Tuesday, June 2, 2015

Tuesday depends on ES pivot

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Tuesday higher only if ES breaks above pivot, else lower.
  • ES pivot 2109.08.  Holding below is bearish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias lower.
  • Single stock trader: VZ is still not a swing trade buy.

After a decent start, the bears made a valiant attempt to knock 'em down into the close on Monday but in the end history prevailed and the Dow  managed to finish  up 30 points.  Hey, we'll take it - we have to.  So "sell in May" was a bust - will it now be "swoon in June"?  Only way to tell is by grilling the charts.  So let's light  the Kingsford and look towards Tuesday.

The technicals

The Dow:  Despite a modest gain on Monday, the Dow remains in a nearly two week-long downtrend.  We now have a fat spinning top that is a reversal sign but one which requires confirmation.  So it's no go here.

The VIX:  Wow - on Monday the VIX put in the supernova of all doji stars hitting 14.86 before collapsing back to 13.97.  Sitting on top of Friday's action with indicators nearly overbought this makes me want to give better than even odds we go lower on Tuesday.

Market index futures: Tonight, all three futures are essentially unchanged at 12:18 AM EDT with ES down one whole tick.  On Monday ES gave us a tall spinning top at the lower end of Friday's dump, just touching its lower BB.  Indicators are mixed though.  But that BB touch has been a good reversal sign lately so a move higher from here is not out of the question.  The overnight though doesn't seem to be supporting that forming a dark cloud cover at the moment.

ES daily pivot: Tonight the ES daily pivot dips from 2110.33 to 2109.08. An odd late-evening dive for no immediately apparent reason now puts ES below its new pivot so this indicator turns bearish.

Dollar index:  Last night I noted the possibility of a reversal in the dollar but insisted on confirmation.  Well we got it on Monday with a nice 0.50% gain.  Unfortunately, that gain was so big it brought us nearly back to resistance so with the indicators remaining overbought and the past week really range-bound we need to wait again for some definitive sign of movement.

Euro:  On Monday the euro fell out of a short rising RTC for a bearish setup.  Last night I wrote that "I'd not be surprised to see a lower close on Monday."  And I wasn't, as we went back down to 1.0935.  We're also getting a stochastic curving around for a bearish crossover from a low level and those are generally good for at least a day of continued lower.  The overnight seems to be supporting this.

Transportation:  Here's something interesting - after underperforming for the last three centuries, the trans on Monday beat the pants off the Dow with a monster 1.14% pop to zoom out of their long-running descending RTC for a bullish setup and force a bullish stochastic crossover.  Indicators have now bottomed at oversold so this all looks higher on Tuesday to me.


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      5       5           2       0.615    581

June       1      0       0           0       1.000     30

     And the winner is...

The second day of June is historically even better than the first day according to the Stock Traders Almanac.  But what we're getting tonight is a series of reversal signs that all require confirmation.  And right now the futures are taking a turn south.  And I always hate to bet against the futures.  But we are so close to the ES pivot that this seems like a good time to make a conditional call: if ES can break back above its pivot by mid-morning Tuesday, we'll close higher.  If not, we close lower.

Single Stock Trader

Turns out I was right to wait on this one.  VZ went down another 22 cents on Monday after days of noodling about,  It just managed to touch its lower BB which is interesting but the indicators have yet to hit oversold so I'm still sitting on the sidelines.

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