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As expected, the S&P 500 had a down session yesterday. Opening with a sizable gap, the bears continued their push to move prices lower. Since the futures have been pointing higher before the unemployment claims came in, does it mark a tradable turnaround?

In short, that's unlikely. Let's start though with the daily chart examination (charts courtesy of http://stockcharts.com).

The days of inside candles are over as stocks indeed rolled over to the downside. These were our yesterday's observations:

(...) Stocks closed near the daily lows on Tuesday, and did so on higher volume than was the case on Monday. Another point speaking for the bears is that yesterday's upswing attempt was again soundly rejected. And still, the daily indicators are increasingly and tellingly curling lower.

The above holds true also today, and perhaps even more so as the daily indicators' examination reveals. Yesterday's bearish gap continues to support the bears, and we certainly expect the downside move to continue over the coming days.

Let's check again the high-yield corporate debt chart (HYG ETF). It should confirm the move lower in stocks, shouldn't it?

It does confirm it. That's what we noted about HYG yesterday:

(...) The relentless yet decelerating climb higher has stopped, and there's a good chance that we'll see its way lower prices ahead, which would confirm the developing downswing in stocks.

But does that mean stocks would move in a straight line lower now? Let's check the perspectives of both the stock and bond market, in order to check their relative dynamics.

The above charts overlays the corporate debt ETF's candles with the stock index line. Comparing the magnitude of yesterday's downswing shows that stocks are a bit ahead in the sliding game. Unless HYG declines more meaningfully today, stocks are likely to take a short-term pause as they have declined more profoundly yesterday. The emphasis here goes to short-term (which implies that any potential upswing certainly isn't going to be a tradable opportunity) - unless we see a turnaround in the debt market, any potential stock upswing doesn't really have legs.

Summing up, the bears enjoy the upper hand as can be seen on both the weekly and daily charts. The renewed downswing is underway, and lower S&P 500 (and SPY ETF) values are ahead. The daily indicators, high-yield corporate debt market and fundamental prospects of more coronavirus pain and its reflection in market prices mean that our open and increasingly profitable short position remains justified.

If you enjoyed the above analysis and would like to receive daily premium follow-ups, we encourage you to sign up for our Stock Trading Alerts to also benefit from the trading action we describe - the moment it happens. The full analysis includes more details about our current positions and levels to watch before deciding to open any new ones or where to close existing ones.

Thank you.

Monica Kingsley
Stock Trading Strategist
Sunshine Profits - Effective Investments through Diligence and Care

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The quarter-end window dressing is over, and with it goes also the treading of water in stocks. Not that the signs of deterioration wouldn't have been apparent already yesterday, as our loyal readers know. And in today's premarket trading, the S&P 500 is sliding lower in tune with our analysis and much to our subscribers' delight.

Let's start with checking the daily chart (charts courtesy of http://stockcharts.com).

While yesterday' candle was again an inside one, it contains even more clues about the upcoming S&P 500 move than Monday's one. These were our Monday's observations regarding its meaning:

(...) it is indeed rich in indications. Its shape is bearish thanks to the large upper knot and prices closing near the daily lows. As the daily volume was lower than that on preceding up days, thus marking the bears' unwillingness to participate heavily in a reversal so far, we might still get another attempt to move higher.

But that's unlikely to overcome Thursday's highs in any lasting way, in our opinion. The pace of RSI and CCI rise is already weakening after they both reached their mid-range readings. While Stochastics is still on a daily buy signal, that can change pretty fast - even with a couple of days' sideways action only.

But still, we expect the return of the bears in the coming sessions as the most likely scenario.

Stocks closed near the daily lows on Tuesday, and did so on higher volume than was the case on Monday. Another point speaking for the bears is that yesterday's upswing attempt was again soundly rejected. And still, the daily indicators are increasingly and tellingly curling lower.

Food for thought, these were our yesterday's words. And where are the futures trading at this moment? While the ADP employment data weren't horrendous, stocks keep trading at around 2480 - yes, that's full 100-points lower than they closed the day before.

We're riding this profitable downside move, and certainly expect our profits to get bigger in the coming hours and days.

Let's check also the high-yield corporate debt chart (HYG ETF). Does it confirm the move lower in stocks, and portend more stress to come?

It does. Yesterday certainly marked a day of weakness in high-yield corporate debt. The relentless yet decelerating climb higher has stopped, and there's a good chance that we'll see its way lower prices ahead, which would confirm the developing downswing in stocks.

That's our yesterday's conclusion:

(...) The market appears to be in the opening moments of doubting whether these solutions will indeed stick.

And indeed, the recent Trump speech warning of more hardship in the weeks ahead, and the speculation about a new stimulus (doesn't that imply that the current one didn't dazzle the market?) are the likely fundamental catalysts behind.

Summing up, despite the weekly chart's price action, the bears still have the upper hand, which will show up more prominently once today's session is over. The temporary upswing appears history now, and the bears are on the move. Both the daily indicators, high-yield corporate debt market and fundamental prospects of more coronavirus pain ahead support the move lower. Our open and profitable short position remains justified, and we fully expect the gains to grow considerably. Stay tuned, be healthy and safe!

If you enjoyed the above analysis and would like to receive daily premium follow-ups, we encourage you to sign up for our Stock Trading Alerts to also benefit from the trading action we describe - the moment it happens. The full analysis includes more details about our current positions and levels to watch before deciding to open any new ones or where to close existing ones.

Thank you.

Monica Kingsley
Stock Trading Strategist
Sunshine Profits - Effective Investments through Diligence and Care

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Yesterday's S&P 500 upswing just couldn't rise over Thursday's highs. Earlier today, we've been in for some volatile, yet short-term sharp moves in the overnight sessions. Similarly to pre-earthquake tremors, does it point to a larger move about to happen?

Let's check the situation on the daily chart (chart courtesy of http://stockcharts.com).

Yesterday, we pointed to the Friday's candle being an inside one, and the same point can be also made about Monday's session. These were our observations regarding its meaning:

(...) it is indeed rich in indications. Its shape is bearish thanks to the large upper knot and prices closing near the daily lows. As the daily volume was lower than that on preceding up days, thus marking the bears' unwillingness to participate heavily in a reversal so far, we might still get another attempt to move higher.

But that's unlikely to overcome Thursday's highs in any lasting way, in our opinion. The pace of RSI and CCI rise is already weakening after they both reached their mid-range readings. While Stochastics is still on a daily buy signal, that can change pretty fast - even with a couple of days' sideways action only.

But still, we expect the return of the bears in the coming sessions as the most likely scenario.

Again, the volume was lower yesterday, and the daily indicators are increasingly and tellingly curling lower. Food for thought.

Let's also revisit the high-yield corporate debt chart (HYG ETF).

The bulls don't appear to be making much progress despite the Fed's policy moves. The market appears to be in the opening moments of doubting whether these solutions will indeed stick.

Before summarizing, let's quote from our quick intraday Alert sent earlier today to our subscribers. This is what we have written about the pre-market action:

(...) the futures moving much in our favor (below 2615 as we speak).

This is happening against the backdrop of surging USDX, plunging oil and commodity currencies (plunging AUDUSD and surging USDCAD). The S&P 500 futures gave up much of their overnight gains to trade close to unchanged when compared to yesterday's closing prices. It's highly likely we're in for a risk-off day later today.

Our observations are valid also at this moment - with the notable exception of oil, which has turned somewhat higher in the past two hours (from around $21.40 to almost $21.80, yet trades at around $21.50 right now). Otherwise, the currencies' moves are continuing, and not even the usual safe haven (JPY) has attracted a bid vis-a-vis the greenback. The risk-off mood rules on, and mightily so.

Summing up, despite the weekly chart's price action, the bears still have the upper hand. While the temporary upswing has run into stiff headwinds on Friday, it can still retrace a part of today's premarket decline but don't bet your farm on that. On the other hand, it appears to be rolling over to the downside as we speak. The time for the rally is increasingly running out, as both the daily indicators and high-yield corporate debt charts show. Considering the risk-reward perspective, our currently open short position remains justified.

If you enjoyed the above analysis and would like to receive daily premium follow-ups, we encourage you to sign up for our Stock Trading Alerts to also benefit from the trading action we describe - the moment it happens. The full analysis includes more details about our current positions and levels to watch before deciding to open any new ones or where to close existing ones.

Thank you.

Monica Kingsley
Stock Trading StrategistSunshine Profits - Effective Investments through Diligence and Care

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