Wednesday, July 22, 2015

Wednesday lower

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Wednesday lower.
  • ES pivot 2115.42.  Holding below is bearish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias higher.
  • Single stock trader: VZ not a swing trade buy.

This has been an "ah-choo" market for a while now.  It looks like it wants to sneeze but it just keeps going "ah...ah...ah" but never "choo".  Well we finally got the "choo" on Tuesday with the Dow dumping 181 points.  It was definitely looking toppy last night, but it had been looking toppy for a while now and it just refused to break.  Now that we've finally got it, let's see how that changes the picture for Wednesday.

The technicals

The Dow:  After warning of impending doom for four straight days now we finally go the break on Tuesday with a 1% dump in the Dow.  Monday was the bearish RTC trigger and Tuesday was the payoff.  But even after all that the indicators are still oversold, and with a nicely completed bearish stochastic crossover I say there's still more selling in store on Wednesday.

The VIX:  Meanwhile the VIX continues to confound.  On Monday it was higher on a day the market was higher - on Tuesday it went lower on a day the market was lower.  Most bizarre.  Just looking at the candles though we now have a tall inverted hammer following an even taller doji star, but with indicators that remain highly oversold.  Go figure.  RTC-wise, it's a bullish trigger but everything's all bollixed up so no call here.

Market index futures: Tonight, all three futures are significantly lower  at 1:14 AM EDT with ES down  0.39%.  Last night I wrote that ES "definitely looking toppy to me here." as it fell out of a rising RTC for a bearish setup.  And the fall from the top came Tuesday with a big red hanging man and a bearish RTC trigger.   And with the new overnight gapping down even further this one is looking just plain ugly for Wednesday.

ES daily pivot: Tonight the ES daily finally falls (for the first time in a while) from 2121.56 to 2115.42. That leaves ES well below its new pivot so this indicator turns decidedly bearish.

Dollar index:  After watching the dollar throw off topping warnings for days now I was reluctant to call it lower for Tuesday.  Too bad too because it fell 0.75% for its biggest daily loss in a month.  That's a clear exit of the rising RTC for a bearish setup and a fresh bearish stochastic crossover.  So this one now looks lower again on Wednesday.

Euro:  Last night, in the face of a long-running downtrend I wrote that "this would be as good a time as any for the euro to stage a rally."  And hey presto, it did, right back up to 1.0950 on Tuesday erasing two days of losses in one swell foop with a giant green marubozu and its biggest gain in a month.  That leaves us with a fresh bullish stochastic crossover and indicators that are still oversold so this one just looks higher again on Wednesday.

Transportation:  And finally more confusion as the trans gained 0.74% on a day the Dow was down for some nice bullish divergence.  There's no real trend here aside from up/down/up and mostly higher highs and higher lows.  Going by that and with overbought indicators, you'd guess the next move would be lower.


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           2       1.000    854

     And the winner is...

On Tuesday we got the confirmat5ion of all the topping signals the market's been showing for several days now.  So with the charts all looking pretty bad, I'm going to go ahead and call Wednesday lower.

Single Stock Trader

I've been down on VZ for days now and on Tuesday I was finally vindicated as it dove a dramatic 2.35% on some negative news with a perfect gap-down doji star.  But that still leaves the indicators overbought, though they've now started lower.  So this is a reversal warning but I need confirmation before jumping in.

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