Stock Market Trading Setup for Monday, April 27, 2020

The Fed is really tightening the screws on Primary Dealers this week. So far, stock futures traders are laughing and farting in the bears’ general direction.

S&P Futures Daily Chart

The futures have been trading between 2814 and 2865 overnight and in the pre market. They’re up 26 at 2857at 8:15 AM in New York.

The uptrend channel at a slightly lower angle than the previous meltup channel from the March low is still intact. The bottom of that channel is at 2776 today. 2743 and 2705 also support levels. Below that is air space to the next support level at 2627.

The futures are hitting resistance around 2860 as I write this. The next resistance level is around 2885. Above that are wide open spaces to 3135. I expect a helluva battle at 2885. If it ever gets there. Call me a sheptick.

Rate of Change tuned to an 8 week cycle remains inconclusive. A downturn is definitely due. The current direction is flat, but the absolute level is still positive, indicating that the uptrend remains intact.

MACD tuned to the same cycle has looked toppy for a week. It was a tease. It’s inching higher. A market decline today could trigger a downturn, and thus a sell signal. Otherwise, the uptrend would remain on a day to day status. 

If this is still a bear market, we’re at the point that that needs to be proven by a real downturn. Say Kaddish for bears if the ES breaks through 2885.

Hourly ES S&P 500 Futures Chart

Both 3 and 5 day cycles are ideally due for downturns today.

Resistance is set at 2865. The futures are challenging that now. The 5 day cycle projection looks like 2870. Close enough.

This could be a double top. Or not. The price is dead center in an uptrend channel. Momentum and cycle indicators are moving sideways. Is it a top or consolidation? Oh, the suspense!

If they clear 2865 the next target appears to be 2876. The bottom of the uptrend channel will be around 2850 in the NY opening hour. The bears need to retake that to avoid extinction.

S&P Cash Index Hourly Chart 

The red bar at the far right shows where the futures traded overnight. It’s between 2814 and 2865.

Uptrend channel support starts the day at 2818 and ends at about 2834. Bears need to break that or they are in big trouble. The previous pivot high is 2875. There’s probably 100 points of clearance above that before a rally reached the next resistance area.

On the downside, there appears to be a lot of air between 2800 and 2750. That doesn’t appear to be in play, at least in the first half of the day. First, they would need to break that 2818-2834 uptrend line.