The Hoot
Actionable ideas for the busy trader delivered daily right up front
- Friday lower.
- ES pivot 2091.92. Holding below is bearish.
- Next week bias lower technically.
- Monthly outlook: bias lower.
- YM futures trader: short at 17,670.
On Wednesday, the Dow sank early and then battled back. On Thursday it kind of reversed that, rising early and then falling most of the rest of the day. The bulls tried a late afternoon rally but that fizzled leaving us with a 23 point loss. So what does this all mean for Friday? It's heigh-ho, heigh-ho off to the charts we go.
The technicals
The Dow: On Thursday the Dow continued having trouble breaking above the 17,940 area, settling for a long-legged red spinning top that drove indicators further overbought and left the stochastic poised for a bearish crossover. This chart looks to have more downside risk than upside potential at this point.
The VIX: Thursday was one of those unusual days when the VIX fell along with the Dow and SPX, putting in a small doji and finding support around 14.73. It's now extremely oversold and has exited its steep descending RTC for a bullish trigger. With this doji, I'd guess the next move here is higher. Oh, and VVIX looks to have bottomed too.
Market index futures: Tonight, all three futures are lower at 12:33 AM EDT with ES down 0.13%. On Thursday ES put in a long-legged doji star that left indicators quite overbought. OBV is also now declining and the stochastic is way overextended and ready for a bearish crossover.
ES daily pivot: Tonight the ES daily pivot rises from 2084.75 to 2091.92. That puts ES back below its new pivot so this indicator returns to bearish.
Dollar Index: After it's Brexit balloon, the dollar has been wandering about the top of that spike just under its 200 day MA for over a week now and Thursday continued that trend with a 0.25% advance. Technically it's a small green marubozu as a bullish engulfing candle but the dollar lately is running totally on news so I can't really call this one right now.
Euro: And in mirror-image fashion, the euro has yet to recover from its Brexit dive that sent it through its 200 day MA. It tried breaking back above last week but that's now looking like a bust as it's fallen back under after putting in lower highs for three consecutive days now. The new overnight is inconclusive but I'm not expecting big things from the euro on Friday.
Transportation: On Thursday the trans confirmed Wednesday's hammer with a solid 0.46% advance but did it on an inverted hammer. Indicators remain highly overbought and the stochastic is ready to break for a bearish crossover so this chart could certainly go lower on Friday.
I don't like the looks of Thursday's ES doji, nor the continuing overboughtedness of the market. It's hard to see where the buyers are coming from right now so I'm just going to have to call Friday lower. That's all she wrote. See you again Sunday night!
YM Futures Trader
We remain short at 17,670. I still believe that this trade will come in reasonably soon.