Actionable ideas for the busy trader delivered daily right up front
- Tuesday lower.
- ES pivot 2024.58. Holding below is bearish.
- Rest of week bias uncertain technically.
- Monthly outlook: bias higher.
- ES Fantasy Trader closed.
It's always nice to have my first call of the year be correct and while I would have been happier if the market had been up 331 points instead of down, my analysis proved correct. Oil apparently is back to ruling the market s the black liquid took another dive on Monday. So let's take a look at the charts and see where we're going next.
The Dow: It's looking a lot like a re-run of last month as the Dow tanked 1.86% on Monday. I was right to be cautious about the reversal tar here. But tonight we're now quite oversold though the stochastic has yet to start curving around for a bullish crossover. So I'd say the reversal is near, but maybe not Tuesday.
The VIX: The VIX similarly ignored its own reversal sign Friday with a 12% pop on Monday. It's now gone overbought and the candle is an inverted hammer so there's more of a chance the next move could be lower from here - but it isn't a slam-dunk.
Market index futures: Tonight, all three futures are lower once again at 12:45 AM EST with ES down 0.06% On Monday ES took another big leg lower and that was finally enough to drive all the indicators quite oversold. Notably, the stochastic has begun that characteristic curve-around that signals its intent to form a bullish crossover though we're not quite there yet. Meanwhile we're still in a descending RTC so it's too soon to call the all-clear.
ES daily pivot: Tonight the ES daily pivot falls again from 2050.75 to 2024.58. After a disastrous day Monday we remain well below the new pivot so this indicator remains bearish.
Dollar index: Last night I thought the dollar might take a rest after a big gap up. Nope! Instead it took another gap up to levels not seen since July 2010. And on the monthly chart, the current candle looks nothing like the inverted hammer that marked the 2010 top. So it continues to look like there's more upside left here.
Euro: Meanwhile the beleaguered euro just kept doing what it does best - digging itself a hole. A very very deep hole. Last night I wrote "there's still no sign of an end to the current slide" (not a very hard call to make) and wouldn't you know, we gapped down to close this time at 1.1947. I also wrote "Next support is 1.1763, a number I'd not be surprised to see fairly soon." and I'm sticking by that.
Transportation: Last night I wrote "This is a fairly bearish chart". That proved to be the case indeed as the trans cratered 2.66% on Monday in a move I feel is overdone. It was enough to drive the indicators oversold but not set up the stochastic for a bullish crossover. But this chart now has the look of a reverse exponential and that always means the end is near. Always.
And the winner is...
I think we're getting near a reversal point but it doesn't look like the selling is done quite yet. Oil in particular seems to have no support at all. I do think we'll see a move higher later this week but not right away. Accordingly, I call Tuesday lower. I'll be happy to be proven wrong.
Single Stock Trader
OK, in 2015 I'm going to try something new - I call it the Single Stock Trader". I pick a stock and makes buy/sell calls on it. And the stock I pick is ... Verizon (VZ). Why Verizon? Well I'm a customer of Verizon, so I know something about the company. I also think they're overcharging me so I'd like to get some of my money back - from them. Right now we're on the sidelines waiting for an entry point. VZ has just gone oversold but I don't see my favorite reversal signs (bullish stochastic crossover and RTC exit) yet. So we wait.