Actionable ideas for the busy trader delivered daily right up front
- Monday lower.
- ES pivot 2025.33. Holding below is bearish.
- Rest of week bias uncertain technically.
- Monthly outlook: bias lower.
- Single stock trader: VZ not a swing trade buy
Last Thursday night I noted that the charts were looking pretty grim and indeed on Friday the Dow plunged another 203 points . You can blame the price of oil, China, whatever but it was a disappointing end to a down week. Let's move on ahead to Monday now and see if we can recover some of those losses on this last week before the big Thanksgiving holiday coming right up.
The Dow: The Dow's 1.16% dump on Friday extended a week-long decline into an inverse exponential rundown. We confirmed the 200 day MA break as the Dow continues heading down towards its lower BB, now not that far away at 17,146. Indicators have now gone to extreme oversold levels but the stochastic is not quite ready to come around for a bullish crossover yet. So with a second tall red marubozu in the books there is still not a bullish reversal sign on this chart.
The VIX: After blasting through its 200-day MA on Thursday, the VIX rose another 9.31% on Friday for three white soldiers. It is now climbing up its upper BB and starting to look a little overextended to me. I often note that the VIX rarely spends more than a day or two at elevated levels after it touches its upper BB and we've been there for 2 days now. However indicators are only moderately overbought at this point and we do not yet have a reversal candle here. So while I think the VIX is due to come down to earth sometime this week, it's not clear that that is going to happen on Monday.
Market index futures: Tonight, all three futures are lower at 12:59 AM EST with ES down 0.47%. After punching down through its 200-day MA last Thursday ES confirmed that bearish sign on Friday with another tall red candle. That almost touched its lower BB. Now in the Sunday overnight, ES actually did test the lower BB at 2006 and for the time being that looks like a success. Indicators are now at extreme oversold levels and we are getting a nice gap-down green hammer candle. With ES having fallen three in a row in what looks like an inverse exponential and the stochastic curving around nicely in preparation for a bullish crossover, this chart has all the makings for putting in a bottom on Monday.
ES daily pivot: Tonight the ES daily pivot dives again from 2052.50 to 2025.33. .That still leaves ES considerably below its new pivot so this indicator continues bearish.
Dollar index: Lately the dollar has been getting jerked around every which way. After what had the makings of a bearish evening star last week and a tall red candle on Thursday, instead of moving lower on Friday it actually gained 0.39% on a bullish inside harami. However the indicators remain just barely overbought and the stochastic is now in full-on bearish crossover mode. So this chart is something of a conundrum for Monday.
Euro: And of course it's about the same deal with the euro. After looking like it was going to start a nice rally in the middle of last week, on Thursday it suddenly reversed course with a tall bearish engulfing candle. And so far in the Sunday overnight it looks like that's being confirmed as the euro is moving down another 0.2%. But the indicators are now oversold and the candle (for now anyway)looks like a hammer. So with some decent support around 1.07 this chart looks like it might have more upside potential than downside risk from here.
Transportation: On Friday the trans made it down three in a row on an inverted red hammer but this one found support right on its lower BB. The indicators are now also oversold although the stochastic has yet to begin curving around for a bullish crossover. So we have a reversal warning in place and it looks to me like the trans are ready to move higher sometime soon but it's not clear that will happen on Monday.
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 7 7 5 1 0.533 538
November 2 4 2 2 0.500 -194
And the winner is...
The charts are starting to show some decent reversal signs. However, I think that's all pretty much moot in view of the barbarian attacks in Paris this weekend. I think the market is going to use that as an excuse to do some more selling, and that seems to be supported by the futures running lower by half a percent in the overnight. So I'm just going to call Monday lower and keep my fingers crossed.
Single Stock Trader
Last Thursday night I called Verizon more of a short than a buy for Friday and that's exactly what happened as it had an absolutely horrible day losing 1.34% for its worst performance in 10 sessions and making it eight out of 10 down now. The good news is that it finally hit its lower BB and the indicators are all at extreme oversold levels. At this point it will be interesting to see if it can manage to bounce off the lower BB or if it starts to dribble down it. There's no real support until 43.51 but because it's been knocked down so hard over the past two weeks there may come a point soon (possibly this week) where all the selling is exhausted. In the meantime it's still not my favorite swing trade buy setup.