Wednesday, February 25, 2015

Wednesday uncertain

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Wednesday uncertain.
  • ES pivot 2110.75.  Holding above is bullish.
  • Rest of week bias lower technically.
  • Monthly outlook: bias higher.
  • Single stock trader: VZ remains a swing trade buy.

Well whadaya know about that?  Last night I went out on a limb calling Tuesday higher - but sometimes my best calls come from that location as the Dow gained a respectable 92 points on Tuesday.  Alrightee then.  So now we plod on to Wednesday as the bleary month of February winds down.

The technicals

The Dow:  On Tuesday the Dow convincingly rejected Monday's hanging man (that's why you generally need confirmation for these candles no matter how tempting they look) to hit yet another record close and remain in a rising RTC even as the upper BB continues to scoot away, now at 18,400.  So tonight there aren't any bearish signs here.

The VIX:  Last night I wrote "I'm going to guess there's more downside available here.".  God guess because the VIX lost another 6% on Tuesday crashing right through its 200 day MA with a tall red marubozu.  The VIX is now in full-on sell-off mode in a steep descending RTC with no end in sight and the lower BB still a ways from here at 12.92.  So we can't call a reversal just yet.

Market index futures: Tonight, all three futures are a bit lower at 12:22 AM EST with ES down 0.04%.  Like the Dow, ES on Tuesday rejected Monday's reversal candle by continuing higher.  There's nothing bearish in the candle but ES has been prone to pausing after one day moves higher lately and I note the indicators are continuing to drift slowly lower while remaining overbought.  So I'm a bit cautious here.

ES daily pivot: Tonight the ES daily pivot rises again from 2104.92 to 2110.75. And once again we remain above the new pivot so this indicator continues bullish.

Dollar index:  Last night I wrote of the dollar "there's at least a suggestion of a move lower here on Tuesday.".  And it wasn't a bad suggestion as the dollar dropped 0.10% on an inverted hammer after a failed attempt to break three day resistance.   But there's an interesting pattern going on YTD - we're forming a symmetrical triangle and it's very close to completion.  Having entered from below I'd guess the dollar is due for a breakout pretty soon - maybe sometime this week.

Euro:  On Tuesday the euro surprised me by putting in its first higher high in seven sessions. It was a small move though and I'll need to see more than this to declare the current downtrend over.

Transportation:  The trans chart on Tuesday looked just like the Dow so my comments there apply here too - nothing bearish.


Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
January    8      6       4           1       0.563    627
February   6      4       4           2       0.667    183

     And the winner is...

The last week of February is historically not so hot.  My predicament here is that while we remain in an uptrend and I don't see any particularly bearish signs on the daily time frame I still see some toppishness on a slightly longer interval as I mentioned a few days ago.  I'm reluctant to call the market higher on that basis but have no real grounds to call it lower so once again I guess that adds up to Wednesday uncertain.

Single Stock Trader

Last night I wrote that for VZ "
the overall bullish thesis remains intact".  And that was that, Jack as VZ gained nearly a percent on Tuesday.  If anything, it looks even better now, with a bullish engulfing pattern, a completed bullish stochastic crossover, a bullish trigger on a descending RTC exit, RSI still oversold but with a bottom in, and a 200 day MA breakout.  What's not to like?  I'm back in at 49.22.

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