Actionable ideas for the busy trader delivered daily right up front
- Tuesday lower.
- ES pivot 2080.33. Holding below is bearish.
- Rest of week bias uncertain technically.
- Monthly outlook: bias higher.
- Single stock trader: VZ not a swing trade buy.
Last night I thought that the market was going to be in for a pause on Monday. And it was a generally down day led lower by energy stocks as the price of oil continues to crater. At least now we have the pin action from Friday's big run-up so let's see what that means for Tuesday.
The Dow: While the range was somewhat larger than I expected, the Dow indeed was completely unable to make any headway past Friday's highs. That sent the indicators lower before ever reaching overbought though we still have a bullish stochastic crossover in place. But the resulting hanging man candle leaves some doubt which will need to be resolved on Tuesday. Overall though I'm not very optimistic about this chart tonight.
The VIX: Last night I blew my call for the VIX quite badly. It did not fall on Monday, instead it rose nearly 7%. However, the retest of its 200-day MA was a flop and the resulting candle was a tall gravestone doji. That was enough to cause a bearish stochastic crossover, so with the 200 MA serving as resistance above it's not out of the question that the VIX goes lower from here on Tuesday.
Market index futures: Tonight, all three futures are lower at 1:01 AM EST with ES down 0.41%. On Monday ES put in a red hanging man right at the top of Friday's big pop. That's a reversal warning and a dark cloud cover but indicators are still nowhere near overbought and in fact the stochastic has only now just completed a bullish crossover. Still the short term here looks bearish and in fact the overnight is continuing the lower which seems to confirm that idea.
ES daily pivot: Tonight the ES daily pivot rises again from 2076.08 to 2080.33. That puts ES back below its new pivot so this indicator turns bearish again.
Dollar index: At least I got the dollar right on Monday as it gained 0.33%. It has now retraced exactly 50% of last Thursday's giant dump (Fibonacci technicians take note). Indicators are only just recently off of oversold and the stochastic is now starting to curve around for a bullish crossover. So with a small gap-up lopsided red spinning top this one is still kind of up in the air. I won't call it tonight.
Euro: I was right about the euro too which descended on Monday for its second losing day in a row, this time back down to 1.0847 as it continues to retrace last Thursday's big pop. Indicators have now come off of overbought and the stochastic is just now completing a bearish crossover. So with the euro continuing lower in the overnight this chart just looks lower again which would make three in a row on Tuesday.
Transportation: And finally, I blew my forecast for the trans too. On Monday it did not go higher, instead it lost 0.88% giving up all of Friday's gains and then some. Indicators remain oversold and the stochastic is now threaded out having failed to execute a bullish crossover. We're back to the lower BB and there is some significant support right here around 7886. But whether or not the trans can capitalize on this remains to be seen.
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 2 0 3 0 1.000 538
And the winner is...
Tonight we have a number of bearish reversal signs on the charts along with plenty of evidence of strong resistance blocking any further advance. And the futures are guiding non-trivially lower so I'm going to go ahead and call Tuesday lower.
Single Stock Trader
Last night I expressed skepticism that Verizon could rise much further on Monday. And it managed a $0.35 gain which is all the more impressive considering it was one of only a handful of winners on an otherwise down day. That brought it up to its upper BB on a small green marubozu. Indicators are now just shy of overbought so it's not clear if VZ is going to just bounce off the BB or start crawling up it. We need some confirmation for this on Tuesday. In the meantime it's not a swing trade buy.