Tuesday Higher, Rest Of Week Bias Uncertain Technically
The Night Owl Trader | May 19, 2015 01:30AM ET
The Hoot
Actionable ideas for the busy trader delivered daily right up front
- Tuesday higher.
- ES pivot 2122.33. Holding above is bullish.
- Rest of week bias uncertain technically.
- Monthly outlook: bias higher.
- Single stock trader: VZ still not a swing trade buy.
Recap
I'll admit to being a bit surprised that the market still had enough gas in the tank to push higher on Monday with the Dow touching another record close. I didn't think it had it in it. So what does this all mean for Tuesday? Let's take a look.
The technicals
The Dow: On Monday the Dow powered past record resistance to close at 18,299. Admittedly it only took 26 points to do that though. And the candle was a stubby spinning top. That makes two reversal candles in a row, both hugging the upper BB. And indicators are now well overbought. It's been rare lately for the Dow to spend more than two days above its upper BB so I have to think there's lower coming here soon.
The VIX: I can forgive myself for being wrong on Monday because this was one of those weird days when the Dow was up and the VIX was also up, in this case 2.83%. But it was on a weird red candle that nonetheless confirmed Friday's gravestone doji. Eh?? In any event, this constitutes something of a morning star that with oversold indicators still makes me think the next move is higher.
Market index futures: Tonight, all three futures are higher at 12:51 AM EDT with ES up 0.12%. On Monday ES rejected Friday's spinning top with a big advance that this time ended on the upper BB which is rising away. The overnight is moving higher still but that is also causing RSI to peak at overbought and making the stochastic curve around in preparation for a bearish crossover. But in general, the candles look positive.
ES daily pivot: Tonight the ES daily pivot rises from 2118.33 to 2122.33. We continue above the new pivot so this indicator remains bullish.
Dollar Index: The dollar on Monday just laughed at Friday's bearish engulfing pattern and posted a huge 1.17% pop that formed a bullish stochastic crossover and blasted it out of its descending RTC for a bullish setup. That all looks positive to me.
Euro: Similarly, the euro on Monday retreated all the way back to 1.1308 to form a bearish stochastic crossover and a bearish setup on a rising RTC exit, and so that looks lower again Tuesday. The overnight seems to be supporting that idea so far.
Transportation: The trans capitalized on Fridays gains with a nice 0.69% gain Monday that punched through their 200 day MA and completed a bullish stochastic crossover. With a new rising RTC in place this chart looks continued bullish.
Get The News You Want
Tonight, everything is looking bullish except for the VIX. I don't usually like to discount the VIX but it is acting squirrelly all of a sudden. It very rarely rises along with the market so I'm going to discount it tonight, possibly at my peril. But the overall chart consensus seems to warrant calling Tuesday higher.
Single Stock Trader
Last night VZ confirmed Friday's bearish engulfing candle with a red marubozu and a stochastic on the verge of a bearish crossover. That means once again this stock is not a swing buy.
Original post
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