Wednesday, August 19, 2015

Wednesday lower

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Wednesday lower.
  • ES pivot 2096.00.  Holding below is bearish.
  • Rest of week bias higher technically.
  • Monthly outlook: bias lower.
  • Single stock trader: VZ still not a swing trade buy.

Last night I was conflicted about whether to call the market higher because of all the positive-looking charts, or just uncertain because, "I note that the Dow has been putting in lower highs since May now and Monday's high lies right along that descending line."  Well the latter view turned out to be a better interpretation and that now raises some concerns.  So let's continue to Wednesday as op-ex week rolls along.

The technicals

The Dow:  What stands out from Tuesday's results is the continuation of a trend back to May of the Dow continuing to make lower highs.  While the Dow remains in a short rising RTC and the indicators remain just short of overbought, Tuesday's red spinning top is definitely concerning.  And I'm giving it better than even odds of going lower again on Wednesday.

The VIX:  his chart definitely surprise me by gaining 5.91% on a bullish harami on Tuesday after really looking like it was going lower.  The net result was a trade outside the descending RTC for a bullish setup and a stochastic that's curving around for a bullish crossover.  So the VIX now looks higher on Wednesday.

Market index futures: Tonight, all three futures are lower at 12:25 AM EDT with ES down 0.12%.  On Tuesday, ES found resistance at 2100 just too much for it as it fell back to 2094 on a red spinning top in a move that curved the stochastic around in preparation of a bearish crossover and peaked the indicators short of overbought.  That's all a good sign of lower to come, and despite a rally attempt earlier this evening ES is now drifting back down.

ES daily pivot: Tonight the ES daily pivot rises again from 2091.50 to 2096.00. That now puts ES back below its new pivot so this indicator turns bearish.

Dollar index:  At least I got this much right when last night I wrote "this chart looks bullish again."  And the dollar indeed gained another 0.26% on Tuesday rejecting the spinning top in a big way.  Indicators are only just barely off oversold and the bullish stochastic crossover is nicely completed so this one just looks higher again on Wednesday.

Euro:  And last night I also wrote "I don't think the selling is done here yet."  Good thinking too because the euro just fell out of bed Tuesday right back down to 1.1023.  That was enough to drop it right out of a two-week rising RTC for a bearish setup.  And with indicators only just now off overbought and a bearish stochastic crossover in full effect, I think there's still room to run lower.

Transportation:  It's also concerning that despite an absence of bearish signs, on Tuesday the trans lost 0.21% on a dark cloud cover as a spinning top.  Indicators are not quite yet to overbought but this pattern definitely doesn't look bullish anymore.


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     5      1       1           2       0.875    503

     And the winner is...

What a difference a day makes.  Tonight all the charts are suddenly looking bearish and with continued failure at recent resistance indicating trouble finding more buyers, I'm going to have to go with that and call Wednesday lower.

Single Stock Trader

Last night I didn't want to bless VZ despite a bullish engulfing pattern and indeed it lost ground on Tuesday, this time on a bearish dark cloud cover as a spinning top.  With indicators still overbought and a completed bearish stochastic crossover there's just no buying this one.

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