Tuesday, February 3, 2015

Tuesday uncertain

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Tuesday uncertain.
  • ES pivot 2003.08.  Holding above is bullish
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias lower.
  • Single stock trader: VZ in an uptrend.

Well history came to the rescue on Monday as the first day of February made it 11 out of 13 now with the Dow up a healthy 196 points.  But just looking at the daily candles makes one wonder if Mr. Market hasn't gone totally schizo.  With four down-up-down-up days in a row, which way will Tuesday go?  Uh ... down?  Let's check the charts to be sure.

The technicals

The Dow:  Despite the easy conclusion that since we were up on Monday we should go down on Tuesday, the stochastic has given us a good bullish crossover and we've now exited the descending RT for a bullish trigger.  So I have to vote higher from here on Tuesday.

The VIX:  Last night's spinning top was confirmed on Monday with the VIX losing 7.34% on a big inverted hammer that just tickled the upper BB and curved the stochastic around very close to a bearish crossover.  That spells lower in my book.

Market index futures: Tonight, all three futures are lower at 12:14 AM EST with ES down 0.42%.  ES, like the Dow, has been bouncing around like a pinball lately between 1990 and 2018.  We're now at the upper end of that range.  The difference is that this time the indicators are a lot more oversold than they were before, effectively putting more oomph behind the chart.  Ahh but there's that resistance at 2018 to get by and it doesn't look like ES is too interested in testing it at least not yet in the overnight.

ES daily pivot: Tonight the ES daily pivot rises from 1998.42 to 2003.08. That still leaves us about five points above the new pivot so this indicator turns bullish.

Dollar index:  Last night I was loathe to call the dollar lower just because that's been a losing proposition for, uh, a long time now.  Nevertheless, the dollar did in fact drop 0.28% on Monday, confirming two spinning tops in a row.  That's also a bearish setup on an exit of the latest short rising RTC so all other things being equal the dollar looks lower again from here.

Euro:  Last night I noted that when the break comes "it should be higher".  I don't know if it was exactly a break but the euro did advance on Monday to close right on resistance at 1.1350.  Indicators are all now clearly rising off oversold and we've got three days of higher lows.  However with this resistance, Tuesday is make or break for the euro.  I think there's enough gas in the tank for a move higher, but I'm just not that certain.

Transportation:  The trans are also in good shape after a nice 1.44% gain Monday.  After bouncing off their lower BB we're now clearly oversold with a stochastic just about to form a bullish crossover.  This one looks to have more upside potential than downside risk to me.


Month    right  wrong  no call  conditional  batting   Dow
                                             average  points

January    8      6       4           1       0.563

February   1      0       0           0       1.000    196

     And the winner is...

The charts generally look pretty bullish tonight with the lone exception of the futures which are all lower by non-trivial amounts.  Also of concern is this crazy down-up-down-up daily action and the fact that we've been putting in lower highs for three days now.  On the other hand, recall that last night I wrote "Dr. Copper looks like he might be getting ready for a move higher" and whadaya know, the $ISC rose nearly 2% on Tuesday.  So to my mind that all just adds up to a great big nothing and therefore I call Tuesday uncertain.

Single Stock Trader

Last night I declared VZ a buy and ka-ching, it paid off nicely on Monday.  The faint of heart might want to bail here, but I think this trade isn't done yet.  Disclaimer: I am now long VZ at 46.47.

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