Tuesday, July 28, 2015

Tuesday higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Tuesday higher.
  • ES pivot 2067.25.  Holding above is bullish.
  • Rest of  week bias higher technically.
  • Monthly outlook: bias lower.
  • Single stock trader: VZ very near a swing trade buy.

Last night I wouldn't commit to continued lower because I thought the selling was about over.    I was wrong.  It was looking good for some sort of doji early on but then the selling just kicked back in as the Dow posted yet another triple digit loss.  It seems that China is now the new Greece.  Serves 'em right for sending us all that deadly drywall, toxic toothpaste, and poison pet food.

Is this sell-off ever going to end?  Let's check the charts to see.

The technicals

The Dow:  On Monday the Dow just picked up right back where it left off on Friday with more selling, this time very nearly down to its lower BB.  It was enough to drive RSI down to 1.97.  The last time we were lower than this was November 15th .. 2012.  And that very day set off a year and a half long rally.  This is simply ridiculously oversold.  Also the stochastic hit its lowest level of the year on Monday and is curving around nicely for a bullish crossover.

The VIX:  On Monday the VIX took a monster gap-up 13.54% pop to vault right over its 200 day MA but did it with a perfect doji thus giving us a classic evening star in the making.  Indicators are also now extremely overbought (RSI=92.87) so I'm laying better than even odds that the VIX goes lower Tuesday.

Market index futures: Tonight, all three futures are higher at 12:48 AM EDT with ES up 0.44%.  ES just kept falling on Monday and that drove the indicators extremely oversold (RSI=8).  The overnight rally so far is bending the stochastic around very close to a bullish crossover.  Right now this chart is looking bullish and ready to reverse.

ES daily pivot: Tonight the ES daily pivot falls again from 2083.75 to 2067.25.  And that, plus an overnight rally, was finally enough to put ES back above its pivot so this indicator now turns bullish for the first time in a while.

Dollar index:  The dollar continued its week-long slide on Monday with a gap-down 0.76% loss on a lop-sided spinning top.  Indicators are now oversold but the stochastic hasn't begun its curve around for a bullish crossover.  So there's a reversal warning here but one that requires confirmation.

Euro:  And similarly the euro on Monday continued its week-long rally closing this time at 1.1083.  Indicators are now overbought and the euro is giving up some of Monday's gains in the overnight.  That's causing the stochastic to bend around for a bearish crossover so I'd say chances are good the euro goes lower on Tuesday.

Transportation:  The trans also went lower on Monday but formed a nice doji star below Friday's action thus setting up a bullish morning star.  Indicators are now oversold and the stochastic is primed for a bullish crossover so a reversal looks like a good possibility here.


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're now seeing a number of decent reversal sign on the charts, finally.  And we've got some extremely oversold conditions with the Dow in particular at multi-year RSI lows.  Also, the SPX Hi-Lo indicator hit 8.47 on Monday, its lowest level of the year and below levels from which rallies usually start.  Finally, the futures are up non-trivially in the overnight.  All in all, I think there are enough factors in alignment to warrant calling Tuesday higher.

Single Stock Trader

VZ hit YTD support on Monday with a red spinning top as it remains in a steep descending RTC.  Indicators are now rather oversold and the stochastic is curving around nicely for a bullish crossover.  This one looks real close to a buy now.  All we need now is some confirmation on Tuesday.  Right now I'm fairly confident this one is going higher on Tuesday.

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