Tuesday, September 29, 2015

Tuesday lower

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Tuesday lower.
  • ES pivot 1890.17.  Holding below is bearish.
  • Rest of week bias higher technically.
  • Monthly outlook: bias lower.
  • Single stock trader: VZ no longer a swing trade buy.

Original vintage poster ROCHERS DE NAYE RACK RAILWAY
Last night demonstrated the problems we have on Sunday nights calling Monday being as most of the information is fairly old by that point. The charts actually didn't look too bad but I hesitated calling Monday higher because the futures weren't participating. As it turns out it was good that I called Monday merely uncertain rather than higher because the Dow took an ugly 313. plunge and the SPX fared even worse. There are some interesting charts to look at tonight so let's get right to them and see where Tuesday may be headed.

The technicals

The Dow:  On Monday the Dow disconfirmed last Friday's bullish setup on a descending RTC exit with a nearly 2% dump that took it right down to its lower BB stopping just short of the 16,000 mark . But even that still leaves the indicators only moderately oversold and continuing to fall. The stochastic is now lying flat on the ground and thus has no predictive power. Perhaps more importantly, OBV continues a decline that began way back in the middle of July, currently running at -872 million. That's not a good sign. And with a red marubozu on the books there's no sign yet of a reversal on this chart.

The VIX:  Last night I thought the VIX was headed higher on Monday and that's just where it went with a big 17% gap up green candle that sent the indicators overbought. With the stochastic continuing to rise but still nowhere near in position for a bearish crossover, VVIX also continuing to rise, and the upper BB not too far away at 30 it looks to me like the VIX still has more room to run on Tuesday.

Market index futures: Tonight, all three futures are lower at 12:23 AM EDT with ES down 0.11%. ES had a simply miserable day on Monday with its worst performance in a month closing just off the day's lows and falling through its lower BB at 1888. It looks to me very much like ES is intent on retesting last month's lows around 1863. We could easily hit that level on Tuesday. In the meantime there's absolutely no sign of a reversal higher even though the indicators are all now extremely oversold.  The continued drift lower in the overnight isn't helping matters either.

ES daily pivot: Tonight the ES daily pivot falls once again from 1926.83 to 1890.17. And with ES unable to make any headway, it remains below its new pivot and this indicator simply continues bearish.

Dollar index:  Last night I said that the dollar looked lower for Monday and that was where it went down 0.26% on a second red candle in a row, this one just touching its 200-day MA before recovering a bit. Indicators remain overbought but the stochastic looks like it's trying to gear up for a bearish crossover. So it appears that there is more downside in store on Tuesday for the dollar.

Euro:  Meanwhile the euro continues to jiggle around in a range bounded by 1.1141 on the lower end and about 1.1254 on the upper end. It did put in another gain on Monday closing back up to 1.1244, a move that took it right up through its 200-day MA. This confirmation of Friday's lopsided spinning top and the 200 MA breakthrough makes it look like there's more upside possible for the euro on Tuesday.

Transportation:  Last night I mentioned that the trans looked positive for Monday based on a bullish looking candle last Friday. Well that of course went right out the window on Monday as the trans lost two and a quarter percent to almost touch their lower BB at 7637. That also took them right back into their descending RTC thus canceling last Friday's bullish setup. On Monday we closed right on recent support, but with the lower BB now starting to fall away there is some concern here and I definitely cannot call the trans higher for Tuesday based on this red marubozu..


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  6      3       8           1       0.700   1215

     And the winner is...

All the charts are looking pretty grim tonight but they're also getting pretty extended.  It's starting to make me think we're due for a reversal soon but technically I just don't see that happening on Tuesday.  So I'll just have to call Tuesday lower.  I'd be delighted to be proven wrong.

Single Stock Trader

On Monday Verizon was of course a loser just like almost the entire rest of the Dow and a gap-down red candle confirmed Friday's red spinning top to send Verizon right back into its descending RTC. So much for the bullish setup. Last night I said it would be good to get out of this trade and it looks like I was right. Having now taken out support at 43.81 and with no new reversal candles insight it is still too soon to call this stock higher despite the fact that all the indicators are now considerably oversold.

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