Stock Market Trading Setup for Thursday, February 13, 2020

I have been beset with brainfarts lately. Must be old age setting in. Bad enough when you let em loose in the sofa cushions, but in headlines on your own website? Oh Gawd, how embarrassing!

Did I get the date right in the headline today? I have since fixed yesterday’s post. But once it’s out there, everybody knows who did it. It was Grandpa again.

However, I did get a few things right yesterday, such as “The hourly chart of the ES futures suggest that a push to 3375 is in order. Then we rollover.  Then the question is how far.”

This morning, so far, so good. The pullback has come to the centerline of the short term channel. That centerline is at 3352.

The market “should” now bounce. What the market “should” do from a technical perspective, it only does about 70% of the time. Ornery bastard. If it doesn’t, it could head for the lower channel bound at 3322 in a NY second. 

If it bounces, if I were a bear (ahem), I’d hope for a lower right shoulder in this pattern.

Meanwhile, momentum and cycle indicators are pregnant. With bull or bear, we don’t know. A weak bounce or a morning move below 3352 would call for bear.

Over in China, Good Gawd Y’all. We finally had a down day. Praise the Lawd and pass the Twice Cooked Beef.

Notice, it filled almost all of the gap but left a teensy weensy bit open. And note where it stopped. Right at the busted uptrend line. What a surprise! Not.

We actually foresaw this in the oracles back on Gapday. Sometimes TA works — even the simple stuff, like drawing a straight line between two points. This classic Return to the Scene of the Crime (support break) pattern, happens a lot.

That said, this is still really an ambiguous setup. A rollover here should lead to a dramatic drop toward a retest of the low. Conversely, a holding action near the trendline should lead to a renewal of the rally, heading for 3100.

Meanwhile, back in New York, the daily chart of the US futures shows a tiny pullback that has slightly violated the short term uptrend channel. They are flirting with disaster here. If they break this, the S&P could fall all the way to, my gawd 3325. Trump will be livid. Powell will have to bend over some more.

I will say this. The technical oscillators at the bottom of the chart look really, really sick, considering we just saw another all-time high. Any downtick from here would be pretty damn bearish, I think.

Below is the S&P index (cash) hourly chart. The green oval at the far right is where the futures have been trading this morning. That’s pretty dramatic. As of 7:45 AM, we’re about in the middle of that sucker.

The 5-day cycle oscillator went on a sell signal yesterday. A 2-3 day cycle bounce is in order, but the downside pressure should return at some point today, and into tomorrow. 3352 looks like the key support level. If it breaks, bear party. Farts and all.

If they hold above that we’ll live with ambiguity for as long as the SPX stays rangebound between 3352 and 3380.

“And that’s the way it is, Thursday, February 13, 2020.” 

From Zadar, Croatia, good morning. 

Where have you gone, Walter Cronkite? Our nation turns its lonely eyes to you.