The Ghost of the Bull, Now You See It, Now You Don’t

Shallow Thoughts

Market Trading Setup for Thursday, April 16, 2020

Yesterday’s post.

Hourly ES S&P 500 Futures Chart

The S&P ES has spent the morning backtracking after a solid pop when European markets opened this morning. At 8:25 AM in New York, we were back to unchanged at 2775. Trading has been rangebound for a week, as multiple trends criscross each other.

Key trend support is now at 2765. Below that, 2750 looks like important support. Anything below that would be a clear downtrend, with trend support looking like 2720. That’s also a critical support level from prior minor lows. Dropping below that would signal downside acceleration.

On the upside, there’s a trend resistance convergence at 2790. 2805, and 2820 also look like resistance areas. The big one is trend resistance at 2840. Bulls would be in complete control if that’s cleared.

Hourly indicators tuned to a 5 day cycle frequency have paused after coming off the cycle low overnight. This puts the market at a fulcrum, with a sizable move likely either way, once the balance is tipped.  A resumption of the rally this morning would trigger strong buy signals on these indicators. Likewise, a decline in the futures below 2765 could set off strong sell signals in these measures.

AAAAANNNNNDDDD, just as I finished the above, the market celebrated 5.2 million unemployment claims filed last week. Futures rise to the top of the downtrend 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 Futures Daily Chart 

The daily chart gives a broader perspective. The futures have been traded between 2747 and 2805 overnight and in the pre market, with trading currently at 2792 at 8:38 AM in New York. So 2747 is the number to watch for support today. Resistance is around 2855-60. That’s a big range. Any trading within that range is meaningless noise.

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

Should the uptrend break, the next critical support level would be around 2700. In fact, I’d look at the whole 2700- 2868 range as the zone of nothingness, but fun for day traders since the market seems technically well behaved on the intraday charts.

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. But if 2747 breaks and there’s follow through, bears’ ball.  

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 2747 and 2805. Resistance is indicated at 2815-20. Based on where the futures are trading, the market should open near there.

Trend support is around 2785 in the opening hour. 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 heading down from the third lower high in a huge negative divergence. That would normally be very bearish. The 5 day cycle should be in the meat of its down phase today and tomorrow. It would be a bullish surprise if the market doesn’t break down today.

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 16, 2020.”