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