The Hoot Actionable ideas for the busy trader delivered daily right up front
- Wednesday lower.
- ES pivot 2068.42. Holding above is bullish.
- Rest of week bias uncertain technically.
- Monthly outlook: bias lower.
- YM futures trader: no trade.
Last night I called Tuesday higher despite a reversal sign on the Dow and by the close I was glad of it as the Dow posted its best gain since March 1st if my calibrated eyeballs do not deceive me. I leave the exact reasons to the puttering pundits of positivity (who are of course the opposite of the nattering nabobs of negativity) as here we are concerned with just the facts ma'am. So let's head on off to the charts and see what manner of facts we can rustle up for Wednesday's market direction.
The technicals
The Dow: The Dow on Tuesday popped right out the gate and just kept on climbing to end with a giant green marubozu for a 1.26% gain of the sort we haven't seen lately. That blasted it out of its descending RTC for a bullish setup, sent all the indicators well on their way from oversold to overbought and neatly confirmed a rising stochastic crossover. Nothing bearish on this chart tonight.
The VIX: Last night I wrote that "[a bunch of stuff] leaves this chart continuing to look negative". And yup, on Tuesday the VIX gapped down 6.45% to drive all the indicators just oversold though the stochastic remains in bearish mode. Next support is at 13.26 and I expect to see that before any move higher here.
Market index futures: Tonight, all three futures are lower at 12:23 AM EDT with ES down 0.16%. ES had an awesome day on Tuesday, jumping way out of its descending RTC on a tall green near-marubozu for a big bullish setup. The indicators continue rising off oversold but we stopped right on resistance around 2077. And the new overnight seems to be having some trouble with that level. This makes me hesitate before calling Wednesday higher again.
ES daily pivot: Tonight the ES daily pivot rises from 2054.08 to 2068.42. ES remains above that number so this indicator is once again bullish.
Dollar index: Last night I was reluctant to call the dollar lower on the basis of a gap-up and that was a good thing because the dollar just kept right on marching higher Tuesday, up another 0.16% on a green spinning top to keep a now six day winning streak alive. Indicators are finally overbought but the stochastic hasn't even begun to curve around for a bearish crossover so there's still no way I can call this chart lower from here.
Euro: And of coruse the euro moved lower on Tuesday, this time back to 1.13805 on a lopsided red spinning top. That left the indicators extremely oversold and the stochastic definitely curving around for a bullish crossover. And the new overnight is actually moving higher so it's looking like the euro may find some support right around here.
Transportation: Last night I wrote that "there still seems to be room to run here" and on Tuesday the trans ran a virtual marathon, up a big 1.21% to blast right through their 200 day MA with a solid green marubozu. That sent all the indicators rising off oversold and confirmed a bullish stochastic crossover. It also gave us a bullish trigger on a descending RTC exit so there's really nothing bearish at all on this chart now.
While there are still no overtly bearish signs on the charts tonight, I am concerned about how fast and how far we ran on Tuesday, a move that seems a bit overdone to me. Also, the VIX is nearing a support level it might bounce off of. And it's not uncommon for the market to take a breather after a big one day move, and the overnight futures seem to be supporting that idea so I'm going to call Wednesday lower.
YM Futures Trader
No trade tonight..