Wednesday, August 12, 2015

Wednesday lower

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Wednesday lower.
  • ES pivot 2084.08.  Holding below is bearish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias lower.
  • Single stock trader: VZ not a swing trade buy.

You'd think "OMG, Chicom devaluation!  Auto-sell sell sell!"  But it's not that simple.  ES actually spent most of the wee hours Tuesday morning just noodling about its pivot.  Until about 7:15 it looked like there was a chance the damage had already been done with the decline right after the announcement Monday night.  But no, ES gave up the ghost at that point and the market closed lower.  That's what my  "conditional call" (TM) is all about.  When it works, it works well.

So let's wander on to Wednesday and see what Mr. Market will make of all this.

The technicals

The Dow:  On Tuesday the Dow gave up almost all of Monday's gains on a tall inside harami - admittedly not the best reversal candle.  But it was enough to short-circuit all the developing positive technicals from Monday and put the Dow right back into its descending RTC.  So this chart in one day turns right back to bearish.

The VIX:  You can basically forget all the technical forecasts I made last night as they were all torpedoed by the Chicoms.  Case in point, the VIX, which did not go down at all, vaulting up over 12% instead on a gap-up lopsided spinning top.  Interestingly, it did not surpass the peak hit all of two days ago when we had our last crisis du jour.  But it was enough to send the indicators almost overbought and amazingly even cause a bearish stochastic crossover.  So with this yawning gap now below us, I'd say the next move looks lower.

Market index futures: Tonight, all three futures are significantly lower at 12:45 AM EDT with ES down 0.67%, apparently on more currency finegaling by the Chicoms.  On Tuesday ES also gave up most of Monday's gains on a wide dark cloud cover.  But with two essentially new-driven candles back-to-back, I'd take the current setup with a grain of salt.  I'm more interested in the overnight gains being posted here.

ES daily pivot: Tonight the ES daily pivot falls again from 2090.92 to 2084.08. But the sharp move lower in the overnight now leaves ES well below the new pivot so this indicator now looks quite bearish.

Dollar index:  And with the Chicom devaluation, of course the dollar rose, up 0.14% on a bullish piercing pattern.  But indicators are not yet oversold and the stochastic continues falling so this one requires confirmation before calling it higher on Wednesday.

Euro:  And as another consequence, it was one of those rare days when both the euro and dollar rose, the euro in this case touching its upper BB before retreating to close higher at 1.1035 on a long-legged spinning top.  But the new overnight isn't confirming it, moving higher still.  So despite now being overbought, I can't call the euro lower yet.

Transportation:  Interestingly, the trans relatively outperformed the Dow, down only half as much on Tuesday in a move that actually bent the stochastic around in anticipation of a bullish crossover.  It's a stubby spinning top though so at this point we need to wait a day and see where this chart sorts out.


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           2       0.857    503

     And the winner is...

There's really not much bullish about the charts tonight but the kicker is that it looks like deja vu all over again as the Chicoms once again tinker with their currency.  And the drop in the futures is even bigger tonight than last.  And since we all know how that one turned out I'm just going to go ahead and call Wednesday lower.

Single Stock Trader

On a mostly down day, VZ was one of few winners on the Dow, putting in a gap-up bearish gravestone doji that hit its upper BB.  Now that's definitely not the buy setup I'm looking for, so we just continue waiting here.

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