Wednesday, October 26, 2016

Wednesday stock market forecast

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Wednesday lower.
  • ES pivot 2141.00  Holding below is bearish.
  • Rest of week bias uncertain technically.
  • Monthly outlook: bias lower.
  • YM futures trader: short at 17,670.

I guess I can't be too surprised about the Dow's 54 point drop on Tuesday because the inverted hammer on Monday and a VIX that was looking ready to move higher telegraphed it from the start.  I guess I let myself get spooked by futures that were moving higher in the overnight last night when I ended up calling the day as "uncertain".  Still the day's action gives us something to chew on so let's get right to it..

The technicals

VIX, daily
The VIX:  Recall that last night I said the VIX looked ready for a move higher and that's just what we got on Tuesday with a 3.38% advance that confirmed Monday's stubby gap-down hammer with a comparatively large green bullish engulfing candle.  That just exited the descending RTC for a bullish setup and the stochastic also eked out a bullish crossover - though you have to look at the actual numbers to tell.

In short, there seems to be plenty of upside left here.  Take a look and see if you don't agree.  Oh and it's worth a quick mention - the VIX is back to its normal inverse correlation with the rest of the market.

Market index futures: Tonight, all three futures are lower at 1:36 AM EDT with ES down 0.22%. 

ES daily pivot: Tonight the ES daily pivot falls from 2142.67 to 2141.00.  ES is now back below its new pivot so this indicator turns bearish.


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        9      3       4           4       0.813     756
June       8      5       7           1       0.643    1393

July       5      6       6           2       0.539    -304
August     1      3       8           0       0.250     120
September  4      5       6           0       0.444     -59
October    9      2       4           1       0.833     314

     And the winner is...

With a VIX looking like it's confirming my guess about moving higher, a bunch of reversal andles on the charts and overnight futures guiding lower, I'm going to call Wednesday lower.

YM Futures Trader

No trade tonight.

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