Friday, August 21, 2015

Friday lower

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Friday lower.
  • ES pivot 2042.58  Holding below is bearish.
  • Next week bias uncertain technically.
  • Monthly outlook: bias lower.
  • Single stock trader: VZ still not a swing trade buy.

It was a just flat out ugly day on Wall Street with the SPX gapping right down through its 200 day MA.  ES never even threatened its pivot in the early morning hours and that was that - we just continued lower the rest of the day.  When will this selling end? Let's check the charts and see if we can figure out Friday.

The technicals

The DowWow - the Dow took a tumble right out the gate Thursday morning then continue to drift lower most of the rest of the day until finally in true kick 'em when they're down fashion they knocked it lower again into the close to finish at session lows. Amazingly this tall red marubozu traded mostly below the lower BB and although the indicators are now oversold they're not vastly so. And this candle also exited the last rising RTC for a bearish trigger.  On top of that on Thursday we gave up support at 17,189 and then kept right on going to break support that goes all the way back to last December at 17,533 leaving the Dow at its low of the year.  I'd like to say the selling is overdone here but I'm afraid I don't see any bullish technical signs on this chart at all.

The VIXAnd speaking of wow, take a look at the VIX which on Thursday rocketed up just over 25% on a giant gap up moonshot marubozu that traded nearly entirely above its upper BB and very nearly hit 20 in the process.  Up 25% - one one day?  Are you freakin' kidding me?  That was just short of the highs hit last month when the world was about to collapse because of oh what was it, oh yes Greece I believe. When Mr. Market takes giant legs up like this it tends to stick around awhile as opposed to the usual behavior of the VIX which is to fall back within a day or two of hitting its upper BB. So despite highly overbought indicators we can't quite call this one lower yet specially since the stochastic has not even begun to curve around in preparation for a bearish crossover.

Market index futures: Tonight, all three futures are lower at 1:31 AM EDT with ES down a significant 0.52%.  Wednesday it looked like ES might be headed higher after bouncing off its 200-day MA but on Thursday instead it just totally fell out of bed and crashed right through the same MA and its lower BB to close at 2028. That left the indicators oversold but the stochastic still has not yet begun to curve around for a bullish crossover.  With its worst day since uh, the late Middle Ages ES is looking just plain ugly tonight.  The only possible salvation at this point would be for a DCB or a relief rally on Friday.

ES daily pivot: Tonight the ES daily pivot plunges from 2079.08 to 2042.58.  We remain way below the new pivot so this indicators just continues bearish.

Dollar indexThe dollar on Thursday also took a dump with a gap-down red spinning top that closed right on its lower BB which continues to fall away.  It also traded outside its last rising RTC for a bearish trigger.  The indicators are once again oversold, however the stochastic in a worrisome sign, just completed a bearish crossover from a low level which means that despite vague reversal warnings from the candle I can't call this chart higher yet and in fact it looks like there's still more downside to come.

EuroLast night I thought the euro was going higher on Thursday and it turns out that's just what happened as it continued on to close at 1.120.  That was also a bullish trigger on a descending RTC exit and it also formed a bullish stochastic crossover from a high level.  Those are generally good for another day or two of higher prices. We also cleared resistance at 1.1169 so at this point I would have to think that the euro goes higher again on Friday.

TransportationAnd finally, on Thursday the trans underperformed the Dow with a giant red marubozu that dropped two and a half percent to fall out of a short rising RTC, stopping only on its lower BB which coincidentally was also right when the bell rang.  This sent the indicators oversold but also completed a bearish stochastic crossover.  Until we see a reversal candle or at least the stochastic curving around for a bullish crossover I can't call this chart 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      10      1       5           4       0.938   1212

August     6      1       1           2       0.889    666

     And the winner is...

OK, no fooling around tonight.  I was looking for some signs that Thursday's selling might be overdone or that a DCB might kick in but there's just no way.  These charts have been beaten soundly with the ugly stick.  I wish it was different but as far as I can tell, on Friday Mr. Market is going down.  That's all, she wrote.  That's enough.  See you again Sunday night!

Single Stock Trader

Last night I decided to hold off on calling Verizon a buy based on it's spinning top candle and on Thursday I was glad I did because it got hit hard along with the rest of the market.  That was enough to drive the indicators oversold but the stochastic continues to fall and although we're now near a potential buy level I'm still not on board.

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