Stock Market Trading Setup for Friday, April 24, 2020

The market is on easy street today. It’s getting its usually daily injection from the Fed, while the Treasury is sidelined, not doing any borrowing today. So all that cash gets to sit around for a whole 4 days until a new wad of Treasury supply hits.

Meanwhile, at the Dear Leader’s suggestion, Trump supporters inject themselves with bleach or isopropyl alcohol to stave off infection with the virus. That’s a good thing. Let’s hope it’s the start of a trend that flattens the curve so we can all get back to normal lives.

S&P Futures Daily Chart

The futures have been trading between 2755 and 2807 overnight and in the pre market. They’re up 20 at 2801at 8:35 AM in New York.

This 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 2756 today. 2743 and 2705 are also support levels. Below that is air space to the next support level at 2627.

The closest resistance is around 2835 and 2855.

Rate of Change tuned to an 8 week cycle is inconclusive. Direction is uncertain, but absolute level is still positive, indicating that the uptrend remains intact.

MACD tuned to the same cycle has looked toppy for a couple days, but it’s inching highe. A market decline today could trigger a downturn, and thus a sell signal. Otherwise, the uptrend would remain on 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.

Hourly ES S&P 500 Futures Chart

The 5 day cycle is in a down phase that is moving sideways. That’s usually a sign that the next move will be up.

An hourly close below 2755 would be needed to activate the potential for a potential right shoulder in a potential top. That’s still a lot of wishful thinking for bears, even more than yesterday.

On the other hand, an hourly close above 2808 could trigger a move to 2825, where they’d start to run into resistance again.

Hourly indicators tuned to a 5 day cycle frequency were bullish at 8:45 AM ET. Really, really bullish.

The key to the next move is the resistance cluster at 2800-08. If market rolls over in the early going, that would give the bears a shot. Otherwise, blastoff! 

S&P Cash Index Hourly Chart 

The red bar at the far right shows where the futures traded overnight. It’s between 2755 and 2807.

There’s a downtrend line at 2825 early that represents important resistance. If it’s cleared, the initial target would be 2845. If they don’t clear it, bears get the ball back.

On the downside, there appears to be a lot of air between 2800 and 2750. 2735-50 is critical support.

The 5 day cycle oscillator had just gone to the sell side in late trading yesterday. The futures are overriding that.