The Hoot
Actionable ideas for the busy trader delivered daily right up front
- Wednesday higher.
- ES pivot 2042.83. Holding above is bullish.
- Rest of week bias lower technically.
- Monthly outlook: bias higher.
- YM futures trader: no trade.
Last night's technicals played out quite nicely and the Dow fell as I expected, off 134 points. We now move on to Wednesday, not much else to say here.
The technicals
The Dow: After a dark cloud cover on Monday the Dow took a big dump on Tuesday with a tall red marubozu that just exited the rising RTC for a bearish setup and sent the indicators just off overbought. So by itself, this chart continues to look bearish.
The VIX: Last night I said this chart looked bullish and so it was, gaining 9.21% on Tuesday on a big gap up star. Check this out. Of course that's now 2/3 of a bearish evening star, so with a completed bullish stochastic crossover and indicators not yet overbought, this is a case where we have to wait and see if the VIX will fall on Wednesday. It's tempting, I have to say.
Market index futures: Tonight, all three futures are higher at 12:15 AM EDT with ES up 0.43%. On Tuesday, ES confirmed Monday's harami with a big drop back down to 2038.75. That was enough to send the indicators off overbought and complete a bearish stochastic crossover. That all looks pretty grim... but the new overnight is actually staging a non-trivial rally that began right around the time oil started rising again - fancy that.
ES daily pivot: Tonight the ES daily pivot falls from 2061.08 to 2042.83. And that's enough to put ES back over its new pivot so this indicator is once again bullish.
Dollar index: The dollar is really having trouble deciding where it wants to go lately. On Monday it put in yet another spinning top, the fifth in five days. This one was good for a 0.12% gain but left the indicators still all oversold. I can't draw any meaningful conclusions from this chart.
Euro: And it's basically the same story with the euro - three spindly dojis in a row here, with Tuesday's showing a small loss back down to 1.1409. Still that makes two lower closes in a row and with indicators remaining highly overbought and the new overnight continuing lower, it looks like there's more downside ahead for the euro.
Transportation: Last night I wrote that "it will be interesting to see if the trans manage to bounce off the MA or fall on through on Tuesday". Turns out it was Door Number Two as the trans dropped another 0.57% on a fat red spinning top that punched right through the 200 MA. That sent all the indicators to oversold but the stochastic is nowhere near a bullish crossover so there's really no bullish signs here tonight.
Tonight we have a VIX that sure looks like it could move lower on Wednesday and futures staging a serious rally in the overnight. In addition, this Wednesday is historically quite bullish according to The Stock Traders Almanac. So while the rest of the charts aren't so hot I'm going to go with this and call Wednesday higher.
YM Futures Trader
No trade tonight..