Wednesday stock market forecast

The Hoot 
Actionable ideas for the busy trader delivered daily right up front

• Wednesday lower. 
• ES pivot 2049.92.  Holding below is bearish.
• Rest of week bias uncertain technically.
• Monthly outlook: bias lower.
• YM futures trader: no trade.

Recap

Well so last night I had no clear idea which way the market was going so I can't say I was surprised to see the Dow take a 181 point dump on Tuesday.  That made for some interesting chartology so let's get right to it.

The technicals

Dow daily

The Dow:  Tuesday's Dow chart formed a fairly rare three candle pattern known as a bullish stick sandwich.  Unfortunately, it's not all that good a predictor.  The last time we saw one of these, on Jan. 30th. 2015, the next day simply added another layer to the sandwich.  Perhaps of more interest is that we're building a base of support around 17,540.  With indicators nearly oversold, one could imagine a move higher from here.  Check out the chart here - you really don't see this one very often.

The VIX: The uncertainty in the market really shows in the VIX.  After a big bearish engulfing pattern Monday it put in an egually big bullish piercing pattern Tuesday.  But with the indicators all rising off oversold, that leads credence to the idea that there's more upside from here.

Market index futures: Tonight, all three futures are slightly lower at 12:14 AM EDT with ES down 0.06%.  ES was pretty mucht he same story as the Dow on Tuesday.  We're building good supprot around 2042.

ES daily pivot: Tonight the ES daily pivot falls again from 2055.42 to 2049.92. ES.is now below the new pivot so this indicator lips back to bearish.

Dollar index:   The dollar stubbornly continues to refuse to fill in last week's big gap up with a third day in a row of going nowhere.  Indicators remain overbought but there's no telling when the break will come here  This one is just a wait & see tonight.

Euro:  And of course it's the same deal with the ero, now congesting around 1.1324.  There's no decent RTC over the past week so this chart remains a cipher until we get a breakout one way or the other.

Transportation:  On tuesday the trans confirmed Monday's bullish harami with a 0.60% gain.  It was a tall inverted hammer that nearly touched its 200 day MA but it also exited a descending RTC for a bullish trigger and formed a bullish stochastic crossover.  Indicators remains just off oversold so I'm guessing there's more upside here.  Note too that the trans rose on a day the Dow was down.

Accuracy: 

Month    right  wrong  no call  conditional  batting   Dow
                                             average  points
January    9      5       5           0       0.643    1433
February   9      3       5           3       0.800    1133
March      8      6       6           1       0.600     222
April      6      4       8           2       0.667     416
May        4      2       3           2       0.750     433
 
     And the winner is...

Stick sandwich or no, the overall gestalt of the charts tonight remains negative.  My only hesitation is the fact that we're sitting right on support in both ES and the Dow but I'm having some trouble working up a case for going higher.  So I guess I'll just go out on a limb and call Wednesday lower.

YM Futures Trader

No trade tonight..