Visualizing 100,000

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Royal Memorial Stadium. Capacity: 100,119

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

continued for members…

Also as we’ve discussed, this allows a test of the red TL at a level higher than the SMA200.SPX will pop above its SMA200 – and then some – on the open.

And, VIX has plenty of room to drop further if necessary.USDJPY had already tagged its SMA50, in keeping with the rising wedge, but didn’t need to go any higher at 11:36……as NKD had already spiked up through its .618, yellow channel line and SMA100 several hours earlier. Note that USDJPY has since fallen all the way to its SMA10 where it bounced just prior to the open.

It’s difficult to say whether ES/SPX will hold their SMA200s. As we discussed last week, this would be a natural place for a reversal. But, given how well engineered the rally from Mar 23 has been, and the unprecedented firepower available to central banks and their proxies, it’s hard to imagine that ES 2997.19 and SPX 2999.72 won’t be vigorously defended.

If they should fall, of course, this would be a nice sell signal. But, by holding these levels SPX can either start to work on the 2.618 at 3047 or simply hold on for one of those vaccines to become real and for the economy to have a real chance of actually rebounding.

This raises the question of what, if anything, could derail the rally in the meantime. I fear that all these states opening up again and the lack of proper precautions will lead to a huge surge in cases. This would start showing up in the next week or so and really build a head of steam in a couple of weeks. Would states start closing again? Could the market shrug that off?

The other indicators are just plain mixed. AAPL, maybe concerned about how silly it would look, has yet to make a new all-time high.

COMP finally reached its .886 and is (so far) falling.RUT has tagged its SMA100 – but a little shy of its .618.The Dow is closing in on its .618 and SMA20 – a logical and reasonable turning point, especially relative to the others.The most ridiculous chart of all has to be DB, which shot through its SMA200 and past the red TL connecting three important bottoms and an important top to tag its .500. UPDATE: 11:52 AM

Decision time… as SPX and ES backtest their SMA200s. The formula is pretty simple: above the SMA200 – hold/buy; below it – short.If they are to hold, we’d want to see VIX start down… …and USDJPY extend its bounce.UPDATE: 3:33 PM

I wouldn’t be surprised to see ES backtest the SMA200 one last time as we go into the close – just to flesh out this little white channel. There are obviously scads of gaps (2980.29, 2865.01, etc.) to fill if the SMA200 should break down. But, keep in mind that almost all the ramp jobs have happened after hours. In other words, shorting on a drop through the SMA200 carries above-average risk.