The Hoot
Actionable ideas for the busy trader delivered daily right up front
- Wednesday higher.
- ES pivot 2013.58. Holding above is bullish
- Rest of week bias uncertain technically.
- Monthly outlook: bias lower.
- Single stock trader: waiting on new VZ entry.
Recap
I don't like Monday-holiday weeks. They throw me off for the rest of the week. In any event, Tuesday's indecision reflected, I think, a general feeling that everyone must be on ECB watch. With that in mind, let's see if we can make any sense of Wednesday.
The Technicals:
The Dow: The Dow had a big day Tuesday, down early triple digits. But the traders must have had a good lunch because soon thereafter it began moving higher, to end the day up a whopping 4 points. The resulting star is a reversal warning - but one which requires confirmation. So we're left to wait & wonder.
The VIX: Monday night I wrote "this one looks lower Tuesday" and danged if that isn't just what happened, with the VIX down another 5%. It's a gap-down star but is also a bearish stochastic crossover so I don't think we're done going lower.
Market index futures: Last night, all three futures were higher at 12:25 AM EST with ES up 0.17% on Tuesday. ES put in a small green spinning top but it was enough to break out of a descending RTC for a bullish setup. Indicators now rising just off oversold, a completed bullish stochastic crossover, rising OBV and positive pin action last night all point to continued higher today, Wednesday.
ES daily pivot: Last night the ES daily pivot rose from 1999.17 to 2013.58. And even with that jump we're still above the new pivot so this indicator continues to be bullish.
Dollar: I refrained from calling the dollar lower Monday night in the face of an inverted hammer. Good thing too because the dollar just kept right on climbing yesterday, up another half percent. The last time we had a monthly close this high was way back in March 2009. And still no end in sight despite impossibly overbought indicators.
Euro: And naturally the euro remained in free fall Tuesday, this time closing at 1.1554. Extrapolating the descending RTC, it looks like the euro will hit parity by the end of the year. Remember, you heard it here first.
Transportation: Monday night I wrote "This one looks like there's more upside left" and indeed there was with the trans up a nice 0.96% on Tuesday. This green marubozu also broke out of the descending RTC for a bullish setup, completed the bullish stochastic crossover, and sent the indicators higher (except for RSI which in an unusual move, went a bit lower). But it looks like the rally isn't over yet.
All the positive signs from Monday night remained in place last night so, ECB or no, I'm just going to go ahead and call Wednesday higher.
Single Stock Trader
VZ gained a bit more on Tuesday but hit its upper BB® again though on a tall dragonfly doji. With overbought indicators, I'd not buy here. If anything it might be time to start thinking about a quick short except that this isn't a good week for it, not with the ECB in the wings.