where Monday finishes that matters, not where it starts.

Here are the critical parameters and levels you need to know to be positioned correctly.

Technical Trader subscribers, click here to download the report.

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

 

 

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