Tuesday, July 7, 2015

Tuesday higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Tuesday higher.
  • ES pivot 2056.42.  Holding above is bullish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias lower.
  • Single stock trader: VZ now a swing trade buy.

After falling over the edge out the gate Monday morning, the Dow quickly recovered the entire loss, only to retrace most of it before finally ending just 47 points lower as Mr. Market displayed more common sense than he usually does in the face of "major crises".  So that's that.  Let's see, if it's even possible technically with the barrage of contradictory and confusing comments coming from Europe lately, where Tuesday might be headed.

The technicals

The Dow:  After trading above its 200 day MA on Thursday, the Dow plunged back below it on Monday, only to pop right back up again and finally settle just a few points below it with the mother of all hammers.  Though we now have two red days in a row they both traded outside the last descending RTC and that's a bullish trigger.  The indicators remain oversold and the stochastic has completed a bullish crossover.  So overall I'd have to say this chart now looks bullish.

The VIX:  After finding support right on its 200 day MA last Thursday the VIX continued higher on Monday.  But after hitting the rarefied air around 19 (where it petered out twice before in the last 5 days) it came right back down to end with a tall dark cloud cover that bounced off its upper BB.  Indicators remain overbought and we have a completed bearish stochastic crossover so this chart looks lower Tuesday.

Market index futures: Tonight, all three futures are higher at 12:54 AM EDT with ES up  0.31%.  ES opened Monday way down, in fact below its lower BB and right down to its 200 day MA.  But then it was up, up and away from there for a nearly 30 point gain.  Even at that, the indicators are still just barely oversold and the stochastic has just completed a bullish stochastic crossover.  So with the overnight confirming that, this one looks higher for Tuesday.

ES daily pivot: Tonight the ES daily pivot plummets from 2070.00 to 2056.42. That now leaves ES way above its new pivot so this indicator is quite bullish.

Dollar index:  The dollar took a 0.19% bounce on Monday, no doubt as all the Greeks sought refuge for their cash.  But that drove it to its upper BB and left the indicators just off overbought with a red hanging man.  This is a pretty good reversal sign so I'd not be surprised to see the buck go lower on Tuesday.

Euro:  I'm a bit surprised that the euro managed to actually post a gain on Monday given all the Greek drama going on.  In the overnight it's virtually unchanged but given all the uncertainty around Europe right now, I'm not touching this one with a ten foot Grecian urn.

Transportation:  The trans have been in a ragged descending trend since the middle of March, one that accelerated after giving up the 200 day MA in mid-May.  The trend is even more pronounced on the monthly chart where you can clearly see the peak in November 2014.  But on a monthly basis we are now oversold and that doesn't happen often.  The last time was September 2011 and month later the trans took off on a four month rally.  In daily terms we've ricocheted off the lower BB with oversold indicators and a stochastic lying on the floor but gearing up for a bullish crossover.  So with some clear support established at 8080, I'd have to guess the next move is higher.


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       2      0       0           0       1.000    185

     And the winner is...

What a difference a day makes.  Tonight the charts are pretty much in agreement with some good bullish technical signs so I'll just go ahead and call Tuesday higher.  With the usual caveat about the Greeks of course.

Single Stock Trader

VZ ultimately lost only a few pennies Monday with a  tall doji star.  With rising indicators and a completed bullish stochastic crossover, this one might go higher Tuesday.  There seems to be more upside potential than downside risk at the moment, modulo the Greeks.

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