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- Monday higher....
- ES pivot 2072.75. Holding above is bullish.
- Rest of week bias uncertain technically.
- Monthly outlook: bias lower.
- Single stock trader: VZ not a swing trade buy.
Last Thursday night I played it conservative and made a conditional call for Friday. As it turns out, ES never even made a run at its pivot, closed well below and so the market closed lower. This doesn't always work, but it works often enough to keep it in Ye Olde Bag of Trickes. Oh and allow me to point out that I mentioned that Friday might be a hammer day and you will note that that is exactly what we got. So with the back-patting out of the way let's move on to Monday and see what the charts have to say about it.
The Dow: So on Friday, the Dow did nothing but go DOWn (nyuk nyuk) until it touched its lower BB. That propelled it back up on an afternoon rally to end with just a 46 point loss on the aforementioned hammer candle. The stochastic is just starting to curve around for a bullish crossover and RSI has now hit zero - it doesn't get any lower. RSI zero hits are quite rare and usually really good bottom markers.
The VIX: And correspondingly on Friday the VIX gave us a tall inverted hammer that sent indicators nearly overbought and started the stochastic curving around for a bearish crossover. So that's a reversal indicator here too.
Market index futures: Tonight, all three futures are higher at 12:23 AM EDT with ES up 0.24%. On Friday, ES put in a nice classic hammer with a tail that touched its lower BB and also successfully saved support at the 200 day MA. It also drove the indicators oversold, though the stochastic has yet to curve around for a bullish crossover. But overall this looks quite bullish to me.
ES daily pivot: Tonight the ES daily pivot falls again from 2082.92 to 2072.75. And that move plus the overnight rise in ES is finally enough to put ES back above its new pivot so this indicator now turns bullish.
Dollar index: On Friday that dollar gapped down to form a dramatic tall inverted hammer that just touched its upper BB before retreating for a 0.29% loss. That sent it out of its rising RTC for a bearish setup, sent the indicators lower off overbought and completed a bearish stochastic crossover. So I can finally make a call here for a move lower on Monday.
Euro: Similarly, on Friday the euro broke out of its falling RTC for a bullish setup on a tall hammer that sent the indicators off oversold and completed a bullish stochastic crossover. So overall this one looks bullish for Monday.
Transportation: On Friday the trans took a big hit, down 1.39% in a move that sent the indicators quite oversold. The stochastic is still in falling mode though so the reversal signs aren't quite as good here as the other charts.
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 3 1 0 1 0.800 261
And the winner is...
Tonight I'm seeing a number of quite good reversal signs in the charts that are supported by the overnight futures. The SPX Hi-Lo indicators has also hit 20, which is low enough for a market reversal. Meanwhile, Dr. Copper is showing signs of stabilizing after a miserable July (and June). So I'm just going to go ahead and call Monday higher. We'll see.
Single Stock Trader
VZ disconfirmed Thursday's hammer on Friday, getting caught up in the general slump as it continued lower. And with indicators amazingly still overbought, the end is not near. So still no buy here.