Actionable ideas for the busy trader delivered daily right up front
- Wednesday higher.
- ES pivot 2064.50. Holding above is bullish.
- Rest of week bias uncertain technically.
- Monthly outlook: bias lower.
- YM futures trader: no trade.
Well I'll be the first to admit I sure didn't see a 213 point pop in the Dow coming on Tuesday, evidently propelled by some good housing numbers. Holy moly. After four days of noodling about, we now have a decent candle to chew on. See let's see how this move changes the picture for Wednesday.
The Dow: So the aforementioned Dow exploded out of its descending RTC for a big bullish setup Tuesday that sent all the indicators closing in on overbought. But there's a note of caution here - we stopped right on two-week resistance. And for the last fourteen days in a row, the Dow has been unable to come up with two up days back to back. Add in the usual tendency to pause after a big move and I'm skeptical the Dow can advance again on Wednesday.
The VIX: Last night I wrot that the VIX "looks more bearish to me than anything." And indeed, the VIX fell nearly 9% on Tuesday on a tall red marubozu that neatly confirmed Monday's red dark cloud cover. It also dropped it out of a rising RTC for a bearish setup and sent all the indicators tumbling towards oversold. Net net, there's nothing bullish about this chart tonight.
Market index futures: Tonight, all three futures are higher at 12:56 AM EDT with ES up 0.22%. ESW had its best day on Tuesday since mid-March but that pop to 2075 only took it back to month-long resistance. The new overnight is showing some surprising pin action but the upper BB is now close at hand at 2081.82. The indicators are now all just shy of overbought and RSI has already turned lower. I'm not convinced ES has the requisite mojo for much more higher though an upper BB touch is not out of the question.
ES daily pivot: Tonight the ES daily pivot jumps from 2048.25 to 2064.50. ES.is now back above its new pivot so this indicator returns to bullish.
Dollar index: After a three day sag, the dollar continued its month-long stair-step ascent with a handy 0.38% gain on Tuesday, remaining in a rising RTC and closing in on its upper BB. Indicators remain quite overbought but without a decent reversal candle I can't call this one lower yet.
Euro: And of course the euro mirrored the dollar Tuesday, falling back to 1.11520 on a red marubozu that stopped just short of its lower BB. Indicators are now quite oversold but with the 200 day MA hoving into view at 1.11178 and the euro still in a steep descending RTC, I'd not be surprised to see it test that level in the next day or two.
Transportation: Finally, the trans also advanced on Tuesday but only half as much as the Dow, hampered by their looming 200 day MA right above. Of concern is that indicators are now overbought and momentum has actually now turned lower. And the inverted hammer isn't a good sign either. So it's not at all clear to me that the trans have the horsepower needed to break through the 200 MA here.
Month right wrong no call conditional batting Dow
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 7 3 4 2 0.750 588
And the winner is...
I'm always a bit wary of the market's ability to continue higher after a big one day pop, particularly in the current environment where we haven't had more than one up in a row in a month. But there's nothing overtly bearish about the charts right now and the futures are certainly guiding higher tonight. And the VIX continues to look lower so I'm just going to call Wednesday higher and let the chips fall where they may.
YM Futures Trader
No trade tonight..