Monthly Bias Lower, Thursday Uncertain
The Night Owl Trader | Aug 27, 2015 01:27AM ET
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- Thursday uncertain.
- ES pivot 1893.75 Holding above is bullish.
- Friday bias uncertain technically.
- Monthly outlook: bias lower.
- Single stock trader: NYSE:VZ still a swing trade buy.
Wednesday morning started out pretty much like a rerun of Tuesday, with a big jump upwards followed by a slide back down again. But in the middle of the day, Dudley Doright came to the rescue with some welcome comments about the possibility of a delay in Fed interest rate rate hikes. That sounded the all-clear and the Dow began moving higher again. Not even the 2 PM margin call stumble could keep it from finishing at session highs. As we move on into the home stretch for this crazy month, lets look at the charts to see if the bottom is in or what as we ponder Thursday.
The technicals
The Dow: The double hammer pattern that we've seen over the past few days, one normal and one inverted finally proved to be too much for the bears and on Wednesday, the day ended up on a 619 point tear. That retraced all of Tuesday's losses plus most of Monday's losses. It also confirmed a new bullish stochastic crossover and caused all of the indicators to bottom at oversold. They are all now rising nicely. Ordinarily, I'd say we're due for a pause, but these are not ordinary times. The candle itself is a tall green marubozu and the indicators are all still oversold, so I'd say this chart now looks technically bullish.
The VIX: Earth to VIX, you're now cleared for reentry. On Wednesday, the VIX dropped nearly 16% on a lopsided red spinning top, its first red candle in 7 sessions. Indicators have now all clearly topped and are descending, though still overbought. We also have a nicely completed bearish crossover, so this chart now looks full-on bearish.
Market index futures: Tonight, all three futures are marginally higher at 12:21 AM EDT, with ES up 0.06%. ES had an amazing day on Wednesday, rocketing all the way back up to 1938. And that big move still left the indicators oversold. They're all rising now, and we have a completed bullish crossover. So with Tuesday's giant doji star confirmed, technically this chart looks continued bullish.
ES daily pivot: Tonight, the ES daily pivot rises again from 1893.75 to 1910.50. That still leaves ES comfortably above its new pivot, so this indicator continues bullish.
Dollar index: On Wednesday, the dollar rose nicely with a gap-up green hanging man that stopped only at its 200-day MA. The indicators are now just off oversold and the stochastic has completed a bullish crossover. We've also exited a descending RTC and that's a bullish setup. Now if the dollar can just clear resistance at the MA, we're good for more advances on Thursday.
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Euro: The euro, meanwhile, made it two down in a row following Monday's high of 1.1718. On Wednesday, it closed at 1.1352, stopping exactly on its 200-day MA. But all of the indicators are now off overbought and descending nicely with a completed bearish stochastic crossover, and Wednesday's candle exited a week-long rising RTC, so that's a bearish set up. That means this chart now looks continued bearish.
Transportation: Finally, the trans also had a great day on Wednesday, solidly establishing support at 7467 and giving us a tall green marubozu. That retraced all of Tuesday's losses and nearly half of Monday's. The indicators remain oversold, are now rising off the bottom, and we have a completed bullish stochastic crossover. That all means this chart now looks bullish.
OK, so here's the problem I'm having tonight. All the charts are looking technically bullish, but with the VIX still over 30 and the futures basically flat in the overnight, so far it feels like flipping a coin and having it land on its edge. The slightest breeze could make it fall over either way. And with the wind gusting from all points of the compass lately, this weather-owl isn't taking any chances: Thursday uncertain, Jack.
Single Stock Trader
After a crazy exponential run-down last week and into Monday, VZ moved higher on Tuesday, but finished with the disappointing red candle. But then it redeemed itself on Wednesday with some nice gains. All the indicators have finally bottomed and are moving higher steadily. The stochastic in particular now has a nice looking bullish crossover in effect. We've also finally peeled away from the lower BB, and it looks like there's still more room to run higher on Thursday.
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