Actionable ideas for the busy trader delivered daily right up front
- Monday higher.
- ES pivot 2118.33. Holding above is bullish.
- Rest of week bias uncertain technically.
- Monthly outlook: bias lower.
- Single stock trader: VZ is not a swing trade buy.
Last Thursday night I wasn't at all sure which way we were going on Friday but I sure didn't expect a 115 point dump in the Dow. That makes things interesting so let's go right to the charts to evaluate the implications.
The Dow: On Friday the Dow confirmed a hanging man with a triple digit loss to break support at 18,047 and just barely hang on to 18K. But this big drop had the feel of a washout tome, driving the indicators well into oversold and curving the stochastic very close to a bullish crossover. Though this isn't a bullish candle, this is the zone from which rallies come.
The VIX: And on Friday the VIX tried to rally but in the end managed only a meager 4% gain on a tall inverted hammer. That also caused the indicators to top just short of overbought and left the stochastic about to form a bearish crossover. That makes this chart look lower for Monday.
Market index futures: Tonight, all three futures are higher at 12:17 AM EDT with ES up 0.17%. ES dropped on Friday but it continues to find support right around 2105. Note that this is actually YTD support, not just from the past week. And that seems to be holding into the Sunday overnight. I'd be wary of going short at these levels.
ES daily pivot: Tonight the ES daily pivot falls again from 2118.33 to 2085.92. So that still leaves ES below its new pivot but now only just barely and this indicator is now only marginally bearish.
Dollar index: The dollar has been mirroring the trans lately (see below). Everything I wrote there applies here too.
Euro: Last Thursday night I wrote to look for "a higher close on Friday for the euro" and indeed it managed to push higher again, to 1.0983 but with a spinning top. Fortunately, we've got some Sunday overnight action to help us out here and that is guiding lower, confirming the spinning top. So despite oversold indicators and a bullish stochastic crossover, I'd not be surprised to see a lower close on Monday.
Transportation: After a big move lower Thursday, the trans hit the brakes on Friday to end with a perfect doji star, though one hanging right above a yawning gap, with overbought indicators and a completed bearish stochastic crossover. This is the sort of reversal candle that absolutely requires confirmation before calling higher.
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 5 5 2 0.615 581
And the winner is...
The first day of most months is generally bullish and June is no exception despite its overall crappy reputation. And while they're not a screaming buy, technically the charts tonight are at least entertaining the possibility of a reversal soon. So I'm just going to go ahead and call Monday higher.
Single Stock Trader
VZ remains unsettled with two inverted hammers and then four spinning tops in a row. I can't really bless this unless and until I see a better edge than this. Patience, as always, is the key.