Wednesday, February 18, 2015

Wednesday uncertain

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Wednesday uncertain..
  • ES pivot 2091.83.  Holding above is bullish.
  • Rest of week bias lower technically.
  • Monthly outlook: bias higher.
  • Single stock trader: VZ moving lower.

Well Mr. Market sure got over his Greek existential malaise in a hurry.  We indeed opened lower in a big way on Tuesday (as I expected) but by the end of the day the Dow was actually up all of 28 points.  Go figure.  It's all Greek to me.  So let's forget about all this drama and move right on to the charts.  At least they always play it straight.

The technicals

The Dow:  It wasn't a big move higher but it did result in a tall hanging man teetering right on the edge of record territory.  And with the indicators still overbought one has to wonder how much gas is left in this tank.  We do have at least a reversal warning here.

The VIX:  Last night I wrote "I'm looking for some support to kick in here on Tuesday."  (Well I wrote "Monday" but I meant Tuesday).  And the 200 day MA kicked right in sending the VIX bouncing with a gap up 7.56% star to form 2/3 of a bearish evening star.  But it was also enough to exit the descending RTC for a bullish setup, so this is a chart to watch on Wednesday.  With oversold indicators, the bull case seems to be stronger here.  It's an unusual divergence where the VIX and Dow were both up on the same day.

Market index futures: Tonight, all three futures are barely higher at 12:55 AM EST with ES up just one tick  On Tuesday ES continued creeping up its upper BB to remain in a steep rising RTC but with a hanging man.  Indicators remain quite overbought and the overnight is trading outside the RTC for a bearish setup - but is this a top?  Can't really tell, unfortunately.  And with the overnight flat, there's no help there.

ES daily pivot: Tonight the ES daily pivot rises a bit from 2090.00 even to 2091.83.  But that still leaves us above the new pivot so this indicator is now bullish.

Dollar index:  So much for last night's hammer.  The dollar lost another 0.14% on Tuesday to remain in a steep descending RTC with a lopsided spinning top.  And we're still not yet oversold.  So this is a reversal sign that requires confirmation and we sit this one out.

Euro:  After something of a bump last Thursday the euro has gotten bogged down again, this time around 1.1406, a level we've seen for four days in a row now.  And with indicators wandering about neither overbought nor oversold, there's little direction to this chart and indeed there has been none since we bottomed on January 26th.

Transportation:  On Tuesday the trans put in an unremarkable small spinning top.  Still not yet overbought not much to learn here.  I take a pass on this chart.


Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
January    8      6       4           1       0.563    627
February   5      2       2           2       0.778    246

     And the winner is...

The Dow is now hard up against all-time high resistance and its RSI has actually been falling for a week now while remaining overbought.  But all our reversal indicators are ones that require confirmation.  And on top of that we've got FOMC minutes on Wednesday.  And it's op-ex week.  To me, that all sounds like a good excuse to call Wednesday uncertain and live to trade another day.

Single Stock Trader

VZ indeed dropped right back to its 200 day MA on Tuesday.  Will this provide support?  It didn't the last two times we were here and we were a lot less overbought back then than now.  So I don't think the selling is over and I'm not yet looking to buy in again.

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