Thursday uncertain

The Hoot 
Actionable ideas for the busy trader delivered daily right up front

• Thursday uncertain.
• ES pivot 1956.75  Holding below is bearish.
• Friday  bias uncertain technically.
• Monthly outlook: bias lower.
• Single stock trader: VZ still not a swing trade buy.

Recap

Last night I was pretty sure the market was going higher on Wednesday. We had a nice tall green marubozu and the indicators looked like they were rising towards overbought. But Mr. Market fooled me and instead the Dow plunged with another triple digit decline to fall right back into its recent consolidation zone. Is there no end to this? We check the charts for clues to Thursday.
The technicals

The Dow:  Since last month's big dump, the Dow has been unable to put together more than two in a row in either direction. That trend continued on Wednesday when it fell 239 for its third triple point move in a row. Clearly volatility is the word as it has been for the past month. I thought we had a chance of moving higher and indeed the Dow took a big leap out the gate Wednesday morning but that was it. It was all downhill from there. That left the indicators all continuing to descend from overbought and now with a tall bearish engulfing pattern in place, this chart just looks bearish for Thursday.

The VIX:  Last night it wasn't very clear what the VIX was going to do on Wednesday. The wide-ranging green candle we got on Wednesday was proof enough of that. In the end we got a small 5.34% gain. That leaves the indicators stuck halfway between oversold and overbought but with a completed bullish stochastic crossover and a bullish engulfing pattern now in place it looks like this chart has more upside potential than downside risk.

Market index futures: Tonight, all three futures are lower at 12:40 AM EDT with ES down 0.08%. So much for Tuesday's bullish engulfing pattern. On Wednesday ES began with good intentions with a sharp move higher. But that was all it had and it spent the rest of the day falling apart. The net result was a good bearish engulfing pattern. With the new overnight confirming that with a continued move lower this chart looks nothing but bearish for Thursday.

ES daily pivot: Tonight the ES daily pivot rises again from 1950.08 to 1956.75. But that now leaves ES below its new pivot so this indicator turns bearish.

Dollar index:   I also missed the dollar on Thursday. Wednesday night I thought it was going to lower but instead it gapped up early, although it did finally came back in to end the day up all of 0.02%. That leaves it now in a four-day consolidation range with the indicators continuing to fall off of overbought towards oversold. In general that looks bearish except for the fact that we are now almost down to some decent three day support. On the whole though I have to think there is still more downside available here on Thursday.

Euro: At least last night I had the sense to equivocate on the euro after a wide ranging spinning top on Tuesday. On Wednesday it put in a second wide-ranging candle, this one a small real bodied red hanging man which again is a reversal warning. But in the new overnight it looks like that has also come to nothing. as the euro continues significantly higher in the new overnight dragging the indicators higher with it. That all looks like a good setup for a higher close on Thursday.

Transportation:  And finally I was also wrong about the trans. After a tall green marubozu on Tuesday, I thought there was more room to run higher on Wednesday. But it was not to be and instead we lost 0.71% on a small bearish engulfing pattern. The indicators are not yet quite overbought but the stochastic has just squeaked out a bearish crossover. So overall this chart looks negative for Thursday.

Accuracy: 

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  4      1       1           0       0.800   1187

     And the winner is...

Tonight the charts are all looking decidedly more bearish than last night, and that includes the futures.  With the VIX still floating around above 25 I may live to regret this but the only logical course of action seems to be to call Thursday lower.

1:30 AM Update: Due to a sudden spike in ES, possibly due to some comments that just came out from the BOJ, I'm revising my call for Thursday to simply uncertain.

Single Stock Trader

I was a bit surprised last night about Verizon's advance on Tuesday but I wasn't ready to commit to a buy. Good thing too because on Wednesday it formed the mother of all bearish engulfing patterns to close down 1% on a tall red marubozu. That sent the indicators all continuing lower, including the stochastic, so this chart definitely looks bearish tonight. Still no buy here.