The Hoot
Actionable ideas for the busy trader delivered daily right up front
- Tuesday higher.
- ES pivot 1921.42. Holding above is bullish..
- Rest of week bias higher technically.
- Monthly outlook: bias lower.
- YM Futures trader: going long at 16,434.
It was as crazy a day on Wall St. as I've seen in a long while as the Dow on Tuesday popped out of the gate, only to give it all back, then wander about the flat line most of the day before finally staging a late day rally to end almost back to the early highs. Go figure. I'm glad I called this day as "uncertain." But in the end we finally got some good stuff to chew on so let's get down to it and see whither Wednesday.
The technicals
The Dow: In the end, the Dow's meanderings on Tuesday gave us a nice fat green spinning top that neatly confirmed Monday's hammer. It also served to finally send all the indicators rising after reaching extreme oversold levels and also finally gave us a fresh bullish stochastic crossover. In addition we also finally managed to break out of a descending RTC that has been going on since the beginning of the month for a bullish setup. In other words, there is nothing bearish about this chart at all tonight and things are looking good for Wednesday.
The VIX: Last night I called the VIX lower for Tuesday and it cooperated nicely, dropping 7.53% on a stubby gap-down red spinning top. That sent indicators right to the edge of overbought and neatly completed a new bearish stochastic crossover. That seems to trump the candles' reversal warning so I'm going to say that there's more downside left to come on Wednesday. That is supported by a bearish trigger on a rising RTC exit.
Market index futures: Tonight, all three futures are higher at 12:25 AM EST with ES up 0.78%. Tuesday's action in ES was mostly notable for the confirmation that it gave to Monday's green hammer. That looks like it did in fact mark an end to the month-long decline that we've seen so far. The result was that we got a nice confirmation to close back up to 1925. That also clearly caused the indicators to bottom at oversold and finally gave us a fresh bullish stochastic crossover. On top of that the new overnight is trading outside this steep descending RTC that we've been in for a bullish setup. This is about as good a setup as it gets so I'm fairly confident in calling ES higher for Wednesday.
ES daily pivot: Tonight the ES daily pivot finally rises from 1911.92 to 1921.42. And the strong showing og ES on Tuesday finally puts it back above its new pivot so this indicator, yes, finally turns bullish.
Dollar index: Last night I found the dollar too confusing to call. And on Tuesday it took a surprising gap up for a 0.24% gain on a classic doji star. That also completed a fresh bullish stochastic crossover while leaving the indicators wandering around halfway between overbought and oversold. So push comes to shove I have to say there's a good probability the dollar could go higher again on Wednesday.
Euro: Last night I called the euro lower for Tuesday and it obliged, falling back to 1.0872 on a small red doji star. But the new overnight is already disconfirming that and along with a fresh bearish stochastic crossover in place, I'm calling the euro lower Wednesday.
Transportation: Last night I called Monday as a short-term bottom in the trans. After Tuesday's 0.92% advance on a nice green candle it looks like that was a pretty good call. Indicators remain quite oversold and the stochastic has just completed a fresh bullish crossover, so I'd say we have the green light to move higher here on Wednesday.
We have finally gotten some decent confirmation of Monday's reversal signs so as op-ex week continues, I'm just going to go ahead and call Wednesday higher.
YM Futures Trader
Tonight we go long YM at 16,434. I wanted to enter this trade right at the close but got distracted. No matter, I think there's still money to be made here as it looks like we have some very good bottoming signs in place.