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Ahead to the Past- Daily Stock Market Setup – May 6, 2020

A month ago the Fed was buying all new Treasury issuance and then some. Now it’s nowhere close to doing that. So is the Fed doing enough to keep the short term bull trend going? Here’s today’s technical setup.

Stock Market Trading Setup for Wednesday, May 6, 2020

S&P Futures Daily Chart 

Yesterday’s post.

The ES futures are up 21 at 2881 at 7:30 AM in New York. They have traded in a range of 2844 to 2886 overnight and this morning. They are near the center of the latest uptrend channel. Resistance is indicated at 2886 and support at 2800.

In the event of a breakout, the next target to the upside would be trend resistance at roughly 2910. Above that, the next target would be the last minor peak of 2965. While 2800 looks unlikely to be broken, if it is, then look for support around 2775, 2742, and 2700.

S&P 500 ES Futures Chart

This Week Will Tell If The Bear is Really Coming Out of Hibernation

Last week’s selloff did less damage than it may have felt like. The drop stopped in the area of 3 crossing uptrend lines, ranging in length from short term to long term. Here’s what would tell us whether the uptrend is still in force, or signal that something evil this way comes. I have added 8 new stocks to the swing trade chart pick list, including 2 shorts.

The daily oscillators tuned to an 8 week cycle are bullish on balance.

Rate of Change has turned up from near the zero line. Upturns from around the zero line are normally very bullish. However, the downtrend in that indicator isn’t broken yet. So follow through is needed today to make that bullish in the bigger scheme of things.

MACD tuned to the same cycle has been moving sideways above the level reached in the Q4-Q1 advance. This signifies that the market is in trending mode. This indicator stayed near this level for 3 months before the market topped out. I wouldn’t get bearish until this heads down and price breaks support.  As long as this indicator stays flat up here, it’s bullish. 

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, I cover that in the Technical Trader service at Lee Adler’s Liquidity Trader. 

Hourly ES S&P 500 Futures Chart

A weak uptrend hangs in the balance as I write, with the futures at 2876 and dropping. That looks like a support level as does 2873. Trend support is around 2865, rising to 2800 at 4 PM. But even breaking that would not give the bears the ball back. There are multiple support lines, both trend and level all the way down to around 2831.

ES Futures Hourly Chart

The Hurst 5 day cycle projection is around 2915. Obviously, they’d need to clear resistance at 2888. Then that would be a reasonable target. Otherwise, fuhgeddaboudit.

Momentum, True Strength, and MACD tuned to a 5 day cycle are mixed. Momentum has just gone to the sell side. Any more pre market weakness from here should be a good sell signal for the day. The two smoother indicators should follow.

However, a rebound that sees the ES exceed 2888 would probably trigger renewed buy signals. The 2870-88 range is the zone of uncertainty.

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.

Join me on the message board today and I will update you there occasionally during the day. Feel free to join the “fun.”

Meanwhile, here are the latest reports from Lee Adler’s Liquidity Trader. 

Here’s Where You Should Start To Worry About Gold

Gold is consolidating. The uptrend will be safe as long as a key support level holds. This report looks at where to start worrying, and where the upside targets are if all goes well.

Subscribers, click here to download report.

Try Lee Adler’s Gold Trader risk free for 90 days!  


Lee Adler

I’ve been publishing The Wall Street Examiner and its predecessor since October 2000. I also publish, 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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