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- Tuesday higher.
- ES pivot 1926.25 Holding above is bullish.
- Rest of week bias uncertain technically.
- Monthly outlook: bias lower.
- Single stock trader: VZ still not a swing trade buy.
Last Thursday night I thought the market was looking toppy what with a bunch of doji warnings on the charts and then sure enough on Friday the Dow lost 272 points. We now face a holiday shortened week with all of the usual problems that implies. So let's take a look at the charts and figure out where Tuesday is going.
The Dow: On Friday the Dow confirmed Thursday's tall doji star with a tall red candle that nevertheless respected support just above 16,000. However, it also sent all the indicators moving lower before they ever even reached overbought. In particular the stochastic formed a clear bearish crossover so there's nothing bullish about this chart tonight.
The VIX: On Friday the VIX gave us another doji star - this one gapping up eight and a half percent from Thursday's doji star . The three-day result is something of a cross between a bullish morning star and a tristar pattern, also bullish. With the indicators now oversold and the stochastic quite low and ready for a bullish crossover of its own this chart looks ready to move higher again on Tuesday.
Market index futures: Tonight, all three futures are higher at 12:18 AM EDT with ES up 0.52%. On Friday ES confirmed Thursday's tall inverted hammer to put in a tall red candle. But the indicators are now completely confused with RSI falling, momentum rising, the stochastic falling from a completed bear crossover, but OBV also rising. The notable point here is that the new Monday night overnight is putting in a strong bullish piercing pattern having already retraced most of Friday's losses. This makes it look like a rally may be coming on Tuesday.
ES daily pivot: Tonight the ES daily pivot falls again from 1953.83 to 1926.25. And that was just enough to put ES back above its new pivot so this indicator now turns back to bullish.
Dollar index: After a big jump on Thursday the dollar continued its wayward ways on Friday unable to make any headway to finish with a 0.19% loss on an inverted hammer that sent the indicators starting to descend off of overbought. The stochastic is completely threaded out at a high level and therefore is useless for predictions. The resulting Friday candle is a bullish harami but with the dollar so nervous lately I can't call this one tonight.
Euro: And despite two black crows on Friday I wasn't ready to call the euro lower on Friday. That's a good thing too because it actually rose on a spinning top to close back up to 1.1150. The indicators are still oversold but now rising and the stochastic remains lying on the floor completely threaded out. But with support respected at 1.1090 and an overnight that's moving higher it looks like the euro has a good chance of closing up on Tuesday.
Transportation: On Friday the trans fell on a similar looking chart to the Dow - a red candle following a doji star. But the damage was only a little more than half of the Dow. Indicators have started to fall off of overbought but the stochastic has yet to begin curving around for a bearish crossover. Overall though in the absence of any bullish signs it looks like this chart may have more downside left to it.
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 3 0 1 0 1.000 1034
And the winner is...
According to The Stock trader's Almanac the first day after Labor Day is historically quite bullish, and it's looking like that may be the case this year too. With the market struggling to find any sense of short-term direction I'm going to go with the futures tonight. While a 0.5% gain in the overnight isn't as big as the spectacular moves we've seen recently, it's still more than enough for me to call Tuesday higher.
Single Stock Trader
Last Thursday night once again I refused to call Verizon a swing trade buy on the basis of a gap-up inverted hammer. And once again right on cue Verizon dropped 2% on a tall gap-down red candle. That sent the indicators falling off overbought and also broke support and 44.90. So yet again this stock is still not a swing trade buy.