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- Thursday lower.
- ES pivot 2098.33. Holding below is bearish.
- Rest of week bias uncertain technically.
- Monthly outlook: bias higher.
- Single stock trader: VZ still not a swing trade buy.
My conditional forecast last night for Wednesday worked out pretty well. ES hovered above its new pivot until shortly after the open and then it fell below making just one brief vain attempt to regain it but by 10:50 AM it was all downhill from there and the market just closed lower. But this is all a reflection of a crazy week full of earnings that are yanking the charts around in strange ways. We'll take a look tonight again as usual but I'm not too optimistic about forecasting this whole week..
The Dow: The Dow wandered all over the place on Wednesday but in the end kept on putting in lower highs and lower lows to finish the day down 0.28%. The resulting candle is a classic dark cloud cover and the indicators are now right on the edge of overbought on the way down. So with the failure to make any headway above the 18,000 level and the upper BB, this chart just looks bearish for Thursday.
The VIX: On Wednesday the VIX put in its biggest gain in over two weeks with a 6.67% advance on essentially a tall green marubozu. Frustratingly enough though it still hasn't broken out of its extended recent trading range. If anything, it looks like it may be forming a megaphone pattern. In the meantime we need to see if the VIX has the chops necessary to break out of this range and test its 200-day MA currently at 16.30 on Thursday. Given recent history though it's not at all clear this is going to happen.
Market index futures: Tonight, all three futures are higher at 12:51 AM EST with ES up 0.07%. Last night I was reluctant to call ES lower on the basis of two fairly strong green candles one of which touched the upper BB. Well on Wednesday that all fell apart with essentially a red harami candle as a fat spinning top. Indicators are still overbought but now all headed lower and with the overnight guiding lower still, this chart looks nothing but negative for Thursday.
ES daily pivot: Tonight the ES daily pivot falls from 2100.75 to 2098.33. That now puts ES below its new pivot so this indicator turns bearish. .
Dollar index: Well I missed the dollar badly on Wednesday. Last night after putting in a gap-up inverted hammer it looked for all the world to me like a topping indication. But on Wednesday instead it moved higher once again on a big 0.80% gap-up green candle, for its best close since August 10th. That move was also enough to send all the indicators back up after recently falling off of overbought and just squeak out a bullish stochastic crossover. So it's not out of the question that the dollar could move higher once again on Thursday.
Euro: On the other hand I caught the euro exactly right last night when I said it was going lower.. On Wednesday the euro broke through support at 1.909 and kept on going to close 1.865. That was enough to Driving indicator is oversold but also caused a bearish crossover from a low level . No through awesome good for another day or two of lower prices and with three accelerating down days on the books now I see no reason why they would go lower or higher on Thursday.
Transportation: Last night I said that the trans look bearish for Wednesday after a red hanging man appeared on Tuesday. And indeed the trans did fall once again, this time down 0.65% to retrace almost all of Monday's gains. This move was also enough to flatten out the stochastic in preparation for a bearish crossover so with indicators continuing to fall but not yet oversold and two red candles on the books this chart looks lower again for Thursday.
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 0 1 1 1 0.500 -165
And the winner is...
I suppose anything's possible during earnings season but the overall impression of the charts is negative tonight so I'm just going to have to go out on a limb and call Thursday lower.
Single Stock Trader
I called Verizon last night lower last night and that's just where it went, down another 0.67% on Wednesday. That has now brought the indicators off of overbought and the stochastic is in full blown bearish crossover mode. With a tall red candle on the books and three down in a row there is now nothing bullish at all about this chart tonight.