Friday, September 4, 2015

Friday lower

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Friday lower.
  • ES pivot 1953.83  Holding below is bearish.
  • Next week bias uncertain technically.
  • Monthly outlook: bias lower.
  • Single stock trader: VZ not a swing trade buy.
Last night I called Thursday uncertain mostly because I didn't really know where the market was headed. Turns out, it didn't know either.  The Dow finished all of 23 points higher.  But this might actually provide some clarity as to where Friday is going so let's go right to the charts and take a look as we end the first week of September.

The technicals

The Dow:  On Thursday the Dow put in a bearish doji star sitting right at the top of Wednesday's big gain. The indicators continued climbing and are now just shy of overbought . The stochastic continues to be threaded out, however I will note that OBV has started increasing again for the first time in a week. So we now have a reversal warning but one which requires confirmation. Therefore once again I cannot call this chart either way tonight.

The VIX:  The VIX continued to decline nicely on Wednesday and on Thursday it put in a doji star. With indicators now oversold and the stochastic threaded out at oversold levels this is something of a reversal warning. However it is one which requires confirmation. This is a good time to check out VVIX. After a big drop on Wednesday it put in a green bullish piercing pattern with indicators quite oversold and its own stochastic just forming a bullish crossover. That has bullish implications for the VIX and a rising VIX would be bad to the market.

Market index futures: Tonight, all three futures are lower at 12:26 AM EDT with ES down 0.82%. We had another doji on Thursday, almost a lopsided spinning top with a tall upper shadow that left it just short of where it started the day. Indicators have now started falling back before ever hitting overbought and the new overnight has taken a non-trivial tumble . So the combination of the new red candle and the reversal warning from Thursday has me thinking this chart could go lower on Friday.

ES daily pivot: Tonight the ES daily pivot rises again from 1934.42 to 1953.83. That now leaves ES back below its new pivot so this indicator now turns bearish.

Dollar index:  After spending an entire week noodling about randomly, on Thursday the dollar finally put in a decent gain of 0.60% to break out of its recent consolidation pattern.  The indicators continue to be fairly overbought but the stochastic also has yet to create a clear bearish crossover.  So with a new green candle in the books I still can't call this one lower yet.

Euro:  Last night I let the indicators cloud my judgement because we had a clear dark cloud cover from Wednesday for the euro. And on Thursday that was confirmed in a big way as the euro fell right back down to 1.1117. The indicators remain oversold and the stochastic remains threaded out. We've now broken support at 1.1170 for but at this point it's a toss-up whether the two black crows on the charts can trump the oversold indicators on Friday.

Transportation: It must really be doji night. On Thursday the trans formed a long legged doji star that left the indicators overbought and the stochastic continuing to rise. After Wednesday's big gains this looks like a fairly good reversal warning to me. And I wouldn't be surprised to see the trans move lower on Friday.

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    10      2       3           2       0.857   2314

September  2      0       1           0       1.000    762

     And the winner is...

Wednesday's rally is starting to look like a fake-out and after Thursday's anemic action the market is looking tired once again.  With a VIX looking ready to move higher, dojis all over the place, and futures guiding lower (possibly because traders don't want to be long over a long holiday weekend), I'm afraid I'll just have to call Friday lower.  that's all she wrote.  See you again next Monday night.  Happy Labor Day!

Single Stock Trader

I couldn't bless Verizon as a swing trade by last night but it managed a 37 cent gain on Thursday anyway.  However it also did it on a shooting star, its sixth reversal warning in a row.  The indicators continue rising into overbought territory and the stochastic looks like it's ready to head lower with a bearish crossover so this is once again not a swing trade buy.

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