The more deaths, the more the market rallies. Yesterday’s US COVID 19 death toll was 2,528, the highest since April 21. The University of Washington model, which has been pretty accurate, now calls for 3,000 deaths a day in June as states reopen their economies.
Liquidity moves markets!Follow the money. Find the profits!
Notice that the daily death toll has broken out above the 7 day moving average, and that moving average just upticked. BULLISH! BUY DEATH!
This must make Trump and GOP politicians happy because most of those dying are… drum roll please…Democrats! So let’s hurry up and get those big states with the biggest cities reopened. Can you say, “Atlanta,” Governor Kemp?
And just think when they open New York, Chicago, Philly, Detroit, and Milwaukee. Especially Philly, where 90% of the population is… say it with me now! DEMOCRATS, in a battleground state. Without Philly, Trump wins PA. So it’s not just death, it’s Democrat death in battleground states! Whoopie. The RNC must be drooling in anticipation.
It gives the concept of voter suppression a whole new edginess.
It’s just so inspiring to see stocks rally on this news, don’t you agree? It will be interesting to see if the S&P keeps pace with the death toll. At the moment, the S&P is in the lead, but not by much.
Sarcasm aside, job losses are terrible, especially if it means you can’t feed your kids. I know people who are in that situation. So yes, we need to get the economy reopened.
But jeez, couldn’t they have waited just a couple more weeks to get this thing tamped down just a little? Is Trump’s reelection and control of the Senate more important than the life of a kid’s grandma?
The Georgia experiment in aggressive reopening will be interesting. What will the economic gain cost in human life? Right now Georgia’s COVID19 confirmed case death rate is running 1000 per month. 5,765 COVID19 patients were hospitalized in Georgia on May 6. May they all survive and return to health.
Save the grannies!
Meanwhile, there’s nothing new on the Fed QE front. Yesterday’s comments still apply. For in depth analysis, including what to expect and its impact on the markets check out Liquidity Trader.
Stock Market Trading Setup for Thursday, May 7, 2020
S&P Futures Daily Chart
The ES futures are up 44 at 2877 at 8:30 AM in New York. That’s down 4 from where they were this time yesterday. The market has been a roller coaster.
They have traded in a range of 2834 to 2881 overnight and this morning. They are below the centerline of the latest uptrend channel. Resistance is indicated at 2886 and support at approximately 2805 (trendline) and 2775 (last minor low).
In the event of a breakout, the next target to the upside would be the trend centerline around 2900, and the previous high around 2965. Below 2775, the next support levels would be 2742 and 2700.
The daily oscillators tuned to an 8 week cycle are still mildly bullish on balance.
Rate of Change is floating near the zero line. Upturns from around the zero line are normally very bullish. Downturns from near the zero line are usually bearish as hell. That means that the market is at that often present inflection point that the talking heads love to talk about. I call it a fulcrum. This is definitely one of those.
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
The futures have been melting up in a straight line overnight. They’re threatening a breakout through trend resistance at 2878. The last minor high at 2880 and 2888 should also be resistance. If those are cleared, then the next battle zone would be around 2900.
Support is just below at roughly 2870, and then 2860 or so. Things could get rolling to the downside if they break that. The market should be thin to 2820.
There are no 3 or 5 day cycle projections yet, but if the market hangs around this level or moves higher, then we’d be looking at a 3 day cycle projection of 2915. An hourly close below 2870 would probably render that moot.
Momentum, True Strength, and MACD tuned to a 5 day cycle are bullish and there’s plenty of time left on the upside 5 day cycle clock. So the odds favor the upside today. 2870 is the key. As long as that holds, the bullish case gets the benefit of the doubt.
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.”
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.