Thursday, May 28, 2015

Thursday higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Thursday higher.
  • ES pivot 2115.50.  Holding above is bullish.
  • Rest of week bias lower technically.
  • Monthly outlook: bias higher.
  • Single stock trader: VZ now close to a swing trade buy.

Whew - I think it was a really good idea to call Wednesday uncertain because although there was nothing bullish in the candles, the Dow managed a 121 point gain anyway.  So what's next?  Let's look for answers in the charts.

The technicals

The Dow:  With its big move lower on Tuesday the Dow looked ripe for a bounce on Wednesday.  But you know the old saying - never buy something just because it's down.  So I took a pass and indeed the Dow retraced about 2/3 of its losses on Wednesday with a 121 point gain.  That sent RSI higher from oversold and flattened out the stochastic in preparation for a bullish crossover.  So at this point, this chart now looks higher.

The VIX:  After a truly breathtaking pop on Tuesday, the VIX was not only unable to keep it going but it lost 5.62% on a bearish engulfing pattern that makes more downside on Thursday look likely.

Market index futures: Tonight, all three futures are lower at 12:11 AM EDT with ES down 0.06%. ES did quite well on Wednesday retracing most of Tuesday's losses in a move that arrested the descent of the indicators and moved the stochastic into position for a bullish crossover.  The bullish harami makes me think more upside might be coming.  But the lack of follow-through in the overnight is certainly a note of caution.

ES daily pivot: Tonight the ES daily pivot rises from 2109.33 to 2115.50.  That means ES is now above hte new pivot so this indicator goes back to bullish.

Dollar index:  This is why we wait for confirmation.  On Tuesday the dollar looked ripe for an evening star with a big yawning gap to fill.  Instead on Wednesday it moved even higher.  Admittedly not by much and with a red spinning top, and hugging the upper BB, but it wasn't a loss.  Still with the indicators now crazy-overbought I'm really thinking we're going lower on Thursday.

Euro:  Now this is interesting.  On Wednesday the euro put in a small green spinning top trading mostly under its lower BB to arrest its seven day-long slide.  That was enough to give us a bullish setup on a falling RTC.and with the indicators all highly oversold I'd not be surprised to see the euro move higher on Thursday.

Transportation:  After a big week-long blood-letting, the trans finally managed a non-trivial gain on Wednesday, retracing most of Tuesday's losses and clawing off the lower BB, right up to the edge of their descending RTC for bullish setup.  Throw in a nascent bullish stochastic crossover and this one looks higher for Thursday.


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        6      4       5           2       0.667    618

     And the winner is...

Despite a move lower in the futures in the overnight, the rest of the charts look just sufficiently bullish for me to go out on a limb and call Thursday higher.

Single Stock Trader

VZ continues to play it coy.  It gained a bit on Wednesday but with a second spinning top in a row, this one a bullish harami.  Still with indicators remaining oversold, I think this one might be worth looking into.  It's not the ideal setup but it has possibilities.

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