Thursday, August 20, 2015

Thursday depends on ES pivot

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Thursday higher only if ES breaks above its pivot, else lower.
  • ES pivot 2079.08.  Holding below is bearish.
  • Friday bias higher technically.
  • Monthly outlook: bias lower.
  • Single stock trader: VZ still not a swing trade buy.

Last night all the charts suddenly started looking bearish which was why I was pretty confident that it was a good time to call Wednesday lower and indeed that's just what happened despite a mid-afternoon rally centered about the release of the Fed minutes - but that's neither here nor there . It was a big move and changes the picture considerably so let's move on to Thursday  and see what's going to happen next .

The technicals

The DowOn Wednesday the Dow took quite a tumble falling right out of its rising RTC on a tall red candle that just touched its lower BB before  recovering a bit and driving the indicators oversold.  We also broke support at 17,363 and formed a bearish stochastic crossover.  So technically there's nothing bullish  about this chart tonight - again

The VIX:  Last night I wrote that "the VIX now looks higher on Wednesday".  And that was a great call because the VIX on Wednesday took a giant 10.6% pop right over its 200-day MA for a tall green spinning top that sent the indicators highly overbought and formed a new bullish stochastic crossover.  But this now has the look of an evening star so I'm cautious about calling the VIX any higher from here.  The general tendency recently of the VIX is to go lower after a 200 day MA breakout

Market index futures: Tonight, all three futures are higher at 1:17 AM EDT with ES up 0.08%.  On Wednesday ES had its worst day in a month with a tall red candle that drove it right out of its rising RTC for a bearish set up.  We just touched the lower BB and also very nearly touched the 200 day MA which is now fairly close at 2064. That also confirmed the bearish stochastic crossover and sent the indicators continuing lower.  However it looks like the overnight is trying to rally a bit and indeed after such a big one day loss we may be due for a DCB or some sort of relief rally.  I note too that ES successfully tested support around 2072 on Wednesday, so that's a good sign.

ES daily pivot: Tonight the ES daily pivot dives from 2096.00 to 2079.08.  Even after all that, ES is still below its new pivot so this indicator continues bearish.

Dollar indexLast night I figured the dollar was going higher again because of the tall green marubozu ignoring the fact that it was also a dark cloud cover because it was green.  On Wednesday though it all came crashing back down with a big 0.72% loss on a tall red inverted hammer that curved the stochastic around in preparation for a bearish crossover and sent RSI lower despite having only just gotten off oversold.  That's also a bearish exit on a rising RTC so there's really nothing bullish looking about this chart tonight

EuroOn Wednesday the euro also fooled me after four down days in a row.   With no reversal candle in sight I figured it was due to move lower again.  But much to my surprise it instead jumped higher with a tall green marubozu to close at 1.115 and that was enough to pop it right out if its descending RTC for a bullish setup and form a bullish stochastic crossover from a high level.  Those are generally good for another day or two of higher prices and with the overnight going a bit higher yet again I think it's fair to say that on Thursday the euro will close higher

Transportation:  And finally, last night I wrote that "this pattern definitely doesn't look bullish anymore."  And indeed it wasn't as on Wednesday the trans confirmed Tuesday's spinning top with a definitive move lower that curved the stochastic around in preparation for a bearish crossover. While we remain in a broad rising RTC this pattern definitely looks to have topped.  I think we're going lower again on Thursday


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...

I really think Wednesday's losses were a bit overdone and the market is due for some retracing.  We're also near some good support levels on various charts and have gotten some good reversal signs too (BB hits).  But all that junk requires confirmation so the best I can do, given the proximity of ES to its pivot, is a conditional call.  If ES manages to break above its pivot by mid-morning Thursday, we'll close higher.  If on the other hand it remains below the pivot, we'll close lower.

Single Stock Trader

On a decidedly ugly day in the market VZ was actually one of the better performers dropping just two cents on a tall spindly  spinning top that sent the indicators lower from overbought and continued a completed bearish stochastic crossover. Overall though this is only a reversal warning and it looks like there might still be more selling in store. In any case this is still not my preferred swing buy opportunity so that leaves us exactly where we've been - just waiting.

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