Wednesday, June 10, 2015

Wednesday higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Wednesday higher.
  • ES pivot 2077.83.  Holding above is bullish.
  • Rest of week bias higher technically.
  • Monthly outlook: bias lower.
  • Single stock trader: VZ still a swing trade buy.

These counter-trend calls are always risky and I acknowledged that last night calling Tuesday higher.  And it almost worked too but for yet another late afternoon sell-off that ended the Dow down all of two and a half points.  Still that beats the recent triple digit losses we've been getting.  Does this mean a reversal is at hand? We scour the charts for clues.

The technicals

The Dow:  On Tuesday the Dow continued its skid down the lower BB but unlike the past two days it ended with a perfect doji star.  Along with indicators quite oversold and a very low stochastic about to form a bullish crossover indicators, I give this better than even odds of being a valid reversal sign.

The VIX:  Last night I wrote that "I still think we're due for some relief here." And it sure arrived, in the form of a 5.36% drop on Tuesday and some bullish divergence for the market.  I always say that the VIX tends to retreat after hitting its upper BB and this was no exception.   One day after closing above it and boom, down we went.  So with indicators still overbought there's no reason to believe the VIX selling is done yet.

Market index futures: Tonight, all three futures are finally higher at 12:40 AM EDT with ES up  0.13%.  On Tuesday ES put in a tall doji star trading entirely below the lower BB at the lower end of Monday's big dump.  Indicators remain oversold  and the stochastic has just made a bullish crossover so I'd hazard we go higher on Wednesday.

ES daily pivot: Tonight the ES daily pivot falls again from 2082.58 to 2077.83.   That drop plus and overnight rise in ES finally puts it back above its new pivot so this indicator now turns bullish.

Dollar index:  Last night I wouldn't commit to a higher dollar Tuesday and it was just as well as the buck sank another 0.16%.  The only things to suggest a reversal at this point are oversold indicators and being near support.

Euro:  Last night I wrote that "it's not clear [the euro] can sustain this momentum into Tuesday."  And indeed it couldn't, ending where it began with a perfect doji star.  So now we have resistance and a reversal sign.  I'd still not be going long the euro here.

Transportation:  They were makign all sorts of noise over on CNBC today about hte dismal state of the trans, and right so, IMAO.  Last night I pointed out a bunch of stuff that "all looks bad for Tuesday."  And it wasn't a disaster but the trans still moved another 0.33% lower.  And if you back out to the monthly chart you'll see that the trans peaked way back last November and have been  in a downtrend ever since.  This is part of the reason why I switched my TickerSense monthly SPX direction poll from bullish to bearish two weeks ago.  Even short-term doesn't look that good: we have a hammer but also a completed bearish stochastic crossover and falling indicators.


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      1       1           3       0.833     91

     And the winner is...

Tuesday had the feeling of a washout low.  Also the Morningstar Market Fair Value Index has hit 0.99 for the first time since last December 15th and that marked a bottom.  We have some decent reversal signs on the charts tonight so I'm going to go ahead again and call Wednesday higher.

Single Stock Trader

On Tuesday VZ lost a bit on a dark cloud cover but overall it looks like it still has much more upside potential than downside risk remaining quite oversold.

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