Thursday, May 7, 2015

Thursday depends on ES pivot

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Thursday higher only if ES breaks above its pivot, else lower.
  • ES pivot 2076.42.  Waiting for a break to determine direction..
  • Friday bias uncertain technically.
  • Monthly outlook: bias higher.
  • Single stock trader: VZ still not a swing trade buy.

My mom once told me that if you don't have anything nice to say about someone, don't say anything at all.  That's something Auntie Janet should have remembered when she bad-mouthed Mr. Market Wednesday morning which sent him into a triple point snit.  A late afternoon rally helped to assuage his feelings only a little and the Dow still finished off 86, taking my call for a higher close with it.  Oh that and some crummy ADP numbers.  This was one of those days when the news trumped the technicals.  Not much I can do about that.  Let's finish off the week now and figure out Friday.

The technicals

The Dow:  On Wednesday the Dow had its one minute of glory right out the gate and then that was that - though it did manage to avoid ending at session lows.  So technically this is quite bearish with a clear break under week-long congestion.  Indicators are now off overbought but not yet to oversold so it's too soon to call a reversal higher.

The VIX:  Last night I wrote "there seems to be enough gas in the tank for another leg higher on Tuesday".  And whadaya know, that's just what happened with the VIX up 5.87% on Wednesday.  Interestingly though, it tried punching through its 200 day MA but fell back to close right on it.  More often than not tough these failed breakout attempts end up succeeding the next day so I'd not be surprised to see the VIX go one more day higher, especially since the indicators are still not overbought.

Market index futures: Tonight, all three futures are higher at 1:15 AM EDT with ES up 0.07%.  On Wednesday ES put in a hammer that pierced its lower BB and left the indicators just short of oversold.  This is a fair reversal indicator and ES seems to be finding some support in the overnight.

ES daily pivot: Tonight the ES daily pivot falls again from 2092.42 to 2076.42.  That now leaves ES sitting right on its new pivot for the second time in the past week so this indicator is mum tonight.

Dollar index:  The dollar had its biggest gap down on Wednesday since April 15th confirming Tuesday's bearish engulfing pattern.  And I said as much last night, though I wasn't expecting this big a decline.  We've now touched the lower BB but with it falling away it's not clear a bounce off it is imminent.

Euro:  I was wrong last night in thinking the euro would continue consolidating.  It shot up to 1.1357 on Wednesday and despite overbought indicators the trend seems to have resumed higher.

Transportation:  The trans found support around 8600 on Wednesday and ended with a slight gain on a doji star that with oversold indicators is a decent reversal sign.  I'd say there's more upside potential than downside risk at the moment.


Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
January    8      6       4           1       0.563    627
February   6      4       5           3       0.692    183

March      7      6       5           4       0.647    976
April      3      8       7           0       0.273      1 May        2      1       0           1       0.667    144

     And the winner is...

Tonight we're seeing a variety of reversal signs but they require confirmation.  The fact that ES is sitting on its new pivot supports the lack of directions here so I'm going to do another conditional call: if ES breaks above its new pivot by mid-morning Thursday, we close higher.  But if it breaks to the downside and stays there, we close lower.

Single Stock Trader

At least I was right when last night I wrote of VZ "
I expect more selling" and that' just what we got on Wednesday with another nice 79 cent drop.  That was the payoff on the bearish engulfing pattern.  The indicators continue to fall and we're still not at buyable levels but we're (finally) getting closer.  The 200 day MA is at 48.99 (call it 49) so I wouldn't feel bad at putting in a buy limit there.

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