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BTFD Again? Daily Stock Market Setup – May 4, 2020

The market has sold off overnight again, but it’s trying to find its footing and hourly indicators are bullish.

Stock Market Trading Setup for Monday, May 4, 2020

S&P Futures Daily Chart 

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Yesterday’s post.

The ES futures are down 18 at 2803 at 8:50 AM in New York. This is a breakdown from a 3 week uptrend channel, but it’s hanging on to a new channel by the skin of its teeth. The bottom of that channel is right around 2800 today. If that gives way, support targets are around 2745 and 2710-15. 

Resistance is suggested around 2860 and 2880. 

S&P 500 ES Futures Chart

The daily oscillators tuned to an 8 week cycle are slightly bearish. 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. However, the absolute level is still bullish but it won’t be if this decline extends from here. If the current level holds, then the trend is still bullish. 

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 have broken out of the downtrend channel that began Thursday.

The 5 day cycle projection was 2760. The low of the move last night was 2771. We’re splitting hairs at this point. Hourly indicators say that the bottom is in. However, resistance is indicated at 2807 and 2811. They need to be cleared to start a new uptrend. Otherwise the low could be tested and a trading range set up.

The next support level, and target if the low is broken, would be around 2750. If they clear resistance, then buy the dip still rules. The first target would be 2835.

ES Futures Hourly Chart

Momentum, True Strength and MACD tuned to a 5 day cycle are bullish. However, 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 2812.

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, Monday, May 4, 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. 

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Lee Adler

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