Does This Dow Chart Point To A Reversal?
The Night Owl Trader | Aug 23, 2016 12:58AM ET
The Hoot
Actionable ideas for the busy trader delivered daily right up front
- Tuesday uncertain.
- ES pivot 2179.83. Holding above is bullish..
- Rest of week bias uncertain technically.
- Monthly outlook: bias lower.
- YM futures trader: short at 17,670.
Well the Olympics are finally over and we're back, Jack. I've watched everything from volleyball to badminton until my eyeballs were rolling around. We somehow survived the green water, the muggings and the Zika mosquito.
Not to mention the Brazilians' continuing obstinate and absurd insistence that they invented the airplane. I'm surprised they also didn't have a closing ceremony segment on how they invented the telephone, the light bulb, and the phonograph too. And maybe the Internet for good measure. Sheesh.
Meanwhile it looks like I picked a great time to go on vacation. When I came back I found that after two whole weeks of trading the Dow was all of 46 points lower than when I left. Ie. nothing happened. Maybe I should just take the rest of the month off too. Well we'll have a quick look at the market anyway as the Dog Days of summer woof on.
The technicals
The Dow: Take a look at this crazy chart of the Dow on Monday in 5 minute bars. It's a classic symmetrical triangle in the form of a damped square wave, Never saw one like that before. So is this a continuation or a reversal triangle?
Well with three days now of lower highs, that would point to a continuation. However, with the daily candle a spinning top, that points to a reversal, and the stochastic looks ready for a bullish crossover.
Market index futures: Tonight, all three futures are slightly higher at 12:30 AM EDT with ES up 0.06%.
ES daily pivot: Tonight the ES daily pivot ticks up from 2179.50 to 2179.83. That leaves ES above its new pivot so this indicator is now bullish.
Get The News You Want
Tonight we've got a plethora of spinning tops on the charts, all signaling reversals but all needing confirmation. We've seen plenty of these come and go all summer to no effect.
So while it looks like we could reverse and go higher on Tuesday, I can't on a technical basis call the market higher. There's clearly plenty odf indecision about, witness that crazy Dow chart.
So all that leaves is Tuesday uncertain. That's probably going to be the case as long as we remain in the Dog Days of summer. And given that I got burned last month trying to call what amounts to noise int eh charts, I'm prepared to call the rest of this month uncertain if I have to.
YM Futures Trader
No trade tonight.
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