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The much-anticipated upswing continuation came yesterday, and the bulls certainly fought hard to keep up the upside momentum. To what degree have they been successful with most of the intraday gains evaporating before the closing bell?

The intraday volatility is high and offers many opportunities to profit on both long and short positions. And that's certainly what we did earlier this week, cashing in a 168-point gain on Friday-opened short position, and two more profitably closed positions (both were long trades) yesterday for an 82- and 52-point profit respectively. In total, that's 302-point gain this week so far!

But going into the employment data later today, how does the technical outlook look like right now?

Fundamentally, we can expect rather disappointing figures, but the real question is how much of a disappointment vs. expectations of a disappointment, it would be. And most importantly, how will the market balance out its reaction with the stimulus effect hopes.

Let's start our analysis with the daily chart examination (chart courtesy of http://stockcharts.com).

Stocks opened on a strong note yesterday, yet didn't close in a show of strength. While the futures tumbled in the final 15 minutes of the regular trading session, and extended losses thereafter, they seem to have rebounded from the low 2410s - for now.

These were our yesterday's observations regarding the daily indicators' posture:

(...) solidly in bearish territory, they're increasingly curling higher, thus supporting another leg up.

While the above remains true, the rally and its path higher so far doesn't seem to be proportionate to the monetary and fiscal stimulus thrown at the coronavirus fallout. And as more and more parts of the US grind to a temporary economic halt, bearing directly on the US consumer, industry and services, we can expect the sellers to return forcefully. As the death toll and the associated economic impact coupled with the sense of alarm unfortunately grow over the coming days and weeks, we better brace ourselved for the renewal of the downtrend in stocks.

Remember, this is a health crises affecting the works of the real economy, not a monetary or fiscal crisis. Therefore, we can reasonably expect the fiscal and monetary tools to play out their magic only when the situation on the ground stabilizes first, or when the market stops reacting to them. That would be similar to the early March 2009 bottom when bad news kept pouring in for weeks longer, yet stocks marched higher already.

Has the time come to jump back in on the short side? Arguably, not yet - certainly not from the risk-reward perspective. Careful monitoring of both the technical and fundamental situation would allow us to identify such an opportune moment. And in general, that goes for both the long and short trades. In these exceptional times, capital preservation is the call of the day as we're in it for the long run. Therefore, we're keeping our powder dry at this moment, and will let our subscribers know once a promising setup (long or short) presents itself.

Summing up, whilethe bears have the upper hand, the potential for a temporary upswing to resume, is still there. While a little underwhelming so far, this Fed and stimulus-triggered move might live on. It has the benefit of short-term doubt, but the upswing is kind of racing against the time, which is not really on its side. Considering the risk-reward perspective, we're not entering into any new trades after the recent profitable string of respectable gains. As always, we'll let our subscribers know of the next worthwhile trade opportunity. That's where the heavy lifting for their benefit is done, that's where the value is.

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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As if the Fed's unlimited QE wasn't enough, we'll get a $2T stimulus now. Predictably and much to our subscribers' delight, the S&P 500 loved that. As it sprang to life, we've already cashed in an 82-point profit on that upswing. As we're currently riding another immediately profitable open position, what kind of gain will it bring this time around? In other words, will the futures keep on climbing later today as well?

Cutting long story short, it's highly likely. Let's start our analysis with the daily chart examination (chart courtesy of http://stockcharts.com).

Stocks both opened and closed on a strong note yesterday. And the volume wasn't at all shabby. After the overnight climb higher, they ran into quite some fast and furious selling earlier today, which wepartially avoided. Instead of seeing gains shrink, we still cashed in an 82-point profit. As the selling pressure dried up, we entered the market again, and are currently riding the momentum for an open gain of over 50 points as the futures change hands at around 2475 currently.

While the daily indicators are solidly in bearish territory, they're increasingly curling higher, thus supporting another leg up.

Let's remember our Monday's notes regarding the market breadth indicators:

(...) While they all confirm the bears as being in the driving seat, new highs minus new lows reveals that the sellers aren't as strong as they appear to be when one looks at price action only. The bullish percent index has also curled higher despite new 2020 lows being hit.

As a result, the market breadth indicators indicate a high likelihood of pause in the trend of continuously lower prices. Be it in the form of a sharp rally that runs out of steam relatively fast, or a somewhat more prolonged sideways trading with a bullish bias, it nonetheless justifies our decision earlier today to take the 168-point profit on our short positions off the table.

On top of today's and yesterday's gains, these observations keep turning out as expected. The Summary just below captures the short-term outlook accompanied by the trading plan, which is reserved for our subscribers.

Summing up, whilethe bears have the upper hand, the potential for a temporary upswing to continue, is still there. And this Fed and stimulus-triggered move might surely stick on. As the markets like this move, it makes sense to give it the benefit of short-term doubt. Considering the risk-reward perspective, please see our game plan within the Trading position section.

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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Available to premium subscribers only.

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