Friday lower

The Hoot 
Actionable ideas for the busy trader delivered daily right up front

• Friday lower.
• ES pivot 1953.83  Holding below is bearish.
• Next week bias uncertain technically.
• Monthly outlook: bias lower.
• Single stock trader: VZ not a swing trade buy.

Recap
Last night I called Thursday uncertain mostly because I didn't really know where the market was headed. Turns out, it didn't know either.  The Dow finished all of 23 points higher.  But this might actually provide some clarity as to where Friday is going so let's go right to the charts and take a look as we end the first week of September.

The technicals

The Dow:  On Thursday the Dow put in a bearish doji star sitting right at the top of Wednesday's big gain. The indicators continued climbing and are now just shy of overbought . The stochastic continues to be threaded out, however I will note that OBV has started increasing again for the first time in a week. So we now have a reversal warning but one which requires confirmation. Therefore once again I cannot call this chart either way tonight.

The VIX:  The VIX continued to decline nicely on Wednesday and on Thursday it put in a doji star. With indicators now oversold and the stochastic threaded out at oversold levels this is something of a reversal warning. However it is one which requires confirmation. This is a good time to check out VVIX. After a big drop on Wednesday it put in a green bullish piercing pattern with indicators quite oversold and its own stochastic just forming a bullish crossover. That has bullish implications for the VIX and a rising VIX would be bad to the market.

Market index futures: Tonight, all three futures are lower at 12:26 AM EDT with ES down 0.82%. We had another doji on Thursday, almost a lopsided spinning top with a tall upper shadow that left it just short of where it started the day. Indicators have now started falling back before ever hitting overbought and the new overnight has taken a non-trivial tumble . So the combination of the new red candle and the reversal warning from Thursday has me thinking this chart could go lower on Friday.

ES daily pivot: Tonight the ES daily pivot rises again from 1934.42 to 1953.83. That now leaves ES back below its new pivot so this indicator now turns bearish.

Dollar index:  After spending an entire week noodling about randomly, on Thursday the dollar finally put in a decent gain of 0.60% to break out of its recent consolidation pattern.  The indicators continue to be fairly overbought but the stochastic also has yet to create a clear bearish crossover.  So with a new green candle in the books I still can't call this one lower yet.

Euro:  Last night I let the indicators cloud my judgement because we had a clear dark cloud cover from Wednesday for the euro. And on Thursday that was confirmed in a big way as the euro fell right back down to 1.1117. The indicators remain oversold and the stochastic remains threaded out. We've now broken support at 1.1170 for but at this point it's a toss-up whether the two black crows on the charts can trump the oversold indicators on Friday.


Transportation: It must really be doji night. On Thursday the trans formed a long legged doji star that left the indicators overbought and the stochastic continuing to rise. After Wednesday's big gains this looks like a fairly good reversal warning to me. And I wouldn't be surprised to see the trans move lower on Friday.
Accuracy: 

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
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  2      0       1           0       1.000    762

     And the winner is...

Wednesday's rally is starting to look like a fake-out and after Thursday's anemic action the market is looking tired once again.  With a VIX looking ready to move higher, dojis all over the place, and futures guiding lower (possibly because traders don't want to be long over a long holiday weekend), I'm afraid I'll just have to call Friday lower.  that's all she wrote.  See you again next Monday night.  Happy Labor Day!

Single Stock Trader

I couldn't bless Verizon as a swing trade by last night but it managed a 37 cent gain on Thursday anyway.  However it also did it on a shooting star, its sixth reversal warning in a row.  The indicators continue rising into overbought territory and the stochastic looks like it's ready to head lower with a bearish crossover so this is once again not a swing trade buy.

Thursday uncertain

The Hoot 
Actionable ideas for the busy trader delivered daily right up front

• Thursday uncertain.
• ES pivot 1934.42  Holding above is bullish.
• Friday  bias uncertain technically.
• Monthly outlook: bias lower.
• Single stock trader: VZ not a swing trade buy.

Recap

Last week it took five big down days before we finally got a 50% replacement. On Wednesday it only took two down days before getting the same 50% retracement . I also note that we have now finally put in a higher low for the first time in a while. And this has changed the charts so let's get right to them and see where Thursday is going.

The technicals

The Dow: Wednesday was something of a conundrum for the Dow. On Tuesday we got a big drop that gave us a bearish trigger out of a rising RTC , but on Wednesday we retraced more than 50% of Tuesday's drop. On the other hand the indicators are still rising and nearly overbought now with the stochastic completely threaded out at a high level. All of this leaves the Dow in a delicate position. In fact I don't even want to call this for Thursday.

The VIX: Last night I let the indicators get the best of me when I refused to call the VIX lower on Wednesday. But as it turns out we are actually did get a completed bearish evening star on Wednesday. And that was enough to send the indicators all oversold and the stochastic is now curving around very close to making a bullish crossover. The VIX is also near support at 26 so while it's possible there's more downside left I think it's going to be limited.

Market index futures: Tonight, all three futures are just barely higher at 12:35 AM EDT with ES up 0.03%. On Wednesday ES retraced more than 50% of Tuesday's losses to form a classic bullish piercing pattern. The indicators continue to rise though are not yet overbought. However, the stochastic is now threaded out at a high level. And the new overnight seems to be forming a gravestone doji so any further advances from here might be problematic.

ES daily pivot: Tonight the ES daily pivot rises again from 1927.00 to 1934.42.  That still leaves ES above its new pivot so this indicator remains bullish..

Dollar index: Last night the dollar looked for all the world like it was going lower on Wednesday. But I didn't count on the considerable support it found at its 200 day MA. The result was a big 0.42% gain on Wednesday with a small gap-up green candle that also sent the indicators quite over bought. The stochastic like on many other charts is also threaded out here at a high level so this chart is also really too difficult for me to call tonight.

Euro: At least I had the sense not to try to call the euro last night. In the end the dark cloud cover prevailed, and the euro was unable to break up through its 200-day MA. On Wednesday if fell right back down to 1.1240 and the new overnight is continuing lower which has the indicators now oversold and the stochastic just about to form a bullish crossover. So with the euro now near recent support I think now it might stand a good chance of moving higher on Thursday.

Transportation: Then on Wednesday the trans retraced almost all of Tuesday's losses with a tall green marubozu. That let the indicators continue rising and also threaded out the stochastic at a high level. And that leaves this chart in an indeterminate state so there's really no calling it tonight.
Accuracy: 

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
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  2      0       0           0       1.000    762

     And the winner is...

The charts are playing it coy tonight.  We're getting a few reversal signs in terms of the stochastic but they're not quite fully formed.  And the futures aren't as much help tonight as they've been recently.  The market seems to be looking for direction right now, waiting perhaps for the next shocker out of China or something.  So in the absence of a clear reading I'm just going to call Thursday uncertain.

Single Stock Trader
 
Last night I wasn't ready to call Verizon higher but it did manage to gain a bit on Wednesday, swept along with the rest of the Dow. But it did it on a classic red hanging man. And the stochastic has now just completed a bearish crossover, so once again I can't call this chart higher on Thursday.

Wednesday higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front

• Wednesday higher.
• ES pivot 1927.00  Holding above is bullish.
• Rest of week  bias uncertain technically.
• Monthly outlook: bias lower.
• Single stock trader: VZ not a swing trade buy.

Recap

Last night I noted a number of good reversal signs in the charts and called Tuesday lower.  All it took was some more bad news from the Chinese to push the market back over the cliff and right back down again we went retracing more than 50% of the two big days of gains we got last week.  So once again the picture has changed and we head to the charts as usual to see where Wednesday is headed as scary September gets off to a rocky start.
The technicals

The Dow:  On Tuesday the Dow tanked right out the gate and then was unable to make any sort of a comeback, ending near the day's lows.  That tall red candle was enough to short-circuit the indicators which have been rising and send them back down towards oversold.  The stochastic is also just about to execute a bearish crossover.  And this move was also a bearish trigger on our last rising RTC.   So with no support until 15,672 it's looking like a retest of last week's lows might not be out of the question.  There's just nothing bullishit all about this chart tonight.

The VIX:  Last night I wrote that the VIX "looks like it has more upside left for Tuesday."  And indeed the VIX took a 10 and a half percent pop to form a perfect gap-up spinning top.  That's now two thirds of an evening star but with the stochastic just forming a bullish crossover it's too soon to call the VIX back lower yet and it wouldn't surprise me to see more upside on Wednesday.

Market index futures: Tonight, all three futures are higher at 1:06 AM EDT with ES up 1.15%.  Like everything else ES tanked on Tuesday falling all the way back to 1931 on a tall red candle that exited its rising RTC for a bearish set up.  It also formed a bearish stochastic crossover.  However the rest of the indicators are completely confused with RSI and momentum rising but money flow falling.  In any case the overnight seems to be staging some sort of rally attempt therefore it is impossible to call this chart lower again on Wednesday.  At the moment, it's looking like a good bullish piercing pattern - but it's tough to call half-baked candles.

ES daily pivot: Tonight the ES daily pivot dives again from 1972.08 to 1927.00.  But that plunge plus a move higher overnight in ES now leaves it back above its new pivot, so this indicator turns bullish again.

Dollar index:  Last night I said this chart look lower for Tuesday and so it was with the dollar falling 0.43% on a fat gap-down red spinning top that stopped just short of its 200-day MA at 63.93.  (Recall that this is on the $USDUPX not the $DXY since those cheapskates at eSignal started charging for the latter).  And also like the other charts it traded entirely outside its latest rising RTC for a bearish trigger.   The indicators are now falling before even having reached overbought so there's nothing bullish about this chart tonight and it looks like it may go lower again on Wednesday.

Euro:  Meanwhile on Tuesday the euro put in its usual mirror image of the dollar with a nice gain that just touched its own 200 day MA before falling back a bit to close at 1.1296.  That also sent the indicators oversold for the first time in a month and also curved the stochastic around just into position for a bullish crossover.  With two white soldiers now in place you'd think this would mean the euro's getting ready to mount another attack on its 200 MA.  But with the overnight actually lower and in the form of a dark cloud cover I'm not so sure.  That makes this chart too tough to call for Wednesday.

Transportation:  The trans got hammered on Tuesday just like everything else with a 2.14% drop that caused them to fall out of their rising RTC for a bearish trigger.  That also sent the stochastic around just short of a bearish crossover and with all the indicators now heading lower there's nothing bullish about this chart for Wednesday.

Accuracy: 

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
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  1      0       0           0       1.000    468
     And the winner is...

 All the charts are looking just dreadful tonight.  However, with the VIX back above 30 again and some non-trivial moves higher this time in the futures, it looks like we're due for some retracement of Tuesday's big move which looked overdone to me.  Heck most moves lately have been overdone leading to the wild oscillations we're seeing as we retrace the retracements.  So anyway, I'm  going to go out on a limb and call Wednesday higher.
And finally, to quote Columbo, just one more thing.  On Tuesday technician Louise Yamada on CNBC said that declining momentum "is suggesting to me that we are looking at a bear market".  She says that the SPX could test its uptrend at 1800.  I think it's actually worse than that.  I show the monthly rising RTC from 2009 currently at 1864 and that's not all that far away from where we are right now.  In fact if you go back to the 2012 rising trend the SPX hs already exited that one for a bearish set up.  That's looking a lot to me like the bull market is dead.

Single Stock Trader

Last night I said that Verizon had more downside left on Tuesday and it turns out that it, along with the rest of the Dow, took a dive gapping down for a 2.4% loss on a red spinning top.  That's a reversal warning but not a great one and with the lower BB not too far away at 44.19 and the stochastic still very elevated and just getting ready for a bearish crossover the selling may not be over here yet.

Tuesday lower

The Hoot 
Actionable ideas for the busy trader delivered daily right up front

• Tuesday lower.
• ES pivot 1972.08  Holding below is bearish.
• Rest of week  bias uncertain technically.
• Monthly outlook: bias lower.
• Single stock trader: VZ not a swing trade buy.

Recap

They knocked 'em lower into the close to end August on a down note.  It made for some interesting candles so we'll get to them in a moment as we begin a brand new month.  But first I want to mention something interesting I  saw in the Stock Trader's Almanac -  the DF/DM warning (not to be confused with KMFDM which is a really awesome  industrial band).  There's something interesting in there which I will discuss at the bottom of this post.  I encourage you to check it out.

The technicals

The Dow:  Last night we had a reversal warning in the form of a doji star on Friday but I wasn't ready to call it lower just yet because it required confirmation.  On Monday we got that confirmation in the form of the 115 point decline in the Dow.  This was also just enough to drop it outside of its latest admittedly short but steep rising RTC, and that is a bearish setup. The indicators are still short of overbought but with a confirmation of the bearish star this chart looks lower again.

The VIX:  Last night I noted the possibility that the VIX might be ready to move higher in a few days.  It didn't even take that long as it rose over 9% on Monday confirming Friday's inverted hammer.  Momentum has now started moving higher again and the stochastic is almost down to oversold levels and preparing for a bullish crossover.  Monday's action  also traded entirely outside the latest descending RTC for a bullish setup.  So over all this chart looks like it has more upside left for Tuesday.

Market index futures: Tonight, all three futures are lower at 12:26 AM EDT with ES down 1.42%.  On Monday ES handily confirmed Friday's doji star with a red candle that retraced half of Friday's gains.  The indicators have now stalled halfway between oversold and overbought, and the stochastic is curving around nicely for a bearish crossover.  I will note too that OBV began falling two days ago. With the overnight guiding strongly lower this chart definitely looks lower on Tuesday.

ES daily pivot: Tonight the ES daily pivot falls again from 1983.25 to 1972.08.  ES remains well below that level and so tonight this indicator turns back to bearish.

Dollar index:  On Monday the dollar retraced half of Friday's gains dropping 0.3% on an inverted hammer.  Indicators are now almost up to overbought and the stochastic is starting to curve around for a bearish crossover.  This was also just enough to exit the latest rising RTC for a bearish setup.  So overall this chart looks bearish for Tuesday.

Euro:  Similarly on Monday the euro retraced most of Friday's losses too close right back up to 1.12 for 7. That was also just enough to place it on the edge of its descending RTC for a bullish set up. The stochastic is also beginning to curve around for a bullish crossover and the overnight seems to be guiding hire again all of which makes it look like euro will move still higher on Tuesday.

Transportation:  So much for Friday's outperformance.  On Monday the trans dropped 0.8%.  It definitely looks now like the trans have run out of gas and  their latest rising RTC is over.  That's a bearish setup.  Momentum and money flow have already started moving lower though RSI continues to climb slightly.  The stochastic looks like it's curving around to begin a bearish crossover although it's still not really quite all that over bought.  But the overall gestalt of this chart is that it looks bearish.

Accuracy: 

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
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

     And the winner is...

Tonight we got a bunch of reversal warnings in the form of RTC exits and those are usually pretty good.  Add in futures that are guiding non-trivially lower and although the first of most months is historically bullish I'm afraid I'm going to have to call Tuesday lower.  I'll be happy to be proven wrong.

DF/DM

 In The Stock Trader's Almanac they talk about the DF/DM warning, that is "down Friday / down Monday".  It refers to instances where the Dow closes lower on a given Friday and then again on the following Monday.  Apparently the average total number of DF/DM days in a year going back to 1995 is 10.  And it seems that in years that have larger than average DF/DM counts the market subsequently moves lower.  Notable examples include 2001-2002 where this warning hit 13 and 18 respectively, and in 2008 when it hit 15.  So where does this leave DF/DM this year?  Drum roll please...  The answer is 9 so far.  And the year is only two thirds over.  So it looks like DF/DM in 2015 will probably end up above average.  And that bodes ill for next year.  Add in the monthly rising RTC exits we've gotten for the Dow and it ain't looking good, folks.  Just sayin'.

Single Stock Trader

Last night I said that Verizon "may in fact may be getting ready to move lower in the next few days" and that's just what it did on Monday. We now have three reversal candles in a row : the lopsided spinning top on Monday following a doji star on Friday and a fat spinning top Thursday.  Monday's candle also fell out of a short but steep rising RTC and the stochastic is flattening out for a bearish crossover.  So even though the indicators are not yet overbought this one looks like it has more downside risk than upside potential at this point.

Monday lower

The Hoot 
Actionable ideas for the busy trader delivered daily right up front

• Monday lower.
• ES pivot 1971.33  Holding above is bullish.
• Rest of week  bias uncertain technically.
• Monthly outlook: bias lower.
• Single stock trader: VZ no longer a swing trade buy.

Recap

I called last Friday "uncertain" and with Dow closing down all of 12 points but the SPX ending up 16 points I think that was about as uncertain as it gets.  There were some interesting candles though - so let's head straight to the charts and see if we can't figure out the last day of August as we bring this miserable month to a close.

The technicals

The Dow:  On Friday the Dow was unable to make any headway at all after two big days of gains. It finished with a classic doji star which is at least something of a reversal warning. Indicators continue to rise off oversold and the stochastic is now about halfway on its trip from oversold to overbought.  More importantly perhaps is that on Friday the Dow just barely managed to recover the lower edge of its long-running multi-year rising RTC which currently stands at 16,630.  That would cancel the bearish monthly RTC setup if we can close higher again on Monday.  So while we do have a reversal warning tonight it's one of those that requires confirmation and with indicators not yet overbought I can't call this one lower yet.

The VIX:  Meanwhile on Friday the VIX continued its re-entry into low Earth orbit following its short visit outside the solar system last week.  It formed a small red candle that looks like a bullish piercing pattern.  The indicators continue falling off overbought and the stochastic has begun curving around in preparation for a bullish crossover.  It's not the best reversal indicator but I do think there's a move higher coming in the next few days.

Market index futures: Tonight, all three futures are lower at 1:08 AM EDT with ES down 1.19%. 
On Friday ES put in a perfect doji star sitting right at the top of Thursdays large gains. That was enough to send the indicators off of oversold and they are all now rising towards overbought. We remain inside the latest rising RTC, however the overnight is moving significantly lower and in fact is sitting right on the edge of that RTC .  This appears to be confirming the doji so I would be looking for a move lower on Monday here.

ES daily pivot: Tonight the ES daily pivot rises again from 1971.33 to 1983.25.  That now puts ES back below its new pivot so this indicator turns bearish.

Dollar index:  Last Friday the dollar defied a gap-up gravestone doji from Thursday and continued to move higher gaining an impressive 0.51% as it left its 200-day MA in the dust. It's now on a four day winning streak with indicators that still have not hit overbought. So in the absence of any bearish reversal signs, I can't call the dollar lower on Monday.

Euro:  Last Thursday night I wrote that "there's more downside coming here on Friday" and that proved to be exactly right as it closed back down to 1.1185. That was also the payoff for the bearish trigger we got on Thursday from Wednesdays exit from the rising RTC.  Indicators are now all falling off overbought but not yet down to oversold.  We now have four down in a row and nothing really bullish about these charts.  However, the overnight is showing us a non-trivial gain up 0.22% in the new overnight so far, so it's possible we have a bottom here since there is some good support at 1.1172.

Transportation:  Finally on Friday, the trans handily outperformed the Dow with a 0.53% gain compared to the Dow's 0.07% loss.  That now gives the trans a three-day winning streak and a new rising RTC.  The indicators also continue rising and are now off of oversold.  With a bullish stochastic crossover in full effect, there's nothing bearish on this chart tonight.

Accuracy: 

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
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     9      2       3           2       0.846   2199

     And the winner is...

Tonight the charts are telling me the market kind of ran out of gas after two big up days last Thursday and Friday.  With the futures guiding significantly lower, I'm just going to call Monday lower.

Single Stock Trader

Last Thursday night I thought Verizon might have a little bit more upside left to go but that proved to be too optimistic.  Instead, Thursday's hanging man was confirmed with a second reversal warning - this one a small doji star.  The indicators have also stopped rising just short of overbought and the stochastic is flattening in preparation for a bearish crossover.  That means Verizon is no longer a swing trade buy and in fact may be getting ready to move lower in the next few days.