Thursday Lower; Monthly Outlook: Bias Higher
The Night Owl Trader | Mar 05, 2015 12:34AM ET
The Hoot
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- Thursday lower.
- ES pivot 2110.00. Holding above is bullish.
- Friday bias uncertain technically.
- Monthly outlook: bias higher.
- Single stock trader: VZ again still not a buy.
Recap
Well we finally got the break I'd been waiting for for a week now as the Dow Jones 30 put in two non-trivial moves lower back-to-back. Jobs numbers, the Blah Book, Netanyahu (who is right, by the way), or whatever, it doesn't matter. It's all baked into the charts, and that's why technical analysis works. So let's take a quick peek in the oven and see what's cookin' for Thursday. Yum!
The technicals
The Dow: This was a big dump for the Dow, down 106 Wednesday for two black crows that leave us finally just barely off overbought. But with support at 18,135 broken, the next line is 18K even and I expect to see that on Thursday. I also note an exit of the rising RTC for a bearish setup.
The VIX: Last night I wrote about the VIX, "I'd have to think the bottom is in". And yup, it was, with a gap-up 2.67% jump on Wednesday. But it was on a funny gravestone doji that pierced the 200 day MA before retreating. 200 day MA assaults can take several tries before succeeding so with indicators now just only off oversold I'd expect another stab at in on Thursday. FWIW, we now have a bullish trigger on the falling RTC exit. OTOH, these gravestone dojis are usually pretty good reversal signs, so now I'm not so sure about an advance here on Thursday.
Market index futures: Tonight, all three futures are higher at 12:19 AM EST with ES up 0.05% Wednesday's dump in ES was enough to finally drive the indicators oversold though the stochastic has yet to begin its characteristic curve around for a bullish crossover. So I'd say a lot depends on the overnight pin action. And indeed some support seems to be coming in making me wonder if the tail on Wednesday's candle was more hammer than hanging man.
ES daily pivot: Tonight the ES daily pivot falls again from 2104.92 to 2095.50. That drop now leaves ES back above its new pivot so this indicator turns back bullish again.
Dollar Index: Well the dollar fooled me Wednesday. I thought we had a sign it might go lower. But at least I had the sense to require confirmation. And it didn't come in a big way as we jumped 0.661% as the dollar powered on to highs not seen since March 2009. We're hugging the upper BB now but any call lower remains problematic at this point and there's really nothing like that in the cards.
Euro: Last night I wrote "We're back below 1.1200 and still on track, as far as I'm concerned for an express trip to Parityville". Well with a break below support at 1.1153 on Wednesday and a close of 1.1075, not seen since September 2003, it looks like the track has been cleared all the way to our destination. My current ETA is now somewhere in the fourth quarter of 2015.
Transportation: The trans on Wednesday were a lot like the Dow, so that commentary applies here too. But here we also got a stochastic close to forming a bullish crossover and a fat hammer than touched the lower BB. That's a reversal warning, though one that requires confirmation.
Get The News You Want
Hmmm - I think we're nearing the point of a turn-around but the charts all look sufficiently bearish (with the lone exception of ES) that I'm going to just have to call Thursday lower again. It's not the ideal pattern I'd like to see but it makes more sense than a call for higher. We'll see.
Single Stock Trader
Last night I wrote about VZ, "Still no buy here". Good call too (as I pat myself on the back because if I don't, who will) as VZ completely gave up on pushing past 49.55 and instead returned to where it was seven days ago stopped only by - surprise - the 200 day MA. But - the indicators remain stubbornly overbought and the stochastic actually only just completed a bearish crossover. So like I tell my German Shepherd when we're out for a walk and she starts sniffing around a poop, "Leave it!". I think VZ will be smelling a lot better in a few days. (Ewww - did I really just write that?)
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