The Hoot
Actionable ideas for the busy trader delivered daily right up front
- Thursday lower.
- ES pivot 2064.50. Holding above is bullish.
- Rest of week bias uncertain technically.
- Monthly outlook: bias lower.
- YM futures trader: no trade.
After weighing all the evidence last night I decided the Dow could in fact move higher on Wednesday and that's just what it did, with a robust 145 point follow-up to Tuesday's big 213 point pop. That makes for some interesting chartology and that's what we do here, so let's check it out, as they say down at the public library.
The technicals
The Dow: The Dow's 0.82% gap-up advance Wednesday was pretty impressive considering it's been over a month since it managed to string together two wins in a row. We handily cleared resistance at 17,710 and confirmed the descending RTC exit for a bullish trigger. And with all this, indicators are not yet overbought and the upper BB is still at 17,957. So it looks like there might still be more upside left here.
The VIX: Last night I wrote that "there's nothing bullish about this chart tonight" and indeed there wasn't as the VIX followed on Tuesday's big dump with another 3.61% decline to just touch its lower BB on a small stubby red spinning top. But indicators are still not yet oversold so this is a reversal warning which requires confirmation.
Market index futures: Tonight, all three futures are lower at 1:22 AM EDT with ES down 0.11%. ES is the chart of the day Notice how it blasted through resistance at 2078 and then kept right on going through its upper BB before ending at 2087.25. That sent all the indicators to quite overbought levels and made for quite a nice two day run. Now we're ready for a pause maybe? The new overnight seems to be suggesting that could happen.
ES daily pivot: Tonight the ES daily pivot rises again from 2064.50 to 2084.42. ES.remains above its new pivot, but just barely. Still that counts as bullish.
Dollar index: The dollar meanwhile confirmed Tuesday's tall inverted hammer with a 0.25% drop. In retrospect I don't know why I wasn't more definitive about this. Either way, it looks like the top is in as all the indicators have begun moving lower, though still overbought. This chart just looks bearish again from here.
Euro: After a big dump on Tuesday I thought the euro might want to visit its lower BB on Wednesday. And while it came close, it finished with a green candle back up to 1.11680 and a classic bullish piercing pattern. Indicators remain quite oversold adding credence to the theory we could see a move higher here on Thursday. And that squares with my call for a lower dollar.
Transportation: Last night I was concerned about an inverted hammer in the trans. But they laughed that off on Wednesday and put in a big 0.81% charge that just pierced their 200 day MA. Indicators are now overbought but do not discount the power of the 200 MA cross.
We're starting to see indications that the tide may be running out. After a big two day run and with a bunch of charts nearing big resistance lines, that has to be kept in mind. Also, the VIX has now touched its lower BB and that's never a good sign for stocks. So I'm going to go out on a limb tonight and call Thursday lower. I'll be happy to be proven wrong.
YM Futures Trader
No trade tonight..