Actionable ideas for the busy trader delivered daily right up front
- Monday lower.
- ES pivot 2101.00. Holding below is bearish.
- Rest of week bias uncertain technically.
- Monthly outlook: bias higher.
- Single stock trader: VZ not a swing trade buy.
Last Friday held true to historical form as the Dow dropped 56 points after two nice days of gains.That comes at an interesting juncture as we begin a new month so let's head straight to the charts to see what they have to say about Monday.
The Dow: For the third day in a row the Dow was stymied by the 200 day MA last Friday. After two failed attempts to break through, it just gave up and moved lower. That confirmed Thursday's dragonfly doji and curved the stochastic around to prepare for a bearish crossover. With a candle that closed right on the edge of a short rising RTC, this chart now looks more bearish than not for Monday.
The VIX: After a confirmed bearish evening star last week that sent the VIX scurrying back below its 200 day MA, on Friday we got a small doji star that after four days of declines signals a reversal warning. That's supported by a descending RTC exit for a bullish setup. And the stochastic is curving around for a bullish crossover so I'd say the VIX is going higher Any Day Now.
Market index futures: Tonight, all three futures are lower at 12:18 AM EDT with ES dow 0.11%. Last Friday ES gave use a second reversal warning in a row with a lopsided spinning top following a hanging man. With indicators nearly overbought and the futures not doing much of anything in the overnight, I'd be cautious about going long at this point.
ES daily pivot: Tonight the ES daily pivot rises again from 2098.58 to 2101.00. That now places ES back below its new pivot for the first time in several days so this indicator turns back to bearish.
Dollar index: On Friday the dollar put in perhaps the tallest gravestone doji I've ever seen, battling its way back from early losses to finish essentially unchanged. But with the indicators caught halfway between oversold and overbought, and what looks like a bearish evening star complete, once again this chart is too tough to call.
Euro: And similarly, I couldnt' get a good read on the euro last Thursday night but looking at the crazy gravestone doji we got, who can blame me. A big attempted move higher was soundly rejected and the indicators continue falling towards oversold so if anything I'd guess the next move is lower on Monday.
Transportation: The trans also lost ground last Friday confirming Thursday's hanging man with a 0.33% fall that curved the stochastic around to prepare for a bearish crossover. After bouncing off their upper BB on Wednesday the trans were unable to make any further headway. That all looks like lower on Monday to me.
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
And the winner is...
The first day of most months is historically bullish but August is not one of those. And we now have the Dow failing to make any headway for three days in a row suggesting a decided absence of buyers at the 200 day MA as we enter the dog days of summer. And tonight we've got a number of reversal signs on the charts. Add it all up and I figure I'm going to call Monday lower. I'll be happy to be proven wrong since I'm always net long.
Single Stock Trader
VZ was one of the Dow stocks moving higher on Friday but it did it on a tall inverted hammer, the second reversal warning in a row. With indicators now near overbought, this is definitely not a buy point.