Actionable ideas for the busy trader delivered daily right up front
- Thursday higher, high confidence. Bull-bear ratio is 6:4.
- ES pivot 1232.17. Current price is far below that.
- Next week bias up on technicals and economic news.
- Monthly outlook: bias up on technicals.
- ES Fantasy Trader went long at 1255.00
My admittedly wimpy call last night was that today's market would be driven by news out of Europe. Well the news was encouraging and the Dow rewarded us with another 162 points to the upside. I also said Sunday night that this was going to be an interesting week. How interesting? Read on as we shake the dice for a lucky roll on Thursday.
The technicals
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| Dow daily |
The VIX: I did pretty well with the VIX last night. Even though the VIX had risen, I called it lower today based on the unusual downside gap three methods pattern and sure enough the VIX dropped 7.3% today to give us a tall inverted hammer. This is a low reliability reversal candle and requires confirmation. Since the VIX is not yet at its support around 29-28, it still has at least some more room to run lower. Its stochastic in particular is not yet giving a bullish reversal sign, so that's +1 bulls.
VIX futures: Again, pretty much the same chart as the VIX itself. Absent an actual reversal pattern, I'm hesitant to call a bottom here, so it's another +1 bulls.
Market index futures: Of course, all the rest of tonight's technical analysis is pretty much academic, because news just came out that the EU cut a deal for a Greek haircut to the tune of 50%. Obviously the market likes this hairstyle because all three futures are up about 1 1/2% at 1:30 AM EDT. ES in particular is up 1.58%. Tonight's ES action also broke out over the 1252 resistance level. The stage is now set for an assault on the 200 day MA at 1262. The indicators are confused but the mood is not, so it's clearly +1 bulls here.
ES daily pivot: Down just a bit to 1232.17. The late European news effectively puts the pivot out of play for Thursday. This action is quite positive, so it's another +1 bulls.
Dollar index: The direction of the dollar was unclear last night. Today's doji combined with oversold indicators and a stochastic making a bullish crossover lead me to believe the dollar's moving higher Thursday. That would be bad for stocks, so +1 bears.
Oil: Oil slipped today as I predicted last night. It was unable to break resistance at 93.46. Significantly though, while oil fell, the market was up on Wednesday. We may be seeing a change from a positive to inverse correlation between the two. I still think oil will go lower again Thursday. If the current inverse correlation holds, that would be +1 bulls.
Copper:Last night I thought copper was too confusing to make a call on. Apparently the market agreed because today copper simply put in a doji star. However, having done so right at the top of its recent trading range and with indicators nearly overbought levels I'm more inclined to say copper's going lower on Thursday, so that's +1 bears.
Morningstar Market Fair Value Index: Today the index dropped right back down from 0.91 to 0.87 again. That's bad, so +1 bears.
History: According to The Stock Traders Almanac,the last two days of this week tend to outperform historically, so +1 bulls.
And the winner is...
The bulls with a bull-bear ratio of 6:4. However, whereas the other night I was more pessimistic than the ratio suggested, I think tonight the technicals are too conservative. I believe that the market will be celebrating the Greek barbers on Thursday and I'm calling the close higher.
ES Fantasy Trader
Today we did not trade. Portfolio stats: the account remains at $147,500 after 28 trades (20 wins, 8 losses) since inception on 8/18 with $100K. Tonight we go long at 1255.00.
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