The Hoot
Actionable ideas for the busy trader delivered daily right up front
- Thursday lower.
- ES pivot 1854.33. Holding below is bearish.
- Friday bias uncertain technically.
- Monthly outlook: bias higher.
- YM futures trader: still long at 16,434 .
It was another crazy day on the Street. The Dow was up triple digits in anticipation of Auntie Janet in Washington, and then it was all downhill from there, the Dow ending with a 100 point loss on the day. After watching this charade on CNBC I'm sure Janet was shaking her head and asking herself "Why did I take this job again?" as she played to an 80% empty room spending half her time listening to politicians who didn't even bother asking her any questions at all, instead using their time as an opportunity to grandstand their pet causes on national TV.
Periodically the camera would pan over to an audience of a motley array of sullen looking teenagers who appeared to be suffering from acute Nintendo withdrawal, all no doubt wondering what they were doing there too. Perhaps it was their "Gimme more money" T-shirts someone gave them. Oink oink.
I just called the day uncertain but it was clear that Mr. Market disapproved. So with this noise out of the way, let's see how the charts have changed.
The technicals
The Dow: The more Janet talked, the lower the market went. Dammit, Janet! You need to get in sync with reality here. You can't seriously be entertaining ay more rate hikes this year, can you? So anyway after two days of reversal candles, we just continued lower, this time with a fat incerted hammer. Indicators moved a bit lowr but the stochastic is still not ready to show us a bullish crossover. With essentially four big down days in a row now, it's starting to look like the market wants to test the January lows here. Wednesday's action certainly canceled any bullish aspirations we may have entertained last night as the Dow gave up the 16K support line.
The VIX: The strangeness carried over to the VIX. As I expected, it moved lower Wednesday but unusually on a day the rest of the market was down too. And the resulting green hammer was a puzzler. We remain highly overbought and the pattern is something of a bearish evening star and yet the market refuses to rally. Go figure.
Market index futures: Tonight, all three futures are lower at 12:23 AM EST with ES down 0.46%. ES has been all over the map lately with a fat hammer Monday a doji star Tuesday and now an inverted hammer wednesday. They all look like reversal candles - until the next day and then ES jsut keeps going lower. January support is now jsut a distant memory, as is last August support. And the lower BB ontinues to fall away. But even atthat the indicators are not yet at extreme oversold levels. And with the new overnight amazingly enough continuing lower again, there's no reveral in sight here at all.
ES daily pivot: Tonight the ES daily pivot rises from 1845.92 to 1854.33. Even without that, ES remains below its new pivot so this indicator simply continues bearish.
Dollar index: On Wednesday, the dollar ignored Tuesday's hammer and jut kept falling, down another 0.16% in an inverted hammer to send all the indicators quite oversold. We're now back to where we were last October. And just like last night we have a reversal candle but once again with such a strong downtrend in place, that requires confirmation.
Euro: And also on Wednesday, the euro put in a dagger doji star ending virtually unchanged at 1.12895. But that reversal sign is already being disconfirmed as the overnight continues marching higher despite indicators now highly overbought. There has to be a top in here somewhere nearby, but it doesn't look like Thursday will be it.
Transportation: After some bullish divergence and a bullish engulfing pattern on Tuesday, the trans gave it back with a tall inverted hammer at the top end of that action. The loss was minor but with indicators now falling, the general impression is bearish.
I suppose it's possible we could go higher on Thursday. The VIX certainly is suggesting that as a possibility and things are getting quite overextended to the downside. And yet oil continues its slide lower, buyers are nowhere to be found and with Auntie Janet scheduled for an encore performance on Thursday, it's looking grim indeed. So in the absence of any positive technical signs on the charts beyond the VIX (which doesn't even seem to be helping), I'm going to call Thursday lower and will be pleased to be proven wrong. Meh.
YM Futures Trader
Nothing new again here.