Shallow Thoughts
I got some hate mail overnight on Constantin Gurdgiev’s post about how badly the US is doing versus the COVID monster. Dr. Gurdgiev is one of the few economists in the world you should pay any attention to. I respect and admire him. He deals in fact, and reports those facts honestly.
But the Trumposphere is in an uproar, as usual attacking the messenger and proposing lies and excuses as alternatives to the facts. They can’t handle the truth.
They can spew their misinformation and disinformation somewhere else. I will not give them a platform here.
To those of you sending me this crap, you are wasting your breath. It goes into a black hole.
Today’s trading setup is below. Follow my Deeper Thoughts, with tips on how to preserve, protect, and defend your investment and trading capital, at Liquidity Trader.
Market Trading Setup for Friday, April 3, 2020
Hourly ES S&P 500 Futures Chart
The futures are bouncing around like a pogo stick here at 8:45 AM in New York. It started before the jobs report was released. I won’t comment on that report other than to say it’s irrelevant. Everybody knows what’s coming.
We now have two channels working, one up, and one sideways. An hourly close below 2486 would break the uptrend. They’d need to drop below 2475 to start a downtrend. There should be a little support for a bounce around 2455, if that happens.
The top of the range is at 2525. If that’s cleared, it’s off to the races for the Pamplona run. Initial target would be 2560, and 2600 later in the afternoon.
Hourly oscillators are stuck in weird sideways patterns around their zero lines. I mean, WTF is that? At least we know that moves that start at the zero line are usually big. So whichever way the range breaks should result in a sustained move.
I expanded the chart so that you can see the fibo levels from the rally off the low.
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.
S&P Futures Daily Chart
The daily chart gives a broader perspective. Overnight and pre market trading has been in a narrow range 2475 to 2525. The ES is above the crash channel from the February high, but still needs to clear 2560 for a breakout.
The
Rate of Change and MACD tuned to an 8 week cycle are bullish, suggesting that that breakout will happen. Th target would then be a test of the rally highof 2635. Then we’ll see.
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.
S&P Cash Index Hourly Chart
The red bar at the far right shows where the futures traded overnight. It’s between 2475 and 2525. Resistance is indicated at 2540 and 2575. That’s the top of a slight downtrend, based on equal height channel lines. If they clear that, we’ll get a full test of the high around 2650.
Support is now well established in the 2438-60 area. Downtrend channel support is around 2430. If that were to break, which looks unlikely today, the initial target area would be 2350.
The 5 day cycle oscillator is on the buy side, and has been since early yesterday, but my focus would be on how the market behaves around resistance levels. 
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, Friday, April 3, 2020.”
From coronavirus locked-in 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.
$321 Billion
That’s how much cash the Fed will pump into Primary Dealer accounts this week. Guess how much new Treasury issuance there will be over the same period. If you guessed $321 billion, you would be all but correct. It’s $328 billion.
That’s right. The Fed is buying all of the COVID19 rescue financing. It’s inventing imaginary money to pay Primary Dealers for that new supply. The Fed is printing the money to pay for the economic bailout.
And it’s not stabilizing the financial markets. Here’s why, and what it means.
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When the margin man came collecting on other stuff, gold got dumped. Once he left, gold came right back. What does it mean for the long haul?
Plus a few mining picks with low risk entries and good upside potential.
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Try Lee Adler’s Gold Trader risk free for 90 days!
The Fed injected around $600 billion into the markets and the banking system last week. That’s about $2,000 for every American, and it was just one weekly installment. All in the valley of Death rode the 600. We are the 600 and the Fed is leading us into the valley of Death.
Meanwhile banking indicators suggest that the sickness is getting worse, not better.
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Massive Fed intervention turned the market, although cyclicality was favorable. The 6 month cycle low was overdue. But is it something more than that?
Technical Trader subscribers, click here to download the report.
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On March 3, the Fed converted Not QE into Panic QE. Since then it has pumped $766 billion in cash into Primary Dealer accounts. At the same time the US Treasury issued “only” $147 billion in new debt. So in essence, the Fed issued $619 billion in excess cash.
Other than the hyperinflationary implications, what good has it done? What does it mean for us looking ahead.
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Even before COVID-19 the trend was clear that the Treasury would need to keep borrowing money hand over fist. Now the deficit will explode. This is a hideous problem for financial markets in this condition.
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