Monday, July 27, 2015

Monday uncertain

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Monday uncertain.
  • ES pivot 2083.75.  Holding below is bearish.
  • Rest of  week bias uncertain technically.
  • Monthly outlook: bias lower.
  • Single stock trader: VZ not a swing trade buy.

Huh - I'll admit I was nervous last week when I called Friday lower because I've seen it fairly often lately that the market will take a completely unexpected reversal from where you'd think it will be going  But that wasn't the case this time and the Dow dropped another 163 points on Friday.  That was an interesting move as we shall examine entering the final week of July.

The technicals

The Dow:  Breaking the 200 day MA as the Dow did last Thursday is never a good sign, and Friday was the proof with another triple digit loss.  That makes it four significant ones down in a row on a real steep (Pearson's=0.983) descending RTC.  We are in fact now within striking distance of the lower BB at 17,429 and while RSI is now quite oversold the stochastic has yet to curve around for a bullish crossover so I'm not calling the Dow higher yet.

The VIX:  Last Thursday I wrote that "this one looks higher again Friday.".  And that looked about right with another 8.7% gain, though on an inverted hammer.  But indicators are only half way to overbought so it's still too early to call this chart lower.

Market index futures: Tonight, all three futures are slightly higher at 1:53 AM EDT with ES up just 0.04%.  Last week's losses just accelerated on Friday with ES right back down to 2077.50.  But that was finally enough to send the indicators quite oversold though money flow and OBV are now in a consistent week-long downtrend and the stochastic has yet to being curving around for a bullish crossover.  Now it is true that ES is forming a small star in the overnight so far, but it's still early so I still can't call ES higher on Monday.

ES daily pivot: Tonight the ES daily pivot falls again from 2101.25 to 2083.75. That still leaves ES substantially below its new pivot so this indicator continues bearish.

Dollar index:  The dollar looked too confusing for me last Thursday.  And after Friday's candle I'm still confused.  A scant 0.12% gain on a tall red, almost marubozu candle.  And despite a gain the indicators continued lower.  So now I'm going to guess there's more downside in store on Monday.

Euro:  The euro looked similarly opaque last Thursday and it's just as well since it put in a perfect doji star on Friday, ending right where it began.  The new Sunday overnight is guiding lower though and nearing the right edge of the rising RTC .  And with indicators near overbought I'd say the next move is more likely lower than higher.

Transportation:  Last Thursday I wrote "there's nothing bullish about this chart".  And I'd say a 0.67% loss on Friday was definitely not bullish.  Indicators continue falling and no reversal sign in sight so I can't call the trans higher yet.


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       8      6       3           4       0.706    552
July       8      1       4           2       0.909    966

     And the winner is...

We wrung a lot of froth out of the market last week and that drove the SPX Hi-Lo indicator very low, near levels from which reversals come.  The same is true of the charts - we're close to but not quite at reversal points.  In fact it's looking to me like Monday might be a doji day with a hammer or perhaps a star.  At this point I'm hesitant to call it lower again just because it looks like the selling could be about exhausted so I will content myself with calling Monday uncertain.

Single Stock Trader

It's good I stayed away from VZ last Friday because it got caught up in the general market malaise right back down to its lower BB on a red marubozu.  We're now nearing a turning point but not quite there  so no buy just yet.

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