Friday, September 18, 2015

Friday uncertain

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Friday uncertain.
  • ES pivot 1987.00.  Holding below is bearish.
  • Next week bias lower technically.
  • Monthly outlook: bias lower.
  • Single stock trader: VZ not a swing trade buy.

Well that was certainly interesting. The market went essentially nowhere as expected until 2 PM and then as soon as the Fed announcement came out all hell broke loose as Mr. Market went right off his meds again. First the market was up then it was down then was way up ad then finally it spent the rest of the afternoon sinking until the Dow finished with a modest 65 point loss.  I'll have to seriously consider taking up day trading if this kind of thing continues.  In the meantime we got an interesting candle so let's take a look at the implications for Friday.
The technicals

The Dow:  In the end, after all the months of endless speculation and hoopla surrounding the question of whether the Fed would raise rates in September or not the end result was pretty anti-climactic. I will point out that the Night Owl was one of the people who predicted there would be no rate increase in September. What we did get on Thursday was a small 0.39% loss in the Dow with a tall inverted hammer that caused the indicators to peak just above overbought and begin moving lower. The stochastic is also now well positioned for a bearish crossover. While we remain in a rising RTC the stage seems to be set for a move lower on Friday.

The VIX:  With all the crazy action on Thursday you would think the VIX would have spiked higher. Instead it actually fell 1%. But it did it on a tall spindly spinning top that seems to have caused the indicators to bottom at oversold. With the stochastic threaded out at a low level it is useless for prediction though. However we now at least have a reversal warning so it's not out of the question that the VIX might move higher on Friday.

Market index futures: Tonight, all three futures are higher at 12:39 AM EDT with ES up 0.16%. Like the Dow, on Thursday ES put in a an inverted hammer with a giant upper shadow. The real body of this candle is a bearish harami and the indicators are back to overbought. We also have a new bearish stochastic crossover and the overnight is gapping lower making it look like there is more downside in store on Friday.

ES daily pivot: Tonight the ES daily pivot rises from 1979.92 to 1987.00. That's enough to put ES back below its pivot so this indicator now turns bearish.

Dollar index:  After a failed attempt at reclaiming its 200 day MA on Wednesday , on Thursday the dollar simply gave up the ghost and gapped down with a huge 0.91% loss that really got going as soon as the Fed announcement came out. There is nothing bullish about this chart tonight and with the lower BB now not too far away it looks like there's more downside in store on Friday.

Euro:  And of course similarly on Thursday the euro put in a tall green candle to break resistance convincingly at 1.1359 before closing at 1.1413 - its best close since August 25th. With a confirmation of Wednesday's spinning top and support from the 200 day MA there's nothing really bearish about this chart tonight other than the fact that the euro might have run a little too far too fast. The overnight is running slightly higher but at the moment is forming a spinning top of its own and so it's not clear whether the euro has enough gas in the tank to continue higher on Friday.

Transportation:  When the smoke cleared Thursday the trans put in a tall inverted hammer just like the Dow. However unlike the Dow they actually managed to gain 0.39% as opposed to fall 0.39%. That keeps them in a rising RTC and even though the indicators remain quite overbought this is only a tentative reversal sign and one which requires confirmation.


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  5      2       5           0       0.714   1228

     And the winner is...

There's a small rally attempt going on in ES right now as I write but the overall look of the charts tonight is bearish.  It looks like our ascending triangle breakout is fizzling.  Unfortunately, our reversal signs, like the VIX require confirmation.  And to top it all off, Friday is a triple-witching.  So I regretfully have to call Friday uncertain.  Perhaps with this crazy week finally behind us we can get back to calling the close next week.  That's all she wrote.  See you again Sunday night!

Single Stock Trader

When all the shouting was over Verizon was not one of the winners on the Dow, suffering a gap-down 2% loss on Thursday that sent the indicators continuing lower off overbought and also formed a bearish stochastic crossover. The candle is a wide-ranging spinning top but with the indicators still nowhere near oversold it still isn't a swing trade buy.

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