Wednesday stock market forecast

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

• Wednesday lower.
• ES pivot 2060.42.  Holding below is bearish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias lower.
• YM futures trader: no trade.

Recap

In retrospect I'm glad I called Tuesday as "uncertain" since I sure didn't see a 140 point yen and oil-fueled drop in the Dow coming.  At least this provided some confirmations we were looking for so let's see how this affects the charts as we wend our wary way to Wednesday.

The technicals

The Dow:  I was worried that Monday's pop in the Dow might be a head-fake and indeed we closed right back down078% on Tuesday for the lowest close in two weeks.  That just barely sent the indicators oversold but they're still falling.  The stochastic is flat on the floor and of no help, so in the absence of any reversal signs I really can't call this one higher for Wednesday.

The VIX: After a giant bearish engulfing pattern on Monday, the VIX - surprise - gained over 6% on Tuesday with a bullish harami to finish just short of where it ended last week.  Indicators remain overbought and the stochastic has completed a bearish crossover now.  We also traded outside the latest rising RTC for the second day in a row for a bearish trigger so overall this chart looks negative now.

Market index futures: Tonight, all three futures are lower at 12:11 AM EDT with ES down 0.16%.  ES retraced all of Monday's gains on Tuesday and then some for a bearish engulfing pattern that sent all the indicators, only just off oversold, headed back down again.  Nothing bullish here tonight.

ES daily pivot: Tonight the ES daily pivot falls again from 2069.08 to 2060.42. ES.is now below its new pivot so this indicator turns right back bearish.

Dollar index:   How 'bout dem dollars, eh?  Sunday night I put up a dollar chart showing it seemingly in freefall.  Then Monday it went even lower trading entirely below its lower BB.  But finally on Tuesday we got the first green candle in eight days as the dollar actually gained 034% on a tall red marubozu as a bullish piercing pattern.  With highly oversold indicators, a new bullish stochastic crossover, and a decent bullish candle, the dollar's looking higher on Wednesday

Euro:  The euro was even more dramatic on Tuesday.  It traded entirely above its upper BB for a giant red inverted hammer/gravestone doji that left the indicators all extremely overbought.  The new overnight is falling off its upper BB and handing us a new bearish stochastic crossover so I'd say this one looks lower on Wednesday.

Transportation:  On Tuesday the trans continued a four day slide, underperforming the Dow handily with a 1.21% dump that actually tested their 200 day MA before recovering a bit. The result was a red hammer with oversold indicators and a stochastic that's on the cusp of a bullish crossover.  Overall, this chart actually looks higher for Wednesday.

Accuracy: 

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
January    9      5       5           0       0.643    1433
February   9      3       5           3       0.800    1133
March      8      6       6           1       0.600     222
April      6      4       8           2       0.667     416
May        0      0       1           1       1.000       0
 
     And the winner is...

On Tuesday we got bearish confirmation on all the charts and that's being supported by the overnight futures.  And oil is looking lower for Wednesday too.  And the weekly charts are looking even weaker.  Sell in May?  Maybe so.  In any case, I'm calling Wednesday lower.  I don't think the selling's doen yet.

YM Futures Trader

No trade tonight..