Thursday, October 1, 2015

Thursday higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Thursday higher.
  • ES pivot 1896.83.  Holding above is bullish.
  • Friday bias higher technically.
  • Monthly outlook: bias lower.
  • Single stock trader: VZ still not a swing trade buy.
Original vintage poster ROCHERS DE NAYE RACK RAILWAY
Despite the bearish reputation of the last day of September, this year the Dow managed a decent 1.47% gain. Nevertheless it finished both the month and the quarter in the red. So with the ugly month of September out of the way let's now move on to the scary month of October and see where Thursday may be headed.
The technicals

The Dow:  The Dow took a nice 236. top on Wednesday to make a tall green marubozu that lifted the indicators off of oversold and finally caused the stochastic to complete a bullish crossover. It also marked the second day trading outside the recent descending RTC and so that's a bullish trigger. The only concern on this chart is resistance around 16,315. But it does appear that the Dow still has some room to run on Thursday.

The VIX:  Last night I said it looks like the VIX had lower to go again on Wednesday. And that's just what happened with the VIX falling nearly another 9% on a gap-down doji star. But that still that leaves the indicators overbought and the stochastic on the verge of forming a bearish crossover. So while this is a bullish reversal indicator it is also one which requires confirmation and from the looks of it my guess is that we're not done going lower yet.

Market index futures: Tonight, all three futures are higher at 12: 15 AM EDT with ES up 0.76%. On Wednesday ES had its best day in almost a month as it confirmed Tuesday's doji star in a big way with a tall green marubozu that brought it all the way back up to 1908.75. That also finally exited the two week long declining RTC for a bullish setup. It also pulled away from the lower BB which is now falling away from us and sent the indicators rising off of oversold as well as confirming a bullish crossover from the stochastic. So everything is looking pretty bullish for this chart except for the fact that there's no follow-through in the overnight which is putting in a nontrivial decline. And that's a concern.

ES daily pivot: Tonight the ES daily pivot rises from 1875.08 to 1896.83.  ES remains well above its new pivot so this indicator continues bullish tonight.

Dollar index:  So much for the classic three black crows pattern. Last night I thought the dollar would move lower again on Wednesday especially after having pierced its 200-day MA. But no, instead it gained half a percent on a stubby spinning top perched above the top of Tuesday's big decline. That still leaves the indicators overbought and the stochastic in the middle of a bearish crossover so this could be a one and done. My guess is that the next move is lower but at this point who knows.

Euro:  On Wednesday the euro confirmed Tuesday's spinning top in a big way with a massive decline that plunged right back through its 200-day MA to close at 1.1179 on a tall red marubozu. That was enough to send the indicators moving lower before ever having reached overbought and the stochastic is now curving around for a bearish crossover before having reached overbought itself. The overnight seems to be looking for some support but it's not clear that it will find it so it looks to me like after such a big move through the 200 MA on Wednesday there's more room to run lower on Thursday.

Transportation:  And finally I was right about the trans moving higher though I was a little surprised that they gained 1.10% on Wednesday. That is the second day we've traded outside the descending RTC so that is a bullish trigger. Indicators remain oversold and the stochastic is still flat on the ground so it looks like the trans have more upside potential than downside risk at this point.


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  7      4       8           1       0.667   1404

     And the winner is...

The first day of most months is bullish and though that isn't always true of October, tonight we have a nice technical base to work off of and the futures are guiding sufficiently higher that all in all I'm going to go ahead and call Thursday higher.

Single Stock Trader
Last night I still wasn't ready to commit to Verizon despite the likelihood that the Dow was going to close higher on Wednesday. And that was a good thing too because Verizon ended up being one of only two Dow stocks that moved lower on Wednesday. That left us with two side by side red spinning tops and indicators that continue to hover at highly oversold levels. But until we see some confirmation of these reversal warnings it's still too early to call Verizon a swing buy.

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