Tuesday, June 9, 2015

Tuesday higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Tuesday higher.
  • ES pivot 2082.58.  Holding below is bearish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias lower.
  • Single stock trader: VZ still  a swing trade buy.

I guess just hitting the lower BB isn't always the panacea as Monday proved.  The Dow sank another 0.46% on another red marubozu again trading mostly below its lower BB. Things are looking pretty grim right about now but the current decline is still less than what we got back in early March.  Is there a reversal in out future?  Only the charts can say.

The technicals

The Dow:  The Dow finished right on session lows Monday and with three black crows, it ain't looking good.  Indicators are now oversold but not extremely so.  So there's really nothing technically bullish about this chart.

The VIX:  And the VIX really surprised me on Monday.  Instead of moving lower it jumped nearly 8% to close above its 200 day MA.  So much for the big bearish engulfing pattern.  However, in its stead, we now have a big dark cloud cover plus overbought indicators.  Usually when the VIX gets overbought like this it's headed lower.  So I still think we're due for some relief here.

Market index futures: Tonight, all three futures are finally higher at 12:46 AM EDT with ES up  0.08%.  On Monday ES extended it losing streak to three, remaining in a steep descending RTC and punching right through its lower BB and leaving the indicators all oversold.  That all looks bad.  The only ray of hope is that ES is actually rising in the overnight, the first time we've seen that in several days now suggesting that maybe bargain hunters are stepping up to the table.

ES daily pivot: Tonight the ES daily pivot falls again from 2092.83 to 2082.58. And even that still leaves ES below its new pivot so this indicator continues bearish.

Dollar index:  I also missed the dollar on Monday which instead of moving higher just collapsed, giving up all of Friday's gains and then some.  Indicators aren't even oversold yet so it's too early to call a move higher from here.

Euro:  And so of course I was also wrong about the euro which instead of moving lower posted a big gain all the way back to 1.1278 on Monday on a big bullish engulfing pattern.  But indicators remain quite overbought and the euro is now at weekly resistance so it's not clear it can sustain this momentum into Tuesday.

Transportation:  Last night I was reluctant to call the trans higher Monday because "it's not clear they have enough gas in the tank to move higher Monday."  And holy moly, the tank was on E as the trans fell a giant 2.06% Monday, dropping right out of their rising RTC for a bearish setup, forming a bearish stochastic crossover, and sending the indicators lower.  That all looks bad for Tuesday.


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       2      0       1           3       1.000     94

     And the winner is...

We're starting to see some technical signs that the selling may be abating, particularly in the futures and the VIX.  I'll also note that the Morningstar Market Fair Value Index has now hit 1.00, indicating a lot of foam has come out of the market.  The last time we were at this level as May 6th and the next day began a two day rally.  But we remain in a long downtrend and the Dow chart is pretty ugly right now.  So I'm just going to go out on a limb, cover my eyes, and call Tuesday higher.

Single Stock Trader

Last night I blessed VZ as a swing buy and it did indeed move higher on Monday, with a green spinning top that suggests bottoming.  And after that it still looks like a reasonable entry point.

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