Just when you might think that the key action to comment on is Friday's reversal, it's the opening of today's overnight session that gets the prize. The development is yet another Fed's pre-FOMC move. This time, it coupled the rate cut to 0% with a $700bn QE. And how did the stock market react?

First though, let's jump right into the weekly chart to see the week just gone (charts courtesy of http://stockcharts.com).

These were our Thursday's observations:

(...) The sizable bearish gap remains unchallenged, and the bears keep the reins. (...) This week's volume is on track to beat that of the either two preceding weeks, lending more support to the bears. And so do the weekly indicators. The bottom clearly appears not to be in yet.

(...) New 2020 lows are very likely ahead of us - that's a pretty safe bet to make as the nearest strong S&P 500 support is at the December 2018 lows at around 2400.

And indeed, the S&P 500 volume was one for the record books. But did the candle's shape mark a profound turnaround? That's unlikely - it look more like a partial retracement of the earlier furious slide. Did that though prevent us from making money on it? Not in the least, we easily snatched 61 points of Friday's upswing.

Let's take a look at Friday's action on the daily chart and then dive into the Fed firing its bazooka.

These were our Friday's observations:

(...) While the daily indicators are very extended on the downside, a temporary rebound would not surprise us in the coming days as the bulls are likely to build upon today's gains so far.

Would it make sense to chase it? In our opinion, it's worth it.

And what a bounce we got, especially in the final hour of trading! The bulls almost reached Wednesday's closing prices. Well, almost - and as a result, Thursday's bearish gap continues supporting the sellers, regardless of another turn higher in the daily indicators and Stochastics being in the oversold territory and on the verge of flashing its buy signal.

Drums please now - it's high time to dive into the key overnight development. The Fed just pushed the panic button again, bringing Fed funds rate to the zero bound. It also brought in a $700bn QE program. That comes on top of the expansion of repo operations. While this is certainly no drop in the bucket, stocks plunged on the news. Having hit the circuit breakers on the downside, futures trading stopped at 2555. The logical conclusion is that the limits of monetary policy tools have been reached, and each bigger bang buys less of a buck.

The implications for stocks are bearish - both in the medium and short-term.

How shall we trade the current setup? The selling pressure is heavy, and whenever everyone leans on the same side of the boat, the market turns the other way - at least temporarily. Selling into the current slide at 2440 wouldn't give us a great entry point from the risk-reward perspective. Remember that the sharpest rallies happen in bear markets. Therefore, we'll let our subscribers know once it becomes justified to act - and how exactly, to be precise.

Summing up, the bears remain firmly in control, and that's true despite Friday's sizable bounce for it hasn't changed even the short-term outlook one bit. With the overnight gap lower, it appears more than likely that Friday's rebound won't get follow-through. The weekly chart examination also puts the technical upper hand over to the bears.

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 session in stocks was a true bloodbath that extended well into today's overnight sessions. It offered two glimmers of hope: one very temporary that came shortly after we exited our tremendously profitable short position, and the other that is unfolding at the moment of writing these words. As the current prices are within spitting distance of our yesterday's exit, it's high time for the short-term outlook reexamination.

Let's jump right into the weekly chart to see the shape of the week-in-progress (charts courtesy of http://stockcharts.com).

These were our yesterday's observations:

(...) The sizable bearish gap remains unchallenged, and the bears keep the reins. (...) This week's volume is on track to beat that of the either two preceding weeks, lending more support to the bears. And so do the weekly indicators. The bottom clearly appears not to be in yet.

(...) New 2020 lows are very likely ahead of us - that's a pretty safe bet to make as the nearest strong S&P 500 support is at the December 2018 lows at around 2400.

And indeed, the S&P 500 futures turned at the 2400 after the short-lived bounce that took them over 2650. We didn't have to ride that one as we have taken our 276-point gain off the table comfortably ahead of it.

The S&P 500 upswing didn't stick however, and stocks rolled over later in the day and in today's overnight session all the way to the December 2018 support's upper border. There, they turned around and trade at 2555 as we speak.

Let's take a look at the daily chart.

While the daily indicators are very extended on the downside, a temporary rebound would not surprise us in the coming days as the bulls are likely to build upon today's gains so far.

Would it make sense to chase it? The answer is reserved for our subscribers. And it's not a yes-or-no one at that.

Summing up, the bears are firmly in control, and have reached a key support in today's overnight session. Prices rebounded though, and a short-term price recovery wouldn't surprise us in the least. The weekly chart though remains solidly in bearish territory, regardless of the daily chart's potential for rebound. Within the trading position details, you'll find our game plan of the setup at hand.

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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If you think that yesterday's session in stocks was a bloodbath, don't look at today's overnight trading. It would be an understatement to say that the markets didn't buy into stimulus package contours or the 30-day Europe flights ban. What about today's ECB monetary policy statement, can that really lift the bulls? Enjoy the wild ride and despair not, as we're profiting on it.

Let's jump right into the weekly chart to see the shape of the week-in-progress (charts courtesy of http://stockcharts.com).

The sizable bearish gap remains unchallenged, and the bears keep the reins. More details about the stimulus package or any other measure (the Europe flight ban or Fed repo operations) didn't exactly instill confidence, and stocks keep reacting to the bad incoming coronavirus-related news.

This week's volume is on track to beat that of the either two preceding weeks, lending more support to the bears. And so do the weekly indicators. The bottom clearly appears not to be in yet.

While a strongly bearish reversal in itself, yesterday's closing price doesn't paint the full picture. The plunge continued overnight unabated, and the current fix at below 2535 means that our open short position is already over 300 points in the black! New 2020 lows are very likely ahead of us - that's a pretty safe bet to make as the nearest strong S&P 500 support is at the December 2018 lows at around 2400.

Summing up, the bears are firmly in control, and the current policy response hasn't been a game changer. Both the weekly and daily charts keep sending bearish messages. The downswing appears likely to have further to go on the downside before the market regains some confidence - especially with stocks in a bear market already as they gave up more than 20% from their February highs. Therefore, keeping open the profitable short positions is 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

• Read more