Actionable ideas for the busy trader delivered daily right up front
- Friday higher.
- ES pivot 2053.33. Breaking above is bullish.
- Next week bias uncertain technically.
- Monthly outlook: bias higher.
- Single stock trader: VZ not a swing trade buy.
It's been quite an interesting week in the markets so far. Many of the charts are in play right around their 200 day moving averages and oil still seems to be in the driver's seat. With yet another surprising move on Thursday, we turn the charts to try to make some sense of all of these shenanigans for Friday.
The Dow: After finding support at its 200 day MA on Tuesday the Dow broke under on Wednesday but put in a gigantic spinning top the likes of which I've never seen (and I went all the way back to the crazy days of 2008). I figured that was a good reversal sign and indeed on Thursday the Dow moved higher again to just barely reclaim the same MA on a tall inverted hammer. Indicators continue to be confused some rising, some falling halfway between overbought and oversold so there's no guidance there. However on Thursday the Dow closed above the MA so I think that number will now serve as support. So if anything there's a good possibility of the Dow could add to these gains on Friday.
The VIX: On Wednesday the VIX touched its upper BB at 19.93 and right on cue it backed off it. And as I've often said the upper BB generally spells the end of a VIX rally. That proved to be the case on Thursday as the VIX lost 1.38% bouncing off that same upper BB with a small doji star. Indicators are now just short of overbought and with the star in place there's at least the suggestion that the VIX could go lower again on Friday.
Market index futures: Tonight, all three futures are higher at 12:11 AM EST with ES up 0.17%. After breaking below its 200-day MA on Wednesday things weren't looking so hot for ES. But on Thursday it managed to post a small gain closing back up to 2049.25, just shy of its 200-day MA after some intraday excursions above that level. That could be taken as a failed test of the MA but we have the benefit of the new Thursday overnight which is showing a nice gap up over that level and making it look like it has enough gas in the tank for a move higher on Friday. Note also that the stochastic is now on the verge of a bullish crossover and volume has increased.
ES daily pivot: Tonight the ES daily pivot ticks up from 2052.00 to 2053.33. That's just barely enough to put ES negligibly below it new pivot. I'm calling this one a wash.
Dollar index: After getting hammered over the course of the past week the dollar seems to have finally bottomed on Wednesday, stopping just short of its 200-day MA. Indicators are now quite oversold and we got a decent bounce up 0.64% on Thursday. This makes it look like more upside could be coming on Friday.
Euro: And the euro was also telling us something on the charts today. After a big gain on Wednesday that just touched its 200 day MA it retreated significantly retracing those gains on Thursday. With that MA now serving as resistance, the indicators all overbought and a negative candle on the books it looks like there's more downside to come on Friday. The action lower in the overnight seems to support that idea.
Transportation: The trans have been getting absolutely hammered for three weeks now but after a giant decline on Tuesday that had a whiff of panic to it , on Wednesday the trans found a bit of buying coming in in the form of a classic spinning top/doji star and then that was confirmed on Thursday with a 0.57% gain its first up day since December 4th. That confirms the spinning top and makes it look that there could be more upside coming on Friday particularly with the indicators now all being significantly oversold.
Month right wrong no call conditional batting Dow
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 4 6 4 2 0.500 -350
December 4 1 3 0 0.800 707
And the winner is...
With the charts tonight generally looking at least modestly bullish and certainly not bearish, and with ES having regained its 200 day MA and carrying higher though the overnight (so far anyway), I'm going to go out on a limb and call Friday higher. Keep in mind there's some economic news coming out on Friday that could easily derail that given the fragile state of Mr. Market's personality lately, but for now, that's what I see.
That's all she wrote. See you again Sunday night!
Single Stock Trader
Last night I said that Verizon was not a buy and indeed on Thursday was only one of a handful of losers on the Dow, down four cents. But the chart is even worse than that with a freshly completed bearish stochastic crossover and three spinning tops in a row now. There are no bullish signs at all on this chart. It is definitely still not a swing trade buy - or a buy of any other kind.