The Hoot
Actionable ideas for the busy trader delivered daily right up front
- Tuesday higher.
- ES pivot 2032.50. Holding above is bullish.
- Rest of week bias uncertain technically.
- Monthly outlook: bias lower.
- Single stock trader: N:VZ not a swing trade buy
Recap
Well that was certainly interesting. The market completely fooled me on Monday and I'm sure more than a few others too by not dropping at all in the wake of the weekend barbarian attacks in Paris. With the future guiding substantially lower Sunday night and considering the fact that past similar attacks have led to market selloffs, I don't think it was unreasonable to expect a decline on Monday. What we got instead changes the picture, so we have some most curious charts to look at tonight.
The technicals
The Dow: On Monday the Dow put in a canonical bullish engulfing pattern much to my surprise. And I was even more surprised at the extent of the gain with a 238 point jump that was its best performance in nearly a month. It was also enough to send the indicators off of oversold and complete a bullish stochastic crossover. That leaves nothing bearish at all about this chart tonight.
The VIX: And in perfect mirror image fashion, on Monday the VIX put in a bearish engulfing pattern with a nearly 10% drop . That was enough to send it over off of overbought levels and also form a bearish stochastic crossover. So just as the Dow now looks bullish, the VIX looks correspondingly bearish.
Market index futures: Tonight, all three futures are higher at 12:14 AM EST with ES up 0.18%. What a difference a day makes. After looking decidedly negative at this time last night, on Monday ES roared back with a giant bullish engulfing candle that was stopped only by its 200 day MA at 2049. And while that still leaves the indicators oversold it also completed a bullish stochastic crossover. In any case, it looks like the latest descending RTC may very well be over and there's certainly nothing bearish about this chart tonight. It remains to be seen if ES can punch through the 200 MA on Tuesday. But judging by how much gas is in the tank I wouldn't be surprised to see that happen.
ES daily pivot: Tonight the ES daily pivot rises from 2025.33 to 2032.50.That leaves ES well above its new pivot so this indicator now turns bullish.
Dollar index: And also on Monday, the dollar put in an exceptional chart of its own with a 0.45% gain that broke monthly resistance for its highest close since April 13th. That also sent the indicators back overbought and caused the stochastic to curve around for a bullish crossover. As an aside, it's interesting that further dollar strength may delay the widely anticipated Fed rate hike next month, which would be something (a delay that is) I would definitely applaud.
Euro: And after a very tall bearish engulfing candle last Friday, on Monday the euro confirmed that with an equally tall red candle that closed right back down to 1.0681, its lowest close since April 15th. And although the indicators remain oversold, the stochastic has now formed a bearish crossover from a low level. Those are often good for another day or two of lower prices and a move lower in the overnight seems to be confirming that idea.
Transportation: After a dreadful week last week culminating with three black crows that took it right down to its lower BB, on Monday the trans put in a textbook perfect green hammer. With the indicators now oversold and the stochastic curving around nicely in preparation for a bullish crossover, this looks like an excellent buying opportunity in the trans for Tuesday.
With bullish engulfing candles galore on the charts tonight and with ES having just reclaimed its 200 day MA, the only logical call I can make is for Tuesday higher.
Single Stock Trader
Like most everything else on Monday, Verizon had an excellent day with a nearly 2% pop that bounced it right off its lower BB. That sent the indicators off of oversold and formed a bullish stochastic crossover. It also pushed it out of its long-running descending RTC for a bullish crossover. Therefore this chart looks nothing but bullish for Tuesday. And while it's not a classic swing buy for me, I think its not a bad entry point right here.