Actionable ideas for the busy trader delivered daily right up front
- Wednesday higher.
- ES pivot 2063.50. Breaking above is bullish.
- Rest of week bias uncertain technically.
- Monthly outlook: bias higher.
- Single stock trader: VZ not a swing trade buy.
Mr. Market sometimes goes through phases of obsessive compulsive behavior where he gets fixated on just one single factor and starts to ignore everything else. This is one of those phases and Mr M's latest obsession is the price of oil. And with oil of course in a deep and continuing funk it's not looking good. But let's look at the charts anyway and see if there's any light at the end of this particular tunnel.
The Dow: The Dow has tracked oil perfectly for the last four days in a row - down up down down. And Tuesday was down big time, off nearly a full percent. It did however conduct a successful retest of its 200-day MA, stopping exactly at that level by the bell. That leaves us with two hanging man style candles (or is the second one a hammer?) Hard to tell, and the indicators are also confused wandering around halfway between overbought and oversold. The stochastic though remains in bullish mode. So go figure. Right now I'd kind of expect support at the MA to hold on Wednesday but that's by no means certain. It will all depend on where oil goes. For some unknown reason.
The VIX: Well the VIX sure fooled me on Tuesday. After failing to break its 200-day MA on Monday I expected it to move lower on Tuesday. But that clearly didn't happen as the VIX didn't even bother with its 200 MA , it simply gapped right over it for an 11% jump with a tall doji star. That left the indicators just short of overbought but also but it also looks like two thirds of a bearish evening star. And that, sadly requires confirmation on Wednesday.
Market index futures: Tonight, all three futures are higher at 12:39 AM EST with ES up 0.22%. At least I got this much right. After looking bearish last night, ES had a terrible day on Tuesday to close right back down to 2059. However it conducted a successfully retest of its 200-day MA, the third in four days. Indicators continue to wander around halfway between overbought and oversold so there's little guidance there. But the new overnight seems to be staging something of a non-trivial rally so there's at least a suggestion here is that Wednesday might be higher.
ES daily pivot: Tonight the ES daily pivot falls from 2080.33 to 2063.50. That puts ES exactly on top of its new pivot, so this indicator is neutral at the moment.
Dollar index: The dollar looked too difficult for me to call last night but after Tuesday's action it's looking a little more clear. And what it looks like is a bearish evening star as the dollar lost 0.2% on a small red candle. That kept indicators moving lower but it also caused a bullish stochastic crossover. So unfortunately with conflicting indicators it is once again too difficult to call this chart for Wednesday though the bias seems continued lower
Euro: The euro fooled me last night because it did not move lower on Tuesday, instead rallying back up to 1.0889 for a classic bullish engulfing pattern against Monday's candle. But the indicators all remain overbought and the euro seems to be establishing a new trading range in the 1.09 area so this chart is too tough for me tonight.
Transportation: Last night I noticed some support for the trans around 7886. Too bad the trans didn't notice that themselves because they massively underperformed the Dow on Tuesday with a giant 2.81% plunge that gapped right under support to head all the way down to the next level of support at 7663. The trans are starting to become something of a concern from a Dow Theoretical point of view as they have been massively underperforming the Dow for some time now. With a tall red marubozu that also punched right down through the lower BB on Tuesday and indicators that are still only just barely oversold, and with further support not until 7465, its difficult to make a bullish case for the trans at all at this point.
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 3 0 3 0 1.000 701
And the winner is...
Withe the VIX possibly looking to be topping, the Dow sitting on some decent support, oil putting in a nice doji star on Tuesday, and the futures guiding higher in the overnight, I'm going to dispense with the hand-wringing and just call Wednesday higher. We'll see.
Single Stock Trader
Last night I mentioned the possibility of Verizon bouncing off its upper BB to move lower on Tuesday and that's just what happened with a 0.78% decline. That was enough to send all the indicators lower just before reaching overbought and left VZ with a doji star. That leaves this chart a bit confused for Wednesday but one thing is clear - this is not a swing trade buy.