If you liked yesterday’s market action, you’re loving today so far. Like yesterday, the latest overnight ramp job has put ES well above its 200-DMA. Like yesterday, now we get to find out whether it will hold.
It didn’t yesterday. The white acceleration channel broke down at the close, taking ES and SPX back below critical support. 
But, today’s a new day. VIX tanked 9.3% overnight – but right to strong support.
The algos aren’t quite sure where to go from here…
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Having attended a few football games there over the years, I can attest to how big and how loud UT’s Royal Memorial Stadium can be, especially if the Aggies or Red Raiders are in town.
As official COVID-19 deaths in the US reach 100,000 today, I think about how that many souls would look if all gathered together at one time. Bryant-Denny in Tuscaloosa holds 101,821. Tiger Stadium in Baton Rouge, 102,321.
The biggest in the country is Michigan Stadium in Ann Arbor with 107, 601. Deaths will reach that level by the end of the week. Still, unless it happens to a family member, friend, or neighbor, I guess it doesn’t seem real to most people – certainly not to these sons and daughters of future COVID-19 patients.
Apparently, news of another pharmaceutical company or two starting clinical trials is all the market needs to remain optimistic that maybe the coronavirus will just vanish, like a miracle. Or, maybe it’s just the algos up to their usual high jinks.
VIX made new cycle lows at 11:36 last night… 
…which just so happened to be the exact moment that S&P 500 futures broke through their 200-day moving average. 
It’s also when WTI futures broke Monday’s highs.
As we’ve been discussing all week, this was destined to happen on a holiday weekend. It was nice of the market algos not to disappoint – especially those seeking a positive headline:
Market Shrugs Off 100,000 Deaths, Soars Through Critical Resistance
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Futures are up 40 points off their overnight lows as VIX was hammered after pushing briefly above its 10-DMA. 
It’s not unusual for charts to take on a bearish tone going into a holiday weekend. In a low volume environment such as this, however, it’s all too common for trends to reverse, currencies to pop, VIX to plummet.
Will this one be any different?
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Futures are off slightly this morning as most every chart we watch are within striking distance of their 200-DMA. It’s no surprise that this is happening just ahead of a market holiday.
Even DB – a stock many have left for dead and one of my favorite canaries in the coal mine — gapped higher and has nearly reached its 200-DMA.
Could we see actual resistance come in at this important moving average or will we see the typical holiday ramp to higher highs?
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Dallas Fed president just gave a nice preview of the Fed’s April minutes due out later today. The highlight: we’ll need to do more. It’s the same message we’re hearing from all the FOMC members, and the same message the market is taking to heart as the Fed’s balance sheet explodes higher on its way to $10 trillion.
Stocks broke down at the close yesterday. And then, to no one’s surprise, they piled on another 50 points overnight.
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April housing starts fell by 30.2%, the biggest single-month drop since records were first kept in 1959. Single-family fell 25.4% while multifamily fell by a stunning 40.5%.
Futures, which are holding their breakout status after backtesting the SMA100 overnight, ignored the results.
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Futures were already up sharply this morning when news hit that Moderna’s vaccine trials were going very well. This sent VIX crashing even lower and futures even higher with ES currently showing an 80+ point gain.
If the vaccine is on the path to ultimate success, has the effect already been fully priced into stocks? Is this the all-clear the market has been waiting for?
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Retail sales collapsed 16.4% in April, the largest single-month decline on record.
The only bright spots were online retailers and food and beverage stores, but food and beverage stores merely stole share from restaurants and bars.
Industrial production plunged as well, off 11.2% — its largest monthly drop. And, manufacturing output dropped 13.7%, also its largest decline ever. 
Capacity utilization fell to 64.9% – well below its 80% average rate.
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It’s surreal, watching our “leaders” debate how many deaths are acceptable and whether workers and children should be sent back into harm’s way. Only a few weeks ago, we all agreed upon the need to flatten the pandemic’s curve so we could prevent a surge from overwhelming our medical system. Now, the debate is about flattening the soaring jobless claims and preventing the country from falling into a depression.
I wish I knew the answer. I don’t. But, I’m fairly certain that if we emphasize the economy to the exclusion of medical issues, it would all be for nought – especially for the dead. As the country reopens and COVID-19 cases and deaths resume their rise, we’re all canaries in the coal mine.
Futures are off sharply this morning and appear likely to reach our next downside target either today or tomorrow.
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April PPI joined CPI in reflecting the severe economic pressures building in the US, dropping 1.2% YoY. Even stripping out food, energy and trade, producer prices fell 0.9% MoM and 0.3% YoY. The cost of goods fell 3.3% MoM, the biggest decrease since 2009.
Powell’s comments at the Peterson Institute will get underway shortly. A preview of his prepared statement suggests his mood will be somber and his optimism tempered by the realities of the pandemic.
Algos are anxious to hear whether he can promise anything more impactful than “whatever it takes.” The overnight bounce has probably run out of steam.
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