Actionable ideas for the busy trader delivered daily right up front
- Monday lower.
- ES pivot 2079.92. Holding below is bearish.
- Rest of week bias uncertain technically.
- Monthly outlook: bias higher.
- Single stock trader: VZ may be a buy soon.
Last Thursday I made a conditional call for the Dow based on ES's proximity to its pivot. That worked very well on Friday with ES noodling about the pivot in the wee hours until breaking decisively below at 8:25 AM as the jobs numbers came out and that was that. Mr. Market was not amused and down we went. The question now becomes, after such a quick dump, where's the reversal? We'll scout the charts for signs.
The Dow: On Friday the Dow started shedding points faster than than my German Shepherd sheds hairs in the opening minute. And then it got worse. Mercifully, the bell finally rang to put an end to the carnage, with a broad-based 279 point loss, giving up the 18 support like it wasn't even there. . That tall red marubozu took the indicators oversold though the stochastic has yet to begin forming a bullish crossover and the lower BB is still over 100 points away.
The VIX: I was a bit surprised to see the VIX up only 8.26% on Friday though it admittedly did blast right back up through its 200 day MA to remain in a rising RTC. Indicators also rose and are now close to being overbought. But not there yet which suggests that the VIX may have enough gas left in the tank to rise further on Monday.
Market index futures: Tonight, all three futures are lower at 12:40 AM EDT with ES down 0.16%. ES took a pounding on Friday to drive its indicators all oversold though the stochastic still hasnt' started curving back around for a bullish crossover. And until I see that and a bullish reversal candle, this chart just looks ugly. And the overnight isnt' helping either.
ES daily pivot: Tonight the ES daily pivot falls again from 2098.83 to 2079.92. We remain under the new pivot so this indicators is now plainly bearish.
Dollar index: Holy moly - the dollar made a moon shot on Friday, up a whopping 1.26% with a gap up green marubozu that traded entirely above its upper BB. And it is clearly going exponential now. And we all know how that ends. Every time. So look for a break lower soon. Maybe not Monday but sometime this week.
Euro: Jeez - did I say the euro was going to parity in the fourth quarter? Well judging by its action on Friday, down to 1.0849, it's looking more like by the end of this month. I'm not pulling these numbers out of thin air either. I simply intersect the current regression trend channel with the 1.000 line and that's where it's landing now. Remember back a few years ago when big rock starts were demanding to be paid in euros rather than dollars? You don't hear much about that anymore do you?
Transportation: And finally the trans got hammered just like everything else on Friday with a big red marubozu that sent its indicators oversold. We're now near the lower BB so I think we may see a bottoming candle here soon, like in a day or two.
January 8 6 4 1 0.563 627
February 6 4 5 3 0.692 183
March 1 1 1 2 0.750 87
And the winner is...
We let a lot of hot air out of the market last week but I don't think we're quite done just yet basically based on a bevy of bearish charts so I'm just going to go ahead and call Monday lower.
Single Stock Trader
Last Thursday night I wrote of VZ "I don't think the selling's done yet here" and hey presto, boom, down we went 1.29% on a big gap down that closed under its lower BB and sent all the indicators oversold. I have to admit that at 48.36 it's starting to look attractive again. OTOH I'm also mindful of the old saying that you never buy a stock just because it's down. So we wait for this falling knife to whizz by. We will definitely miss the bottom, but we won't get all hacked up.