It’s Fed Carnival! That’s in honor of the Fed bailing out the sinking Carnival Cruise Lines. What will it think of next to bail out its cronies, and the markets? Here are a few thoughts.
Meanwhile here’s a look at how the stock market sets up today.
Stock Market Trading Setup for Wednesday, April 29, 2020
S&P Futures Daily Chart
The futures have been trading between 2871 and 2917 overnight and in the pre market. They’re up 43 at 2911 at 8:55 AM in New York. This looks like a full blown breakout through major resistance at 2882. That theoretically now becomes support.
The market is now just below mid channel in an uptrend channel at a slightly lower angle than the previous meltup channel from the March low. The bottom of that channel is at 2820 today. The centerline is at 2930. If that’s cleared, this thing will really explode higher, with no meaningful resistance indicated below 3020.
Rate of Change tuned to an 8 week cycle is bullish, both in terms of direction and absolute level. A downturn is due, but as long as the indicator is in positive territory, I wouldn’t get too bearish. I wouldn’t get too excited about the negative divergence either. Unless the market turns down from here. Then it might mean something. For now, no.
MACD tuned to the same cycle has accelerated and is now at 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.
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 are headed for trend resistance at 2925 on the hourly chart. It has already broken out of a shorter term uptrend channel that developed since last night. How crazy is this?
Ending the first hour below 2918 would put the market back within that channel and signal at least an intraday trend top. But if they stay above that, look for much higher prices.
If they do pull back, intraday support levels would be 2910 and 2905. Bulls would remain in charge above that. In fact, the bottom of the intraday uptrend channel is now at roughly 2885, rising to 2895 at the bell. That would need to be broken to turn the outlook even modestly bearish.
There’s no 5 day cycle projection yet. A 3 day cycle projection of 2925-30 is all but done. So there’s that.
Momentum, True Strength and MACD tuned to a 5 day cycle remain bullish. Those cycles are ideally due to peak today or tomorrow. This is a recipe for strength to continue through today’s Fed announcement–a classic faith in the Fed rally. Then we’ll see.
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.”
“And that’s the way it is, Wednesday, April 29, 2020.”
From coronavirus locked-in, and earthquake-ridden 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.
It may be. Here’s what to look for, and a few mining stocks to ride along the way.
Massive Fed intervention has once again tilted the long term playing field. Evidence is increasing that we will not see the March low materially exceeded in nominal terms. This may have little meaning in terms of the future purchasing power of a dollar, but at least nominally the worst seems over. The Fed has won this round and is, for now, again in control of the stock market.
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