Tuesday, August 11, 2015

Tuesday depends on ES pivot

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Tuesday higher only if ES stays above its pivot, else lower.
  • ES pivot 2090.92.  Breaking  above is bullish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias lower.
  • Single stock trader: VZ not a swing trade buy.

Yup - I figured Monday was looking higher last night and the technicals did not disappoint with a nice 242 point pop for the Dow.  I'm the first to admit when I'm wrong so I might aw well take credit when I'm right.  But that was then and this is now.  And tomorrow is Tuesday.  So let's see what the charts predict after this interesting day.

The technicals

The Dow: On Monday the Dow had its best day since May with a jolly green 1.39%  marubozu that blew it right out of its descending RTC for a bullish setup, sent the indicators starting higher off oversold, and formed a sharp bullish stochastic crossover.  Technically, this looks nothing but bullish.

The VIX:  Last night I noted that the VIX was getting ready to reverse and it sure did, down 8.66% on Monday on a big gap-down red marubozu that sent the indicators lower before ever hitting overbought and formed a good bearish stochastic crossover..  Now there's still strong year-long support around 11.95 but that still leaves some room to run lower before hitting that on Tuesday.

Market index futures: Tonight, all three futures are lower at 1:05 AM EDT with ES down 0.40 %.  ES had its best day in a month on Monday, handily confirming Friday's hammer, sending the indicators higher off oversold, completing a nice bullish stochastic crossover and exiting the descending RTC for a big bullish setup.  That all looks strong except that we're real close to resistance at 2104.  So we need to see how ES deals with that level.

ES daily pivot: Tonight the ES daily pivot rises from 2072.75 to 2090.92. That leaves ES sitting right on top of the new pivot so this indicator is indecisive.

Dollar index:  After days of wishy-washy indecision last night I wrote that "I can finally make a call here for a move lower on Monday."  And that call paid off with a 0.43% decline in the dollar to trade entirely outside its recent rising RTC for a bearish trigger.  With indicators now falling off overbought and s solidly completed bearish stochastic crossover there seems to be lots of room to run lower still here.

Euro:  Last night I wrote that "this one looks bullish for Monday", and indeed the euro rose again to close at 1.1024 in a move that sent the indicators overbought.  The stochastic is still rising though but the new overnight seems to be losing steam so we could be in for a pause here on Tuesday.

Transportation:  On Monday the trans did a bit better than the Dow with a bullish one white soldier good for a nearly 1.5% advance.  That drove the indicators right off oversold and sent the stochastic curving around to prepare for a bullish crossover.  So it looks like there's plenty of gas in this tank for further gains.


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     4      1       0           1       0.800    503

     And the winner is...

Tonight the charts are generally bullish technically  following last Friday's bottoming action.  Whether the reversal can be sustained is another issue particularly given the non-trivial losses in the futures, apparently triggered by news of a currency devaluation by the Chicoms.  What pin action this will have on Tuesday is unclear.  But with ES currently sitting exactly on top of its pivot, that's a perfect opportunity for another conditional call: if ES breaks above its pivot and stays there by mid-morning Tuesday, we close higher.  But if it breaks lower and stays there by mid-morning, we close lower.  Simple as that.

Single Stock Trader

VZ got swept up in the general euphoria on Monday with its best day since March.  It wasn't looking that way on its own merits though, so I couldn't call it higher that way last night.  But everything I wrote about the Dow tonight holds true for VZ too.  Except that we're now nearly overbought and I'm afraid this might be a case of running too far too fast.  So Tuesday could be a pause here and therefore I'm not calling it a buy.  This is a pop we just missed.

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