Friday, August 28, 2015

Friday uncertain

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Friday uncertain.
  • ES pivot 1971.33  Holding above is bullish.
  • Next week  bias uncertain technically.
  • Monthly outlook: bias lower.
  • Single stock trader: VZ still barely a swing trade buy.

Well it was another wild and woolly day on Wall Street Thursday.  It ended up being pretty much a rerun of Wednesday with the Dow jumping big right out the gate, then fading promptly at 2 PM only to recover and go blasting into the close at the highs of the day.  And with the Dow's 369 point advance, the Night Owl has now recovered all of the sickening three and a half percent loss she suffered on Monday and then some, just like that.   I didn't even trade it. Of course I didn't sell anything but what I did do was spend a lot of time kicking myself because I didn't have any cash to put into the market.  I had some bills to pay that used all y cash this month and the timing wasn't good. It really was an extraordinary opportunity though.  Oh well, that's life.  Now let's set our sights on Friday as the month winds down.

The technicals

The DowIt was pretty nuts. The Dow was all over the map on Thursday but in the end gave us a lovely tall textbook green marubozu that traded entirely outside the latest descending RTC for a clear bullish setup.  The indicators are only just now off oversold, continue to rise smartly, and the stochastic has a nicely completed bullish crossover going.  This chart now looks full-on bullish.

The VIX:  Last night I wrote that "this chart now looks full-on bearish'.  And so it was, with the VIX gapping down 14% on Thursday on its second red spinning top in a row.  That was also enough to leave the rising RTC for a bearish setup.  With indicators still overbought and the stochastic descending in a bearish crossover, it looks like there's still more downside available here.

Market index futures: Tonight, all three futures are lower at 1:52 AM EDT with ES down 0.38 %.  Considering the advances we saw on Wednesday, the continuing rise in ES on Thursday was nothing short of extraordinary.  It finally sent the indicators off of oversold with a bullish stochastic crossover in full effect.  So with the confirmation on Tuesday of Monday's doji star and now two white soldiers, this chart looks continued bullish.  The only problem is that a non-trivial decline in the new overnight is raising the caution flag.

ES daily pivot: Tonight the ES daily pivot jumps again from 1910.50 to 1971.33.  ES continues above its new pivot so this indicator continue bullish.

Dollar index:  Last night I wrote "we're good for more advances on Thursday"And indeed the dollar gapped up over half a percent on Thursday to jump right back over its 200-day MA which was also the second day it traded  outside its descending RTC so that's a bullish trigger.  On the other hand it was also a gravestone doji . But indicators are not yet overbought so in the presence of conflicting indicators I'm not calling this chart tonight.

Euro:  Last night I wrote tht "this chart now looks continued bearish."And indeed it was with the euro gapping right back down under its 200-day MA on a red spinning top to close back down to 1.1243.  That makes it three down in a row now and Thursday's candle was a bearish trigger on a rising RTC exit.  With all the indicators now descending smartly off overbought but not yet down to oversold it looks like there's more downside coming here on Friday.

TransportationAnd finally, on Thursday the trans outperform the Dow with a nice tall green marubozu of their own. This one also exited their descending RTC for a bullish setup. Indicators are all rising off the bottom and only just off oversold, and we have a clear bullish stochastic crossover.  So there's really nothing bearish about this chart at all tonight.


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     9      2       2           2       0.846   2199

     And the winner is...

Another tough one.  Last night I was worried the market may have run too far too fast.  Those concerns are only doubled tonight, particularly since the futures appear to have done a turn-around.  Also this is now Friday and traders may once again not want to be long over the weekend given recent events.  There's also Jackson Hole and who knows what announcements are likely to pop out of that.  And with the VIX lower but still around 26 this one is just too risky for me to call one way or the other.  If I had to take a wild guess I'd give better than even odds we go lower, but officially I'm just going to call Friday uncertain.  That's all she wrote.  See you again Sunday night!

Single Stock Trader

Last night I said they were still more room to run in VZ and indeed on Thursday it gave us a nice 2% gap-up pop but did it on a hanging man.  Still, the indicators remain closer to oversold then overbought so I'm not quite ready to call this one lower yet.  I think you could still get in on this trade but I also think at least half the money has already been made in this trade.


  1. Michele, Can you comment on the "pending" S&P deathcross?

    1. This comment has been removed by the author.

    2. [Previous reply deleted to fix some typos - stupid Blogspot offers no way to edit commenets]

      I don't pay any attention to these "death crosses". I don't even have those MA's up on my charts. There's a good article about this here:

      I much prefer the use of regression trend channels (RTC) and what I *do* see on the SPX monthly chart is that we have this month exited a very long-running rising monthly RTC all the way back to June of 2012. That marks a "bearish setup", ie. a warning that the current uptrend may be over. If SPX ends the month below 2101 (which is virtually certain) and then finished September below 2122 (the lower line of the rising trend next month), then that will be a "bearish trigger" and a confirmation that this long-running uptrend is indeed over and that we're likely looking at lower prices for some period of time.

      A few days ago I pointe to the Morningstar Market Fair Value Index which is also suggesting more downside to come.

      While not a fan of the death cross in general, I'm afraid this particular one may have something to it.


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