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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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.
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.
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.
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“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.
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