Friday higher

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

• Friday higher.
• ES pivot 1948.42  Holding above is bullish.
• Next week bias uncertain technically.
• Monthly outlook: bias lower.
• Single stock trader: VZ still not a swing trade buy.

Recap

I'm very glad I noticed a sudden upturn in the futures in the wee hours of Wednesday night and changed my Thursday call from bearish to merely uncertain. The overall market managed to finish with modest gains - always a good thing. It was also a welcome relief from the series of wild swings intraday we've been seeing recently. So let's move on to Friday as we complete this holiday-shortened week . 

The technicals

The Dow:  As it turns out the Dow gained a respectable 77 points on Thursday on a lopsided spinning top. That also unwound the stochastic for a narrow bullish crossover from a high level which is an encouraging sign. This isn't the most bullish pattern in the world but I'd give better than even odds of advancing further on Friday.

The VIX:  On Thursday the VIX lost 7% on a classic dark cloud cover. That sent RSI moving lower and the stochastic just squeaked out a bearish crossover from a low level. The latter is often good for a day or two of continued lower. Therefore I'd say there's more downside in store here on Friday.

ES daily

Market index futures: Tonight, all three futures are higher at 12:59 AM EDT with ES up 0.35%. After a rocky start yesterday evening ES telegraphed a move higher around 1:30 AM and indeed managed to close with a long-legged green spinning top on Thursday. But here's something interesting , take a look at this chart. It sure looks to me like ES is developing a symmetrical triangle and if that's the case then that's really bad news for the markets because these patterns generally exit in the same direction from which they were entered. So given the fact that this one was entered in a big crash last month the next leg would likely be lower. And from the looks of it the pattern is nearly complete. If this follows through I will be looking for another leg down next week.  But Friday at the moment is looking higher.

ES daily pivot: Tonight the ES daily pivot falls again from 1956.75 to 1948.42.   And that, plus the drift higher overnight is enough to put ES back above its new pivot so this indicator is back to bullish.

Dollar index:  Last night I wrote that it looked like they was still more downside available for the dollar on Thursday and was that was a very good call indeed as the dollar slid a massive 0.60% to punch right through its 200-day MA at 64.08 on a tall red marubozu. With two black crows in place, falling indicators, and the 200 MA gone this chart looks distinctly bearish for Friday.

Euro:  Similarly I called the euro higher for Thursday and that's also just what happened as it rose smartly to close at 1.1285 stopping right on its own 200 day MA. However that typically offers some pretty strong resistance and indeed in the overnight we now see the euro moving back lower again. That has had the effect of sending RSI starting to move lower too. But the stochastic continues to rise and has yet to begin curving around for a bearish crossover so what we have here is a warning of a possible move lower on Friday but something that requires confirmation.

Transportation:  On Thursday the trans handily outperformed the Dow with a 0.93% advance compared to the Dow's 0.47%. That also broke resistance around 8015 and keeps us in a rising RTC. Indicators also continue to rise but have not yet hit overbought. So the overall impression of this chart for Friday now looks bullish - quite a reversal from last night.

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  4      1       2           0       0.800   1187

     And the winner is...

In the space of one day, the technicals have gone from bearish to bullish - such are the vagaries of life with the VIX in the mid-20's.  So assuming there's no untoward announcements from any Byg Wygs overnight, I'd say we round out the week with Friday higher.  That's all she wrote.  Next week should be  really interesting.  See you again Sunday night!

Single Stock Trader

On Thursday the Verizon was one of the Dow's weaker players gaining just $0.07 on a narrow lopsided spinning top. But that came right at the lower end of Wednesday's tall red bearish engulfing pattern. The net result is that the indicators are now all over the place with RSI and OBV rising but momentum falling and money flow flat. In any case none of that makes for my preferred setup therefore this is once again not a swing buy.

Thursday uncertain

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

• Thursday uncertain.
• ES pivot 1956.75  Holding below is bearish.
• Friday  bias uncertain technically.
• Monthly outlook: bias lower.
• Single stock trader: VZ still not a swing trade buy.

Recap

Last night I was pretty sure the market was going higher on Wednesday. We had a nice tall green marubozu and the indicators looked like they were rising towards overbought. But Mr. Market fooled me and instead the Dow plunged with another triple digit decline to fall right back into its recent consolidation zone. Is there no end to this? We check the charts for clues to Thursday.
The technicals

The Dow:  Since last month's big dump, the Dow has been unable to put together more than two in a row in either direction. That trend continued on Wednesday when it fell 239 for its third triple point move in a row. Clearly volatility is the word as it has been for the past month. I thought we had a chance of moving higher and indeed the Dow took a big leap out the gate Wednesday morning but that was it. It was all downhill from there. That left the indicators all continuing to descend from overbought and now with a tall bearish engulfing pattern in place, this chart just looks bearish for Thursday.

The VIX:  Last night it wasn't very clear what the VIX was going to do on Wednesday. The wide-ranging green candle we got on Wednesday was proof enough of that. In the end we got a small 5.34% gain. That leaves the indicators stuck halfway between oversold and overbought but with a completed bullish stochastic crossover and a bullish engulfing pattern now in place it looks like this chart has more upside potential than downside risk.

Market index futures: Tonight, all three futures are lower at 12:40 AM EDT with ES down 0.08%. So much for Tuesday's bullish engulfing pattern. On Wednesday ES began with good intentions with a sharp move higher. But that was all it had and it spent the rest of the day falling apart. The net result was a good bearish engulfing pattern. With the new overnight confirming that with a continued move lower this chart looks nothing but bearish for Thursday.

ES daily pivot: Tonight the ES daily pivot rises again from 1950.08 to 1956.75. But that now leaves ES below its new pivot so this indicator turns bearish.

Dollar index:   I also missed the dollar on Thursday. Wednesday night I thought it was going to lower but instead it gapped up early, although it did finally came back in to end the day up all of 0.02%. That leaves it now in a four-day consolidation range with the indicators continuing to fall off of overbought towards oversold. In general that looks bearish except for the fact that we are now almost down to some decent three day support. On the whole though I have to think there is still more downside available here on Thursday.

Euro: At least last night I had the sense to equivocate on the euro after a wide ranging spinning top on Tuesday. On Wednesday it put in a second wide-ranging candle, this one a small real bodied red hanging man which again is a reversal warning. But in the new overnight it looks like that has also come to nothing. as the euro continues significantly higher in the new overnight dragging the indicators higher with it. That all looks like a good setup for a higher close on Thursday.

Transportation:  And finally I was also wrong about the trans. After a tall green marubozu on Tuesday, I thought there was more room to run higher on Wednesday. But it was not to be and instead we lost 0.71% on a small bearish engulfing pattern. The indicators are not yet quite overbought but the stochastic has just squeaked out a bearish crossover. So overall this chart looks negative for Thursday.

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  4      1       1           0       0.800   1187

     And the winner is...

Tonight the charts are all looking decidedly more bearish than last night, and that includes the futures.  With the VIX still floating around above 25 I may live to regret this but the only logical course of action seems to be to call Thursday lower.

1:30 AM Update: Due to a sudden spike in ES, possibly due to some comments that just came out from the BOJ, I'm revising my call for Thursday to simply uncertain.

Single Stock Trader

I was a bit surprised last night about Verizon's advance on Tuesday but I wasn't ready to commit to a buy. Good thing too because on Wednesday it formed the mother of all bearish engulfing patterns to close down 1% on a tall red marubozu. That sent the indicators all continuing lower, including the stochastic, so this chart definitely looks bearish tonight. Still no buy here.

Wednesday

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

• Wednesday higher.
• ES pivot 1950.08  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias lower.
• Single stock trader: VZ still not a swing trade buy.

Recap

Despite what looked like a bearish technical pattern last night the futures prevailed and Mr. Market had a great day on Tuesday, possibly due to some good news out of China. Who knows. I don't even pay any attention to any of that anymore. My position is that you can't believe anything they say, good or bad. So on we go to Wednesday to see where the charts may lead us next as this holiday shortened week progresses.


The technicals

The Dow:  On Tuesday the Dow confirmed historical precedents by rocketing higher right out of the gate and then continuing on to close on the highs of the day with a handy 2.42% advance. Looking at the daily chart one can imagine a double bottom now in place over the last week . Interestingly, Tuesday's action has also caused the stochastic to curve back around just about into position for a bullish crossover from a high level. And as I always say those are often good for a day or two of higher prices following. With the Dow now looking like it has broken out of its recent week-long congestion area I'd say this chart looks good to move higher again on Wednesday.

The VIX:  Last night I wrote that the VIX looks like it was ready to move higher again on Tuesday. That was of course completely wrong as the VIX instead confirmed Monday's tall spinning top and then gapped right back down again to close more than 10% and below its levels of last Friday. But it did it on yet another doji star. T hat makes three in a row. This would be a classical bearish tri-star pattern except for the fact that that is entered from below whereas this one is entered on a descending trend from above.

That just leaves us with indicators that are totally confused with RSI rising but momentum falling, and the stochastic continue to be threaded out at a low level. Tuesday's doji would suggest there is a possibility of the VIX moving higher on Wednesday and with the indicators still closer to oversold than overbought that still might happen.

Market index futures: Tonight, all three futures are higher at 1:00 AM EDT with ES up 0.67%.  ES had a fantastic day on Tuesday putting in a tall green marubozu that handily cleared three days' resistance to close at 1966. The indicators are still not yet overbought and the stochastic in fact has generated a bullish crossover from a high level just like the Dow did. This all makes me think that despite Tuesday's big gains iES might still have enough gas left in the tank to continue higher on Wednesday. The fact that the overnight continues moving higher tends to support that view.

ES daily pivot: Tonight the ES daily pivot rises again from 1926.25 to 1950.08. That still leaves ES above its new pivot so this indicator continues bullish.

Dollar index:  Last night the dollar was looking too tricky for me to call. On Tuesday turns out it lost 0.26% to fall right back to where it opened last Friday. However we now have three consecutive days of the dollar putting in lower highs and that was enough to send the indicators moving lower off of overbought peaks. We also now have a stochastic that has completed a bearish crossover so I would say Tuesday's candle points to continued lower on Wednesday.

Euro:  At least I got the euro correct. Last night I said it had a good chance of closing higher on Tuesday and so it did, back up to 1.1186 on a tall spinning top, the second one in a row. All the indicators now continue moving higher off of oversold and we have a bullish stochastic crossover in place. However the new overnight is moving lower after having gapped up, now calling into question whether this is the start of a new rally or just another fake-out breakout like we saw last week.

Transportation:  On Tuesday the trans outperformed the Dow with a giant 2.81% advance that clearly broke recent resistance at 7908. All the indicators continue rising but are not yet overbought so with a tall green marubozu now in place there are no bearish signs on this chart .

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  4      0       1           0       1.000   1424

     And the winner is...

With no bearish technical indications to speak of on the charts tonight and some decent follow-though in the overnight futures, it doesn't seem unreasonable to call Wednesday higher.

Single Stock Trader

Last night Verizon wasn't looking at all like my preferred swing trade buy set up, but on Tuesday it got caught up in the general market euphoria and gapped up anyway over 2 and a quarter percent to put in a green hanging man. But that also caused the stochastic to suddenly curve back around just shy of a bullish crossover. And with the other indicators having arrested their fall from overbought and now moving higher again it looks like VZ may continue higher on Wednesday - but this is still not my preferred buy setup.

Tuesday higher

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

• Tuesday higher.
• ES pivot 1926.25  Holding above is bullish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias lower.
• Single stock trader: VZ still not a swing trade buy.

Recap

Last Thursday night I thought the market was looking toppy what with a bunch of doji warnings on the charts and then sure enough on Friday the Dow lost 272 points. We now face a holiday shortened week with all of the usual problems that implies. So let's take a look at the charts and figure out where Tuesday is going.

The technicals

The Dow:  On Friday the Dow confirmed Thursday's tall doji star with a tall red candle that nevertheless respected support just above 16,000.  However, it also sent all the indicators moving lower before they ever even reached overbought.  In particular the stochastic formed a clear bearish crossover so there's nothing bullish about this chart tonight.

The VIX:  On Friday the VIX gave us another doji star - this one gapping up eight and a half percent from Thursday's doji star . The three-day result is something of a cross between a bullish morning star and a tristar pattern, also bullish. With the indicators now oversold and the stochastic quite low and ready for a bullish crossover of its own this chart looks ready to move higher again on Tuesday.

Market index futures: Tonight, all three futures are higher at 12:18 AM EDT with ES up 0.52%. On Friday ES confirmed Thursday's tall inverted hammer to put in a tall red candle. But the indicators are now completely confused with RSI falling, momentum rising, the stochastic falling from a completed bear crossover, but OBV also rising. The notable point here is that the new Monday night overnight is putting in a strong bullish piercing pattern having already retraced most of Friday's losses. This makes it look like a rally may be coming on Tuesday.

ES daily pivot: Tonight the ES daily pivot falls again from 1953.83 to 1926.25.  And that was just enough to put ES back above its new pivot so this indicator now turns back to bullish.

Dollar index:  After a big jump on Thursday the dollar continued its wayward ways on Friday unable to make any headway to finish with a 0.19% loss on an inverted hammer that sent the indicators starting to descend off of overbought. The stochastic is completely threaded out at a high level and therefore is useless for predictions. The resulting Friday candle is a bullish harami but with the dollar so nervous lately I can't call this one tonight.

Euro:  And despite two black crows on Friday I wasn't ready to call the euro lower on Friday. That's a good thing too because it actually rose on a spinning top to close back up to 1.1150. The indicators are still oversold but now rising and the stochastic remains lying on the floor completely threaded out. But with support respected at 1.1090 and an overnight that's moving higher it looks like the euro has a good chance of closing up on Tuesday.

Transportation:  On Friday the trans fell on a similar looking chart to the Dow - a red candle following a doji star. But the damage was only a little more than half of the Dow. Indicators have started to fall off of overbought but the stochastic has yet to begin curving around for a bearish crossover. Overall though in the absence of any bullish signs it looks like this chart may have more downside left to it.

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  3      0       1           0       1.000   1034

     And the winner is...

According to The Stock trader's Almanac the first day after Labor Day is historically quite bullish, and it's looking like that may be the case this year too. With the market struggling to find any sense of short-term direction I'm going to go with the futures tonight. While a 0.5% gain in the overnight isn't as big as the spectacular moves we've seen recently, it's still more than enough for me to call Tuesday higher.


Single Stock Trader

Last Thursday night once again I refused to call Verizon a swing trade buy on the basis of a gap-up inverted hammer. And once again right on cue Verizon dropped 2% on a tall gap-down red candle. That sent the indicators falling off overbought and also broke support and 44.90. So yet again this stock is still not a swing trade buy.