Better case for lower Thursday

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

• Thursday lower, high confidence.  Bull-bear ratio is 1:5.
• ES pivot 1198.33.  Breaking below is bearish..
• Friday bias lower, rebound possible next week.
• Monthly outlook: bias up, on technicals
• ES Fantasy Trader remains short at 1184.75.

Recap

My headline call last night was "Wednesday's going lower".  And with all the technicals looking bearish, can you blame me?  After all, the bull-bear ratio was 1:8, just one short of a shut out.  Today's 103 point gain in the Dow proved me just plain flat out wrong.  Ouch.  Well like I've been saying lately, it's not an exact science and I've never claimed infallibility.  Sometimes stuff happens.

At this point though, I think it was more a matter of being a day early than being completely wrong.  This has happened to me a few times this year already.  I have a tendency sometimes to get ahead of myself.  But let's check the technicals again to see if maybe my analysis was actually wanting in some respect last night.

The technicals

The Dow: Last night, the Dow had put in a doji.  That's not necessarily a reversal indicator, only an indication of indecision.  Today, we got a shooting star, which is a bearish reversal indicator, though admittedly not the greatest one.  And the high brought us nearly to our upper Bollinger band and was not able to clear the resistance from the end of August.  Coupled with yesterday's doji and indicators that are even more oversold tonight, technically it still looks like +1 bears.

VIX, daily

The VIX: Last night I gave a point to the bears mostly because the VIX looked closer to support than resistance.  However, there was still a bit of room to run down and sure enough, that's what happened today.  Tonight though paints a different picture.  Today the VIX put in a gap-down hammer that was ultimately held up by support (red line).  Check it out.  That's looking like a lot better case for a reversal now than yesterday, so I'm again giving +1 bears.  This time I mean it!

VIX futures: These put in a gap down red candle right down to support, though not a hammer.  So theoretically, there's no reversal sign here yet.  However, I do believe in the support plus the even more oversold indicators (RSI is now a mere 5.4).  So, it's got to be +1 bears.

Market index futures: Last night these were overbought.  Tonight they're even more overbought.  And ES has now fallen off the right side of its rising regression trend channel.  That's a good bearish indicator.  Don't want to sound like a broken record, but technically, the only interpretation here is +1 bears.

ES daily pivot: Now 1198.33.  ES right now at 1:15 AM EDT is just hanging just barely over that basically unchanged in the overnight until just 5 minutes ago.  It just made one attempt to break under but that was rejected.  I'm not comfortable awarding any points based on the action I'm seeing right now though, so we're skipping this one too.

Dollar index: Got this one wrong too.  The dollar did not reverse today but continued lower in a big way.  It's indicators are even more oversold now and it's getting close to its 200 day MA which could provide support.  However, in the absence of a reversal candle, I'm not going to call this one either way tonight - once burned, twice shy.

Oil: I even got the oil call wrong yesterday.  Oil did not drop today but it did put in a second doji.  And unlike last night, we now have a bearish crossover in the stochastic and a peak in OBV.  That's a much stronger case than yesterday to go lower Thursday, so +1 bears.

Morningstar Market Fair Value Index: Today the index advanced from 0.83 to 0.84.  That's bullish, so +1 bulls.

History: According to The Stock Traders Almanac,tomorrow has only a slight positive historical bias, not really enough to award any points though.

     And the winner is...

Once again, the bears, this time with a bull-bear ratio of 1:5.  For now I'm going to stick with my theory that my call last night was just a day early.  I am sincerely looking for Thursday to go lower.  All I have to work with is the charts and the charts are telling me lower right now so I have to stick with that.  If this one doesn't work out, I'm going to have to step back and reassess what I'm doing wrong.  We'll see.  That's all she wrote.

ES Fantasy Trader

Today I decided to simply hold onto my short position from yesterday on the expectation that Thursday will bring some profits.I hate nothing more than throwing in the towel at exactly the wrong moment.

Portfolio stats: the account remains $158,500 after 25 trades (18 wins, 6 losses, 1 wash) since inception on 8/18 with $100K.