Friday stock market forecast

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

• Friday higher.
• ES pivot 1950.83.  Waiting for a break either higher or lower..
• Next week  bias uncertain technically.
• Monthly outlook: bias lower.
• Single stock trader: new feature coming soon.

Recap

Holy moly, I was expecting Thursday to go lower but I wasn't expecting the Dow to trade mostly below its lower BB. This reminds me of the old joke - cheer up, things could be worse. So I cheered up and sure enough things got worse. And they got a lot worse on Thursday with the market putting its worst annual opening performance apparently since forever. With the fate of the First Five Days of January indicator pretty much sealed now let's take a look at the Friday to figure out if the stock market is ever going to move higher again.

The technicals

The Dow:  On Thursday the Dow marched relentlessly lower giving up successive support at the lower BB at 17,329, 16,880, 16,748, and finally 16,642 on a tall red marubozu with selling that only ended because the bell finally rang at 4 PM, the Dow's version of the Mercy Rule. That left all the indicators continuing to march lower though someone surprisingly RSI is still only at 14.26, not the extreme oversold level you would expect after a horrible week so far.  We remain firmly in a tight descending RTC but the stochastic is starting to tighten up in preparation for a bullish crossover. Will it happen Friday?  Perhaps.

The VIX:  And on Thursday the VIX jumped an astonishing 21.37% on a fat tall gap-up spinning top that pierced its upper BB at 24.48 before finally settling at 24.99, almost exactly the levels we saw last month back when ... yeah I don't remember what that noise was anymore either. In any case we now have two thirds of a bearish shooting star although the VIX remains in a rising RTC. But Indicators are quite overbought and we are back above the upper BB. As I've often said that it rarely stays above that level for long so I'm looking for the VIX to come back down to earth in short order.

Market index futures: Tonight, all three futures are higher at 12:11 AM EST with ES up 0.88%. ES got absolutely clobbered on Thursday making the past week look very similar to the disaster we got in the middle of last August back when it also looked like the world was coming to an end (before it didn't). ES gave up several support levels in a row on a tall red marubozu and blasted right down through its lower BB before finally coming to rest at 1933. That left all the indicators highly oversold and the stochastic very close to forming a bullish crossover. The general look of the chart to is also an exponential run-down suggesting that selling may soon be over. But a nontrivial move higher in the overnight seems to support that the selling may finally be exhausted and we could see a higher close on Friday.

ES daily pivot: Tonight the ES daily pivot plunges from 1989.92 to 1950.83.  That move was finally enough to leave ES parked exatly on top of its new pivot so tonight this indicator is indeterminate.

Dollar index:   Last night I said that the dollar looked lower for Thursday but I sure wasn't expecting a giant 1% gap-down red marubozu that absolutely dove out of its rising RTC for a bearish trigger sending the indicators all moving lower off of overbought and finally getting us a fresh bearish stochastic crossover. That all makes the dollar look lower again on Friday.

Euro:  Similarly, the euro had an awesome day on Thursday confirming Wednesday's little green hammer with the big jump to close right back up to 1.0952 in a move that rose out of its descending RTC for a bullish setup. Indicators are now off of oversold and moving towards overbought. Interestingly there doesn't seem to be any follow-through in the overnight which is actually lower by a non-trivial amount therefore calling into doubt the ability of the euro to capitalize on this big gain on Friday.

Transportation:  And finally on Thursday the trans were absolutely decimated, falling over 3% to underperform even the Dow's awful showing on the day. This tall red marubozu started on the lower BB and then just kept on going lower from there. That left the indicators extremely oversold and the stochastic very close to a position for a bullish crossover. The chart is also starting to have the look of an exponential run down which would mean that the end is probably near. But in the absence of a bullish candle I can't specifically call this chart higher for Friday.

Accuracy: 

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
January    3      1       0           0       0.750    920


     And the winner is...

They should just change the name of the Dow to the Ching Dow or something, since lately it just seems to be a proxy for the Chinese "stock market".  Tonight, for the first time in three days, ES did not crater at 8:15 PM on the opening of the Hong Kong futures.  To the contrry, it rose non-trivially in a way we don't normally see at that hour.  The SPX Hi-Lo indicator also hit 2.53, right down in the range from which reversals generally come.  We also have a number of incipient stochastic crossovers on the charts and things are starting to look pretty overextended to me.  Call me crazy, but instead of a conservative conditional call I'm just going to come right out and call Friday higher.  That's all she wrote.  See you again Sunday night!

Single Stock Trader

Watch this space for a new feature next week.

Thursday stock market forecast

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

• Thursday lower.
• ES pivot 2007.00.  Holding below is bearish..
• Friday bias uncertain technically.
• Monthly outlook: bias lower.
• Single stock trader: new feature coming soon.

Recap

Well if it was looking bad for the First Five Days of January indicator after Monday, it's looking a whole lot worse after Wednesday as the Dow continued to cascade lower amid news that the mentally deranged pipsqueak leader of North Korea announced that his country exploded an H bomb.  They can't even keep the lights on at night but they have an atomic bomb?  How does that work?  But I digress - let's survey the wreckage to figure out how Wednesday's debacle has changed the landscape and where Thursday is headed.

The technicals

The Dow:  On Wednesday the Dow took a big dump right out the gate and then just kept going lower from there as it blasted right through the 17,000 support level and then continued on going to trade mostly below its lower BB at 16,998 before finishing with a ugly 252 point loss. That left the indicators quite oversold and the stochastic only finally beginning to around for a bullish crossover (which looks like it still days away trhough). And with a week-long descending RTC now firmly in place there's no sign of reversal here yet.

The VIX:  With all the chaos going on Wednesday you'd think that the VIX would have made a bigger move than it did. As it was, it gained just 6.46% and only that on a fat red hanging man . that closed below Tuesday's highs giving it a rather bearish overall impression. It also closed outside a steep rising RTC for a bearish setup. Indicators remain overbought but the stochastic interestingly has just completed a bearish crossover. All of this makes it look likely to me that the VIX is going lower on Thursday.

Market index futures: Tonight, all three futures are lower at 12:30 AM EST with ES down a big 1.12%. For the second time in three days ES tested its lower BB on Wednesday at 1984. The test was successful though it barely managed to close above that level. The resulting candle was still pretty ugly. Indicators continue to remain oversold but the stochastic is finally starting to curve around for a bullish crossover though we're not there yet. In the meantime we remain in a descending RTC and in the absence of any kind of a bullish candle it just looks like more downside ahead for Thursday.

ES daily pivot: Tonight the ES daily pivot falls again from 20007.00 to 2079.67. Tonight, ES remains well below its new pivot so this indicator continues decidedly bearish.

Dollar index:   Last night I noticed that the dollar might go lower on Wednesday but didn't want to commit to it. Too bad because it fell a big 0.23% confirming Tuesday's inverted hammer. Even with that move it remains extremely overbought and the stochastic also just gave us a brand new bearish crossover. That all makes the dollar definitely look lower for Thursday as there is still a yawning gap between Tuesday's close and Monday's close that needs filling.

Euro:  Last night I noted that the euro might be reaching the end of its week-long decline and that was actually confirmed on Wednesday as it found support around 1.0731 and finished with a green hammer to close at 1.0806. That brought it back above its lower BB as the indicators remain highly oversold. But we now have a brand new bullish stochastic crossover though the new overnight is off somewhat. Still the overall impression is for a move higher on Thursday.

Transportation:  The trans got it even worse than the Dow on Wednesday falling a big 2% gapping right down through support around 7358 and then on through their lower BB at 7279 before finally ending up at 7217. That left indicators extremely oversold and the stochastic turning around for a bullish crossover, though it's not there yet. So with a steep descending RTC going and no bullish candles in sight it's still too early to call a reversal here.

Accuracy: 

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
January    2      1       0           0       0.667    528


     And the winner is...

Here we go again.

Tonight is starting to look like a rerun of last night with the futures tanking right at 8:15 PM Eastern, the very minute the Hong Kong Futures Exchange opens.  And with the ongoing shenanigans in the Communist stock market (isn't that an oxymoron?) down we go.  So with the charts looking pretty gloomy anyway, it doesn't take a North Korean nuclear scientist to call Thursday lower again.

Single Stock Trader

Watch this space for a new feature next week.

Wednesday stock market forecast

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

• Wednesday lower.
• ES pivot 2007.00.  Holding below is bearish..
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• Single stock trader: new feature coming soon.

Recap

Well Tuesday turned out to be a rather odd day with the Dow going through all sorts of weird gyrations before finally ending with a gain of less than 10 points.  That meant my conditional call was wrong - but not by much.  Maybe we can get some better direction for Wendesday.

The technicals

The Dow:  The interesting thing about the Dow lately is that on Monday it stopped exactly on the lower edge of its multi-year long rising RTC that represents the current bull market. On Tuesday we got another test of that line and ended up in the same place. So far support at 17,000 is holding, as well as the December lows. One thing that has changed is that the Dow is now finally oversold for the first time in a month and the stochastic has fallen way off its bearish crossover, and looks like it is near the level from which a bullish crossover might start - possibly sometime later this week. In the meantime we have a nice doji star going and that is at least a reversal indicator.

The VIX:  I've said it before and I'll say it again - the VIX rarely spends much time about its upper BB. And after hitting that on Monday it obediently came right back down again 6.57% on Tuesday on a red marubozu. That was enough to send it out of its latest rising RTC for a bearish setup. The indicators have now peaked at verbought and the stochastic is curving around nicely just short of a bearish crossover. With two red candles in a row and indicators overbought I'd say there's more downside risk than upside potential to this chart here tonight.

Market index futures: Tonight, all three futures are lower at 12:22 AM EST with ES down a big 0.92%. After a bad day on Monday, on Tuesday ES managed a lopsided spinning top sitting at the lower end of Monday's action. Indicators remain oversold yhough not extremely so. However the stochastic continues to curve around in preparation for a bullish crossover. Monday also saw an attempt to retest the lower BB and that was successful. But the new overnight appears to be sagging again in a non-trivial fashion so it's not at all clear that Tuesday's reversal warning is going to pay out. At this time I have my doubts.

ES daily pivot: Tonight the ES daily pivot rises again from 2010.92 to 2007.00.  That now places ES sqaurely below its new pivot so this indicator is quite bearish tonight.

Dollar index:   After an inverted hammer on Monday I was cautious about calling the dollar lower on Tuesday which is just as well because instead of reversing course it continued on higher with a second big gap-up inverted hammer for a 0.53% gain - this one trading entirely above its upper BB. Indicators remin overbought and the stochastic continues to narrow for a bearish crossover but as Monday's example proves, inverted hammers are to be taken with a grain of salt. So we'll see if the dollar goes lower on Wednesday - I'm not calling it tonight.

Euro:  I also didn't call the euro last night which is also just as well because it completely ignored its spinning top from Monday and kept right on going lower, this time to close at 1.0763, below its lower BB. You'd think it might bounce off that but no, it's going lower still in the new overnight and indicators are now hitting extreme oversold levels. The stochastic is also curving around nicely and should be in position for a bullish crossover any day now. But in the meantime we need to see if the euro can manage to arrest this now week-long descent. It's still too early to call that for sure.

Transportation:  And finally after touching their own lower BB on Monday, the trans recovered on Tuesday by gaining 0.15% on a nice doji star. That sent the indicators all oversold and started the stochastic curving around in preparation for a bullish crossover. So we now have a buish reversal warning but this is still one which requires confirmation so I can't really call this chart higher just yet.

Accuracy: 

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
January    1      1       0           0       0.500    276


     And the winner is...

We still have some weak reversal signs in the charts tonight but they all require confirmation.  And the overnight futures are falling again, likely on more bad news out of Communist China strongly suggesting thata reversal isn't in the cards.  Also, the SPX Hi-Lo indicator popped back up to 50 on Tuesday, not the kind of depressed level reversals come from.  So I don't think the selling's done yet and I'm just going to have to call Wednesday lower.

Single Stock Trader

New feature coming soon.

Tuesday stock market forecast

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

• Tuesday higher only if ES stays above its pivot, else lower.
• ES pivot 2010.92.  Watching for a break either above or below..
• Rest of week bias uncertain technically.
• Monthly outlook: bias higher.
• Single stock trader: new feature coming soon.

Recap

Foo.  This wasn't exactly the way I wanted to start off the new year.  Not one bit.  With a 276 point dive in the Dow, the First Five Days indicator is off to a very rocky start.  We've come to a sorry point where the US markets are now seemingly subject to every whim of the joke "stock markets" of the Communist Chinese.  What the heck?  So against that sad background we now move ahead to see if Mr. Market can redeem himself for Tuesday.

The technicals

The Dow:  As expected last night the Dow moved lower on Monday dropping 1.58%. There was significantly heavier than normal volume but it managed to close well off its intraday lows even as indicators fell off of overbought and the stochastic continued its bearish crossover. We got a successful test of the lower BB at 17,118, but with indicators still nowhere near oversold and no bullish candle insight it is too soon to call this one higher yet.

The VIX:  After a gap-up spinning top last Thursday that looked for all the world like two thirds of a bearish evening star, on Monday the VIX rocketed higher again on a nearly 14% gap-up move that just touched its upper BB at 23.37. As is often the case though it bounced off that and as I often say the upper BB is the third rail of the VIX - it rarely spends more than a day or two above it. This move was enough to send the indicators all back to overbought though the stochastic is still not in position for a bearish crossover. Still with this big gap yawning below us and a red candle on the books I'd give better than even odds of a move lower on Tuesday.

Market index futures: Tonight, all three futures are higher at 12: AM EST with ES up %. Breaking under its 200-day MA last Thursday ES had a miserable day on Monday. It fell all the way back down to 1980 .25 while conducting a an ultimately successfully test of its lower BB and retracing half of its losses to end the day at 2009. The net result was a fat red hammer that sent the indicators oversold though the stochastic is not yet in position for a bullish crossover. However, OBV has started moving higher for the first time since December 29th. That plus something of a rally in the overnight is an encouraging sign and suggests the possibility of a reversal higher on Tuesday.

ES daily pivot: Tonight the ES daily pivot dives again from 2041.17 to 2010.92. And that was enough to leave ES sitting exactly on top of the new pivot so that leaves this indicator indeterminate tonight.

Dollar index:   Also on Monday, the dollar continued its latest rising RTC with a 0.23% move higher, one that just touched its own upper BB. That was also enough to drive the indicators overbought and send the stochastic just starting to curve around in preparation for a bearish crossover. So with an inverted hammer here and overbought indicators there's a suggestion of a move lower on Tuesday but that requires confirmation.

Euro:  And of course similarly on Monday the euro moved lower closing back down to 1.0846 but doing it on a long-legged fat spinning top, one which successfully tested its own lower BB at 1.0818. This move drove all the indicators oversold and sent the stochastic starting to come around for a bullish crossover. Like the dollar this requires confirmation but we may be starting to see some of that as in the new overnight the euro appears to be arresting its descent. Still we need to see what happens here on Tuesday.

Transportation:  This is it good example of why spinning tops required confirmation. Last night I noted that there was the chance of a reversal in the trans on Monday but it was not to be as the trans took it on the chin for a better than 2% decline, one that just touched their lower BB at 7297 before recovering a bit. While the indicators are now well on their way to oversold they're not there yet. So in the absence of any true bullish candles it's still too soon to call this one higher.

Accuracy: 

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
January    1      0       0           0       1.000    276


     And the winner is...

Tonight we're seeing a few reversal signs but they're fairly weak and require confirmation.  But we also have ES sitting exactly on top of its new pivot.  Put it together and it looks like a good time for a conditional call: if ES can break over and remain above its new pivot by mid-morning Tuesday, we'll close higher.  But if is falls below and remains there by mid-morning, we close lower.

I'm vaguely guessing that with three big down days in a row, we're now sufficiently over-extended that turnaround Tuesday may kick in, but it's not clear enough to make it an official call.

Single Stock Trader

We're wprking on cooking up something new and interesting for this spot.

Monday stock market forecast

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

• Monday lower.
• ES pivot 2023.67.  Holding below is bearish.
• Rest of week bias lower technically.
• Monthly outlook: bias higher.
• Single stock trader: ended.

Recap

Happy New Year!  And good riddance to 2015.  With all the holidays now out of the way and a full week of trading ahead of us to start off 2016, let's see what the charts have to offer us and what might be in store for Monday.

The technicals

The Dow:  Last Thursday, for anyone who can remember that far back, the Dow plunged through its 200-day MA with a 179 point loss. On top of that, the indicators all started moving lower, falling off of overbought and the stochastic gave us a completed bearish crossover. All of that looks simply bearish for Monday.

The VIX:  In contrast to an ugly looking Dow chart , on Thursday the VIX, while rising just over 5% did it on a very tall lopsided spinning top, almost an inverted hammer. Although indicators continue to rise they are no longer oversold and there is at least a suggestion of a reversal lower here for Monday.

Market index futures: Tonight, all three futures are lower at 12:08 AM EST with ES down 0.77%. Last Thursday, like the Dow, ES broke through its 200 day MA with a very ugly red candle making it two in a row to fall back to 2035 and a half. That sent it just to the edge of overbought with a freshly completed bearish stochastic crossover. The new Sunday overnight is now down nearly as much making this all look pretty grim indeed.

ES daily pivot: Tonight the ES daily pivot falls from 2061.00 to 2041.17.  ES remains below its new pivot so this indicator is clearly bearish.

Dollar index:   After falling relentlessly through the last half of December the dollar has now reversed course and exited that descending RTC. We now in fact have a bullish trigger on that as indicators continue to rise off of oversold. The dollar last Thursday in fact rose 0.4% and with no resistance now until back in the middle of December it looks like it will test its upper BB on Monday at 66.32 (on the $USDUPX).

Euro:  Similarly the euro is now has now fallen out of its rising RTC from last month, and last Thursday continued that descent falling all the way back down to 1.0859. Indicators are now oversold but the stochastic is still a long way from even starting a bullish crossover. And with the lower BB now not too far away at 1.0821 I wouldn't be surprised to see the euro test that level on Monday.

Transportation:  After a decidedly weak showing on Wednesday, last Thursday the trans fell further, but this 0.38% loss was on a red spinning top. Although the indicators are all now moving lower just short of overbought there's at least the suggestion of reversal here for Monday though one which requires confirmation.

Accuracy:  

Final stats for 2015:

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  7      4       8           1       0.667   1404
October    7      7       5           1       0.533    538
November   4      6       4           2       0.500   -350
December   8      2       5           0       0.800   1029


This wasn't too bad.  Four months of four-digit returns and only one losing month.  Recall that the "Dow points" are calculating by taking abs (Dow open - Dow close) and adding that number to each month when I called the close correctly and subtracting it when I was wrong.

For conditional calls, I increment the "conditional" column when I'm right and the "wrong" column when I'm wrong, but I don't take any Dow points for conditional calls since there's no fixed starting value for them.  The "no call" column is a bit of a misnomer.  That gets incremented when I make an "uncertain" call.

On days when I make no call at all, like if I take a vacation, then nothing gets changed.  I think this is a pretty reasonable way to gauge my effectiveness at calling the action of the market a day ahead of time.

     And the winner is...

The first day of January is historically quite bullish but I don't think that's going to be the case this year.  The charts are uniformly bearish and the futures tonight are looking just plain awful, apparently on some bad economic news from our pals the Chicoms.  I'm afraid I'm just going to have to call Monday lower.  This doesn't bode well for the First Five Days of January indicator either.

Single Stock Trader

This feature was pretty much a bust in 2015.  I had high hopes for swing trading VZ after it started off oscillating nicely.  But that pattern broke off after a few months and then the rest of the year gave us very few opportunities to do anything productive with it.  So until I figure out something more interesting, the idea of following a single stock all year long is finished.