Thursday Lower As Futures Move Lower Non-Trivially
The Night Owl Trader | Oct 08, 2015 12:38AM ET
The Hoot
Actionable ideas for the busy trader delivered daily right up front
- Thursday lower.
- ES pivot 1979.67. Holding below is bearish.
- Rest of week bias lower technically.
- Monthly outlook: bias higher.
- Single stock trader: NYSE:VZ not a swing trade buy.
Recap
Well, that was interesting. I was reasonably certain that with the Dow having hit its upper BB on Tuesday with a spinning top reversal candle it would go lower on Wednesday. But no such luck. Instead, it gained 122 points to continue its recent week and a half long winning streak. So lets check the charts to see how that changes the picture for Thursday.
The technicals
The Dow: On Wednesday, the Dow rejected Tuesday's spinning top in a big way to continue crawling up its upper BB for the third day in a row. That has now left the indicators all extremely overbought, with RSI having hit 98.64. Of note too is that the stochastic is now perfectly primed for a bearish crossover that could happen any moment. So although this is not a bearish reversal candle, it is questionable how much further the Dow can move without reversing course at least for a day.
The VIX: Similarly, on Wednesday, the VIX rejected the spinning top that it put in on Tuesday to descend further on an inverted hammer to close down to 18.40. It is tracking its lower BB and has hit zero, and that's as low as it goes, folks. The stochastic has actually fallen off the bottom of my chart and is now primed for a bullish crossover. So with a reversal candle in place here, I would give better than even odds that the VIX goes higher on Thursday
Market index futures: Tonight, all three futures are lower at 12:23 AM EDT, with ES down 0.52 %. I based my call for a lower close Wednesday in part on a red spinning top reversal candle in ES from Tuesday. Instead, on Wednesday, ES put in a tall green marubozu that brought it all the way back up to month-long resistance at 1988, sent the indicators to highly overbought levels and moved the stochastic into position for a bearish crossover. However, we remain in a rising RTC and this trend is far from over. On the other hand, the new overnight is experiencing a fairly significant move lower, and that bodes ill for Thursday.
ES daily pivot: Tonight, the ES daily pivot rises again from 1971.08 to 1979.67. That move now puts ES back below its new pivot so this indicator turns bearish.
Dollar index: After bumping into its 200-day MA on Monday, the dollar gave it all back on Tuesday and then some on a tall red candle. But on Wednesday it finished essentially unchanged on a small doji star. The indicators continue falling, but have not yet hit oversold, so what we have here is a reversal warning of a move higher but one which requires confirmation.
Get The News You Want
Euro: The euro, meanwhile, simply continues bouncing around in a two week long consolidation range bounded from below by 1.114 and from above by approximately 1.1300. After a nice gain on Tuesday, it was unable to make any further headway on Wednesday and closed right back down to 1.1263 on a small red doji star. And the new overnight isn't doing much of anything, so this chart continues to remain conflicted without any clear direction. I woudn't be trading this currency at the moment.
Transportation: Finally, on Wednesday, the trans outperformed the Dow by nearly a factor of two. They easily cleared resistance at 8085 on a tall green marubozu that keeps them in a nearly two week long rising RTC. Indicators are now very overbought, and the stochastic is in position to form a bearish crossover any day now. But without an actual reversal candle, I cannot call this chart lower just yet.
Accuracy:
It sometimes happens that I am a day early in my calls, and I'm thinking that this is one of those times. All of the forces that were in play last night are still there tonight, only more so. And this time, we're getting some better confirmation in the form of futures that are moving lower non-trivially. So I'm going to give it another try and once again call Thursday lower.
Single Stock Trader
I was thinking that Verizon looked toppy last night, and indeed, it came back in on Wednesday confirming Tuesday's tall inverted hammer with a lopsided green long-legged spinning top. Indicators continue to rise though, but have not yet hit overbought. That leaves this chart in a very mixed up state, but it is definitely not in my preferred swing buy mode at the moment.
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.