Tuesday, July 21, 2015

Tuesday depends on ES pivot

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Tuesday higher only if ES remains above its pivot, else lower.
  • ES pivot 2121.58.  Holding above is bullish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias higher.
  • Single stock trader: VZ not a swing trade buy.

Though the charts were looking generally bearish last night I opted not to make that call, going with a conditional call instead.  Good thing too as ES made one brief failed attempt to break below its pivot at 10:05 AM and that was it.  Despite a late afternoon sell-off, the Dow still managed a 14 point gain.  So let's see where that all leaves us for Tuesday now.

The technicals

The Dow:  On Monday the Dow actually tried to break above Friday's highs but in the end failed.  So while we did get a green candle, it was a spinning top clinging to the lower end of Friday's candle.  This failure to break resistance along with a reversal warning and highly overbought indicators continues to make me think this chart looks lower.

The VIX:  I figured we were due for a move higher but wasn't sure it would be Monday.  Well it was, but with a 2.51% advance as a small doji star  it wasn't very convincing.  Still, indicators remain highly oversold and the stochastic is lying flat on the floor.  And with Monday giving us a bullish setup on a descending RTC exit I still have to think there's more upside to come.  Oh, and it was one of those unusual days when both the VIX and the market closed higher, indicative of some ongoing internal uncertainty.

Market index futures: Tonight, the futures are mixed  at 12:58 AM EDT with ES up 0.02 % but YM down 0.03%.  On Monday ES pushed past resistance at 2118 only to stop again at resistance at 2122.  But its rising RTC is so steep this move led it right out of the channel for a bearish setup.  Indicators remain at extreme overbought and the overnight is guiding lower.  It's definitely looking toppy to me here.

ES daily pivot: Tonight the ES daily pivot rises again from 2117.17 to 2121.58. That still leaves ES above its new pivot but tonight it's just barely.  So this indicator remains ever so slightly bullish - for now.

Dollar index:  I wasn't ready to call the dollar lower last night and good thing too because ti rose another 0.18% on Monday.  That only made it more overbought and left it just shy of its upper BB.  Bottom line, we're in the same spot as last night - looks toppy but I can't call it lower just yet.

Euro:  The euro gapped down with a small doji star on Monday to close at 1.0837 as it continues to dribble down it slower BB and remain in a steep descending RTC.  Support at 1.0871 is now long gone but Monday's close is another support line so with indicators now very oversold this would be as good a time as any for the euro to stage a rally.

Transportation:  Last night I wrote that "this inverted hammer looks bearish to me."  And sure enough the trans dropped 0.36% on Monday with a second inverted hammer.  Indicators remain overbought, and the bearish stochastic crossover is holding so I don't think the selling is over 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       6      0       4           1       1.000    854

     And the winner is...

Looks like deja vu all over again here.  All the factors that were in play last night are still there only more so.  The market still looks overbought and toppy but I still can't yet definitively call it lower.  And once again, ES is sitting just above its pivot so I guess I'll just make another conditional call: if ES an stay above its pivot by mid-morning Tuesday we'll close higher.  If it breaks under, then we close lower.

Single Stock Trader

Wow, VZ sure fooled me on Monday with a nice 1% gain.  But this one took it to its upper BB and left the indicators even more overbought.  I know it sounds like tape-fighting but I still can't get on board this bus.

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