The market action of the past 36 hours suggests that the money is gone.
Meanwhile here’s a look at how the stock market sets up today.
Stock Market Trading Setup for Friday, May 1, 2020
S&P Futures Daily Chart
The ES futures are down a chill 60 at 2842 at 8:40 AM in New York. That’s down about 80 this time yesterday. Pretty soon you’re talking real money.
The market has edged below the uptrend channel it was in for the past couple of weeks, which was at a slightly lower angle than the previous meltup channel from the March low. The bottom of the channel is at 2860 today. 18 points is easily recoverable in this environment.
But the daily oscillators tuned to an 8 week cycle are no longer bullish. They’ve begun to roll over. Rate of Change tuned to an 8 week cycle has turned down from a negative divergence. Those are usually good sell signals. Absolute level is still bullish but it won’t be if this decline extends from here, or is followed by a down day on Monday.
MACD tuned to the same cycle has edged lower from above the level reached in the Q4-Q1 advance. Note that it stayed up there for 3 months before the market topped out. Ugly. I wouldn’t get bearish until this heads down and price breaks support. Today could be the day, but if the market rebounds here, it can continue trending for days, if not weeks. This is very much day to day.
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 futures are working within 2 downtrend channels that began yesterday. They’re bumping up against the top of the sharper of the two at 2845 here near 9 AM in New York. That was also a significnt support level marking prior minor lows. Whether it remains support or becomes resistance all depends on what happens over the next few hours.
The 5 day cycle projection says that they’re going to 2810. There’s a trend support level there as well. Seems like a reasonable target.
Resistance levels are suggested around 2855 and 2862. If those are cleared, then “Buy the Dip” remains in force and the bearish outlook is off the table.
Momentum, True Strength and MACD tuned to a 5 day cycle look bottomy. That’s not necessarily bullish. A trading range that sees these indicators rise to near neutral could set up another washout. In order for the daily pattern to turn bullish, they’d need to clear 2862.
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 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, May 1, 2020.”
From coronavirus partly reopened, and earthquake-recovering 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.
