Wednesday, September 30, 2015

Wednesday higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Wednesday higher.
  • ES pivot 1875.08.  Holding above is bullish.
  • Rest of week bias higher technically.
  • Monthly outlook: bias lower.
  • Single stock trader: VZ still not a swing trade buy.

It was another crazy roller coaster day on Wall Street and it finished with another mixed market with the Dow and the SPX closing higher but the Nasdaq finishing lower. The Dow was up then it was down then it was up then it was down before a late afternoon rally caused it finish with that 47 point advance that caused my call to be wrong but not be very much. So with another interesting candle in the books let's move on to close out the miserable month of September by figuring out which way Wednesday may wend.
The technicals

The Dow:  After the dust settled the Dow had put in a 0.30% advance on a long-legged green spinning top sitting right at the bottom of Monday's big dump. As the lower BB continues to fall away at least support of 16,000 was respected, and the indicators have now started rising from oversold levels. This is an encouraging reversal sign for Wednesday.

The VIX:  I was wrong about the VIX on Tuesday. I thought it would move higher but instead in a bit of bullish divergence it fell 2.9% on a day the Dow and the SPX closed higher but on a small green spinning top that sent the indicators a little further into overbought territory. However the candle is in a bullish harami position so I wouldn't make too much of that. At this point it's hard to tell which way the VIX goes on Wednesday.  But I tend to favor continued lower at this point.

Market index futures: Tonight, all three futures are higher at 12:53 AM EDT with ES up 0.77%. After Monday's big dump, on Tuesday ES put in a nice reversal warning in the form of a long-legged doji star sitting right on its lower BB as the indicators have now hit extreme oversold levels. We haven't quite retested the August lows yet but it looks like the overnight is wanting to confirm Tuesday's candle so we could be looking at a rally on Wednesday.

ES daily pivot: Tonight the ES daily pivot falls again from 1890.17 to 1875.08. That's finally enough to bring ES back above its new pivot so this indicator now turns bullish.

Dollar index:  Last night I wrote that it look like the dollar would move lower again on Tuesday and that's just what it did with another 0.20% loss that drove it right back down through its 200-day MA. That gives us a bearish three black crows pattern and has started the indicators all moving lower off of overbought. The stochastic now has a freshly completed bearish crossover so there's nothing bullish about this chart tonight and it looks like the dollar still has lower to go on Wednesday.

Euro:  Similarly, last night I called the euro higher for Tuesday and that's just where it went climbing right back up to 1.1272 on a green spinning top. That's a weak reversal sign but with the indicators still rising and not yet overbought it has to be taken with a grain of salt.

Transportation:  Last night despite some reversal signs I was cautious about calling the trans higher on Tuesday. They did manage a modest 0.32% gain but it was on a long-legged doji star. With indicators now extremely oversold it looks like the trans may be in a bottoming process. I still think we're due for a move higher and it might come as early as Wednesday but it's not certain.


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      4       8           1       0.636   1168

     And the winner is...

The last day of September is historically quite bearish but tonight the charts are generally suggesting that we've gotten overextended to the downside and a rally may be at hand.  So I'm going to just go ahead and call Wednesday higher as we close out the month and the quarter.

Single Stock Trader

Last night I was cautious about calling Verizon higher and that proved to be a good move because it fell further with a third spinning top in a row on Tuesday as it continues to dribble down its lower BB. Indicators remain oversold but have not yet begun to put in a convincing bottom. We are still in a descending RTC so once again this is not a swing trade buy.

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