Wednesday, August 5, 2015

Wednesday depends on ES pivot

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Wednesday higher only if ES breaks above its pivot, else lower.
  • ES pivot 2086.92.  Holding below is bearish.
  • Rest of  week bias uncertain technically.
  • Monthly outlook: bias higher.
  • Single stock trader: VZ not a swing trade buy.

Ja, ja, the market was looking saggy last night and sure enough down it went some more on Tuesday.  With Greece and China apparently now out of the way, the technicals seem to be working again, so let's capitalize on that and see whither Wednesday.

The technicals

The Dow:  On Tuesday the Dow gave up another 48 points on a lopsided spinning top to give us three black crows.    This was the payoff on Monday's bearish RTC trigger.  It also confirmed a bearish stochastic crossover and with the indicators still a long ways from oversold we're now in full-blown bearish mode here.

The VIX:  Ah, El Vixmo.  Last night I wrote that "there's more upside left here."  And sure enough on Tuesday the VIX rose another 3.5%.  This gave us a bullish trigger on a descending RTC exit as well as a bullish stochastic crossover.  So there's nothing but bullish signs on this chart right now.

Market index futures: Tonight, all three futures are higher at 12:25 AM EDT with ES up  0.16%.  On Tuesday ES just kept on falling to yield three black crows, a completed bearish stochastic crossover and a steep new descending RTC.  No bullish reversal signs on this chart, fer sure.

ES daily pivot: Tonight the ES daily pivot falls again from 2091.17 to 2086.92. That still leaves ES under the new pivot but only by a fraction of a point, close enough in fact that it's a wash at this point.

Dollar index:  Whoa!  The dollar was doing exactly nothing until 1:25 PM EDT when it suddenly took off the end with a 0.42% gain and its highest close since July 20th.  This tall green marubozu was the mother of all bullish engulfing patterns.  However it was also enough to send the stochastic around in preparation for a bearish crossover.  And since we're now just short of month-long resistance I'd say further upside is limited from here.  Wednesday might be a doji day.

Euro:  Last night I wrote that it "[l]ooks like there's at least one more day lower in store before the reversal."  And in fact the euro did fall again, back to 1.0897 easily giving up support at 1.0915 in the process.  That now leaves it oversold and with a stochastic curving around for a bullish crossover.  The overnight is continuing lower though so the best I can say is that a move higher is coming before the end of the week but it may not be Wednesday.

Transportation:  In what would ordinarily seem to be a bit of bullish divergence, the trans rose 0.12% on a day the rest of the market was lower.  However, Tuesday's candle was stopped by resistance at5 8427 just like the last four days.  And with indicators now highly overbought along with a new bearish stochastic crossover it looks to me like the trans are headed lower on Wednesday.


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     2      0       0           0       1.000    140

     And the winner is...

Tonight the charts overall are still looking pretty bearish.  Ordinarily I'd just go ahead and call Wednesday lower but I always hate to go against the futures,  On the other hand the futures alone aren't enough to make a bullish call.  But the proximity of ES to its pivot makes this a good opportunity for a conditional call: if ES can break above its new pivot and stay there by mid-morning Wednesday, we'll close higher.  But if it remains below or falls further, we close lower.

Single Stock Trader

I guess third time's the charm.  After three reversal candles in a row, VZ finally gave up the ghost on Tuesday, down 0.64%.  And that stopped right on the edge of its latest rising RTC.  We'll call it a bearish setup.  And the stochastic is perched on the cusp of a bearish crossover (the two lines are only 0.01 apart).  So it looks like the selling still has some more to go.

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