The BLS reported a seasonally adjusted 20.5 million jobs lost in April and stocks rallied on the news. Wall Street loves both death and unemployment apparently.
Stock Market Trading Setup for Friday, May 8, 2020
S&P Futures Daily Chart
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The ES futures were up 25 at 2905 at 8:20 AM in New York, 10 minutes before the jobs report. That’s up 49 from where they were this time yesterday. Rocket launch.
They have traded in tight a range of 2893 to 2922 overnight and this morning. They were virtually on the centerline of the latest uptrend channel. Having broken through what had been resistance at 2886, that now theoretically becomes support. The next support level would be around 2855-60. The bottom of the uptrend channel is at approximately 2910. That would need to be broke, at a minimum, for there to be a chance of a downtrend developing.
The daily oscillators tuned to an 8 week cycle are bullish on balance.
Rate of Change has turned up near the zero line. Upturns from around the zero line are normally very bullish.
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 rallied 6 points to 2931 on the knee jerk reaction to the jobs report. That changes nothing from the TA perspective. However, the ES is threatening to break the 2 day uptrend channel. That line is now at 2908.
The next support level below that is 2901, then about 2895 and 2888. If they break that, the overnight breakout would be aborted. Holding above that would keep bulls in charge.
Hourly resistance is around 2921. Breaking through that would probably send the market on a tear.
The Hurst 3 and 5 day cycle projections are around 2935.
Momentum, True Strength, and MACD tuned to a 5 day cycle are mixed. The two smooth indicators are moving sideways at high levels, which is bullish hour to hour. But rate of change is trending down. That’s normally bearish. But if the ES stays above 2920 in the 9-10 AM hour, the bullish trend would remain intact.
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