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Climb Every Market, Buy Every Death- Daily Stock Market Setup – May 7, 2020

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.

COVID19 US Death Toll Chart

Liquidity moves markets!

Follow the money. Find the profits! 

Source: https://www.worldometers.info/coronavirus/country/us/

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!

Georgia COVID19 Deaths Chart Source: https://datausa.io/coronavirus#cases-adj

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 

Yesterday’s post.

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.

S&P 500 ES Futures Chart

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.

ES Futures Hourly Chart

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. 

Here’s Where You Should Start To Worry About Gold

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.

Subscribers, click here to download report.

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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. 

  2 comments for “Climb Every Market, Buy Every Death- Daily Stock Market Setup – May 7, 2020

  1. Keith Thacker
    May 7, 2020 at 9:12 pm

    You should leave politics out of your work because I am seriously considering not reading your work & never giving you my money again! Your bias is leftist hatred. Any only divides our Country. You think the only people who read you are Leftist Democrats?!? The bible says, we are to pray for our leaders. God decides who our leaders are & Trump was a God send. Now saying that I Hate some of the things he does. & his lies have to go. But you can`t throw the baby out with the bath water. I have been reading you & learning from you for years. I hope you can you will make adjustments. : ]

  2. May 8, 2020 at 4:33 am

    I deal in that which is observable. There are observable events. There are numbers. There’s data. And of course there are fantasies for anyone who chooses to believe them. I don’t concern myself with unobservable and unprovable myths, fantasy, and folk legend. I report what I see. I analyze those observations and state my conclusions.

    I will continue to do that. When the facts call for adjustments in my thinking, I make them as a matter of course.

    Sometimes my analysis annoys or angers people. I lose business as a result. I have never catered to a particular “crowd” and I never will. My criticism of the Obama Administration was frequent and deep. I have lost readers and subscribers of all political persuasions through the years.

    So be it.

    I am sorry that my reporting upsets you. I obviously would prefer that everyone agree with me wholeheartedly. I at least hope that I stimulate those who disagree, to at least think about things differently. I appreciate your support, and I hope that you continue to learn from everything in life, just as I continue to learn from the facts as they present themselves, day to day.

    Watch the numbers in Georgia in the weeks ahead. That will tell the story of how many die, who dies, and how many people get a job again.

    Lee

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