Actionable ideas for the busy trader delivered daily right up front
- Tuesday higher only if ES breaks above its new pivot, else lower.
- ES pivot 2077.58. Holding below is bearish.
- Rest of week bias uncertain technically.
- Monthly outlook: bias higher.
- Single stock trader: VZ still not a swing trade buy.
Well I guess all the signs were there last night but I chose to ignore them, preferring instead to go "out on a limb" with a call for Monday higher. And as it turns out the limb snapped out from under me as the Dow dropped 180 points on a tall red candle. This is one of those days I wish I could take back but I can't. Part of trading is being wrong sometimes. So let's simply dust off and move on to Tuesday.
The Dow: On Monday the Dow suffered its biggest loss in nearly a month with an exactly 1% decline. This took it clear out of its rising RTC for a bearish setup. Meanwhile the indicators have now fallen off of overbought and are heading towards oversold but they're not there yet and with Monday's confirmation of last Friday's hanging man this chart just looks bearish for Tuesday.
The VIX: I also missed the VIX last night . I figured it was going to go check out the bottom end of its recent trading range on Monday but instead it just rocketed right off with a giant 15.28% pop that blasted it right through its 200-day MA at 16.33 to finish just above there at 16.52. That at least finally takes it out of its two week long noodling-around area, and the MA cross is always bullish. Indicators continue to rise but have not yet hit overbought so overall this chart looks higher again on Tuesday.
Market index futures: Tonight, all three futures are higher at 12:15 AM EST with ES up 0.21%. On Monday ES ignored not one but two reversal warnings in the form of doji stars. Instead of moving higher it crashed right back down to 2073 on a tall red candle. That at least sent all the indicators falling off of overbought and headed towards oversold although they're a long way from there. It also dropped out of its latest rising RTC for a bearish setup. And with essentially no follow-through in the overnight it's still too soon to call and move higher for ES on Tuesday.
ES daily pivot: Tonight the ES daily pivot falls again from 2090.08 to 2077.58. .That leaves ES sitting barely under its new pivot so tonight this indicator is only nominally bearish and essentially neutral.
Dollar index: At least I was right about the dollar not being able to make any further headway on Monday as it did fall 019% on a small red spinning top. It wasn't classic but one could still call this a bearish evening star. Indicators have also now hit extreme overbought levels with RSI just under 92. The stochastic is now threaded out at overbought and has lost its predictive powers. So with a still considerable gap remaining below here further downside is possible but with a reversal candle in place again we need to wait for confirmation on Tuesday.
Euro: After last Friday's big decline I was skeptical about the euro's ability to close any higher on Monday. And that turned out to be about right as all it was able to manage was 1.0762 on its smallest range day since I don't know when. That leaves all the indicators still oversold and nothing much to go on in technical terms. Even the new overnight isn't doing much of anything so I really don't have anything to say about this chart for Tuesday. Hey, it happens sometimes.
Transportation: On Monday the trans put in quite a different candle from the Dow. While they did fall 0.32%, it was on a wide-ranging long-legged doji that sent the indicators falling after having only just barely hit overbought. This is a good reversal candle but one which requires confirmation so I'm not making any guesses about the trans for Tuesday here.
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 1 2 2 1 0.500 -341
And the winner is...
Tonight the crystal ball is a bit cloudy as we have some reversal signs but they all require confirmation. The best indication we've got right now is ES which is moving higher and forming a bullish piercing pattern, though you can't read too much into a half-baked candle. So with no great clarity and ES bumping along just under its pivot, I'm going to make a conditional call: if ES can break above its pivot by mid-morning Tuesday, we'll close higher. On the other hand, if it stays below, or rises above but falls back, then we close lower.
Single Stock Trader
\At least I'm glad that last night I refrained from calling Verizon higher Monday on the basis of a tall hammer candle. Good thing too because VZ got caught up in the general carnage on Monday with a 1.05% drop that took it out of its latest rising RTC for a bearish setup and also sent the indicators oversold. We now have a second hammer in a row but all the factors in play last night remain in play as Verizon is going inverse exponential on us. This will eventually end with a nice gain but once again we require some confirmation. This is one falling knife I don't feel like catching at the moment.