Thursday, September 24, 2015

Thursday uncertain

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Thursday uncertain.
  • ES pivot 1926.92.  Holding below is bearish.
  • Friday bias lower technically.
  • Monthly outlook: bias lower.
  • Single stock trader: VZ not a swing trade buy.
Recap apologies to all my readers for having missed last night's post. I had a family emergency involving one of my dogs, which required an all day trip to a large veterinary specialist hospital in another city. By the time I got back home there was no time left to study the market and I figured it was better to just skip it entirely then try to wing it and possibly be wrong. As it turned out Tuesday's action was pretty much general continuation. So now that we're back on track let's move ahead and figure out where Thursday is going.

The technicals

The Dow:  Monday night I mentioned some doubts as to whether the rally we had could be sustained into Tuesday. Turns out it couldn't as we got another day of losses. Those were followed on Wednesday with more losses with the Dow down 0.31% on a short stubby hammer. Indicators are still a fair ways away from oversold but the stochastic is finally starting to curve around for a bullish crossover. So now we have at least a minor indication of a reversal but we remain in a tight descending RTC. Bottom line, it's still too soon to call the Dow higher on that basis.

The VIX:  Well this was one unusual thing I did miss on Tuesday. The VIX put in a huge inverted hammer that looked like an excellent reversal sign. And indeed on Wednesday the VIX moved lower by 1.38% to finish with a perfect doji star. Indicators are wandering around between overbought and oversold but the stochastic looks like it is now moving into position for a bearish crossover. Another unusual point is that the VIX fell on a day when the market was also lower.  Overall the VIX remains in a descending RTC so I'd say there's a good chance that we move lower again on Thursday.

Market index futures: Tonight, all three futures are lower once again at 12:09 AM EDT with ES down 0.34%. After a week in a steep descending RTC , on Wednesday ES put in a decent reversal candle in the form of a long-legged spinning top. Indicators have now fallen very nearly to oversold and the stochastic is definitely curving around in preparation for a bullish crossover.Unfortunately, ES is showing no interest in the wee hours of going any place other than down again as it remains in a steep descending RTC.

ES daily pivot: Tonight the ES daily pivot falls again from 1938.25 to 1926.92.  But even that isn't enough to put ES back above its new pivot as it just continues falling away from it.  So this indicator continues bearish tonight.

Dollar index:  Monday night I mentioned that the dollar looked bullish. And on Tuesday it did indeed gap up on a stubby spinning top. That was followed on Wednesday with a 0.25% decline on a red candle that formed a perfect bearish engulfing pattern. It also sent indicators slightly lower just before they reached overbought. The stochastic is not yet in position for a bearish crossover but it looks like that could happen very soon. Overall this chart looks negative for Thursday.

Euro:  Monday night I mentioned the euro fall through its 200-day MA as a bearish sign. And indeed on Tuesday it continued to move lower closing at 1.1147. Then on Wednesday it staged a comeback with a bullish engulfing pattern to recoup all of Tuesday's losses and then some, closing right back up to 1.1222. But in the overnight it seems to be giving some of that back again. However we now have indicators rising off of oversold and a just-completed bullish stochastic crossover. So the majority seems to vote that the euro goes higher on Thursday.

Transportation:  After a bearish trigger on Monday the trans took a bad fall on Tuesday. That was followed by a smaller 0.44% decline on Wednesday on a small red hammer. The indicators are now all falling towards oversold and the stochastic is beginning to curve around for a bullish crossover. So we do have a fair reversal warning in place and there's a chance the trans could finally move higher on Thursday.


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      3       6           1       0.667   1102

     And the winner is...

Tonight we have a decidedly mixed picture with most of the charts looking ready to move higher but the futures guiding lower and oil looking ready to take another leg lower.  And with the overall bias clearly now running to the downside, it's just too risky to call Thursday higher without all the stars lined up.  So I just have to shrug and call Thursday uncertain.  Sometimes that's just how it is.

Single Stock Trader

I've been unable to get behind Verizon for some time now. It's just been one thing after another with this stock and we haven't really had any good swing buy opportunities. After a possible doji star reversal warning on Tuesday, it was disconfirmed entirely on Wednesday with another leg down. But things may be about to change because on Wednesday Verizon finally hit its lower BB and indicators have now gone oversold. More importantly the stochastic looks like it's finally about to execute a bullish crossover. However we remain in a descending RTC so we're not quite at my preferred buy point yet. But Thursday we'll be watching very carefully.

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