Thursday, October 8, 2015

Thursday lower

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Thursday lower.
  • ES pivot 1979.67.  Holding below is bearish.
  • Rest of week bias lower technically.
  • Monthly outlook: bias higher.
  • Single stock trader: VZ not a swing trade buy.

Well that was interesting. I was reasonably certain that with the Dow having hit its upper BB on Tuesday with a spinning top reversal candle it would go lower on Wednesday. But no such luck. Instead it gained 122 points to continue its recent week and a half long winning streak. So let's check the charts to see how that changes the picture for Thursday.SWISS VINTAGE train travel poster ROCHERS DE NAYE mntns LAKE GENEVA 24X36

The technicals

The Dow:  On Wednesday, the Dow rejected Tuesday's spinning top in a big way to continue crawling up its upper BB for the third day in a row. That has now left the indicators all extremely overbought with RSI having hit 98.64. Of note too is that the stochastic is now perfectly primed for a bearish crossover that could happen any moment. So although this is not a bearish reversal candle it is questionable how much further the Dow can move without reversing course at least for a day.

The VIX:  Similarly, on Wednesday the VIX rejected the spinning top that it put in on Tuesday to descend further on an inverted hammer to close down to 18.40. It is tracking its lower BB and has hit zero, and that's as low as it goes folks. The stochastic has actually fallen off the bottom of my chart and is now primed for a bullish crossover. So with a reversal candle in place here I would give better than even odds that the VIX goes higher on Thursday

Market index futures: Tonight, all three futures are lower at 12:23 AM EDT with ES down 0.52 %. I based my call for a lower close Wednesday in part on a red spinning top reversal candle in ES from Tuesday. Instead, on Wednesday ES put in a tall green marubozu that brought it all the way back up to month-long resistance at 1988, sent the indicators to highly overbought levels and moved the stochastic into position for a bearish crossover. However we remain in a rising RTC and this trend is far from over. On the other hand the new overnight is experiencing a fairly significant move lower and that bodes ill for Thursday.

ES daily pivot: Tonight the ES daily pivot rises again from 1971.08 to 1979.67.  That movr now puts ES back below its new pivot so this indicator turns bearish.

Dollar index:  After bumping into its 200-day MA on Monday the dollar gave it all back on Tuesday and then some on a tall red candle. But on Wednesday it finished essentially unchanged on a small doji star. The indicators continue falling but have not yet hit oversold so what we have here is a reversal warning of a move higher but one which requires confirmation.

Euro:  The euro meanwhile simply continues bouncing around in a two week long consolidation range bounded from below by 1.114 and from above by approximately 1.1300. After a nice gain on Tuesday it was unable to make any further headway on Wednesday and closed right back down to 1.1263 on a small red doji star. And the new overnight isn't doing much of anything so this chart continues to remain conflicted without any clear direction.  I woudn't be trading this currency at the moment.

Transportation:  Finally on Wednesday the trans outperformed the Dow by nearly a factor of two. They easily cleared resistance at 8085on a tall green marubozu that keeps them in a nearly two week long rising RTC. Indicators are now very overbought and the stochastic is in position to form a bearish crossover any day now. But without an actual reversal candle I cannot call this chart lower just yet.


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

October    1      3       1           0       0.250    169

     And the winner is...

It sometimes happens that I am a day early in my calls and I'm thinking that this is one of those times. All of the forces that were in play last night are still there tonight only more so. And this time we're getting some better confirmation in the form of futures that are moving lower non-trivially. So I'm going to give it another try and once again call Thursday lower.
Single Stock Trader

I was thinking that Verizon looked toppy last night and indeed it came back in on Wednesday confirming Tuesday's tall inverted hammer with a lopsided green long-legged spinning top. Indicators continue to rise though but have not yet hit overbought. That leaves this chart in a very mixed up state but it is definitely not in my preferred swing buy mode at the moment.

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