Fed Codifies Friday’s Intervention, Market Goes Limit Down Again

Hourly ES S&P 500 Futures Chart

The Fed pretended to fire a bazooka on Sunday with its announcement of $700 billion in market intervention in outright purchases. But it was really a popgun. The Fed had committed to the $500 billion in outright Treasury purchases. The only thing new was the $200 billion in MBS.

But even this doesn’t matter, because the Fed is really operating on a reactive, ad hoc basis. The truth is, we don’t know what they’ll do tomorrow, because they don’t know.

The fact is that so far at least, nothing the Fed does has worked.

The S&P fucutures have been limit down since the opened last night. That limit is now 100 points, putting the ES at 2555 before the New York open.

An hourly bar that ends the hour below 2555 will break the incipient uptrend channel. Then where is support? Maybe 2400, where it bottomed last week. If not there, then we’d be looking way back in time for support, to the 2018 low of 2330 or thereabouts.

And where do they need to be to break the crash. I’d say an hourly close above 2600 for starters.

ES Futures Hourly Chart

Momentum and cycle indicators have just rolled over. There’s no law that says they can’t turn back up instantly, but until they do, this won’t be good.

Reminder- I’m only talking a day or so. This is not the big picture.

S&P Futures Daily Chart

On the daily chart, we can’t even see today’s trading because of the fact that it has been locked at one price for the entire overnight session. Again, this is for the perspective of one day only. The purpose of these reports is not to divine the longer term. 

So the latest and sharpest crash channel remains intact. It’s so sharp that it’s hard to tell just what the market would need to do today to clear it, but let’s say 2650 give or take 10. Anything less than that, and the crash will continue, and will set new lows.

“Support” is suggested around 2450If they drop under 2400, then 2317 would be the target. Below that, abandon hope, all ye who enter.

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