Thursday tough call, bias lower

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

• Thursday lower, low confidence
• ES pivot 1225.25.  Current price is well above.
• Rest of week bias uncertain, oversold rally not done yet..
• Monthly outlook: bias down, on politics and technicals.
• ES Fantasy Trader standing aside..

Recap

Wow.  I'll say it again: wow.  Today was exactly the reason why last night I wrote:

"I have to add the usual disclaimer that anything coming from Europe will move the markets regardless of what the technicals tell us."

Today Europe said "Jump" and the markets leapt.  The TA said down but we rocketed up almost 500 points for the best day in over two years??  As tycoon Osgood Fielding III said in Some Like It Hot, "Zowie!"

Not that I'm complaining - I'd much rather see that than calling the market up and getting down 500 (that's happened to me too).  Of course I called the market down today and was dead wrong but until Europe gets their act together, that's how it goes. 

Anyway, today's big move greatly complicates tonight's analysis.  Because of the distortions this threw into the charts, I'm just going to concentrate on the Dow and ES to see where we may be headed on Thursday.

The technicals

The Dow:Today was very significant for the Dow because in just one day, or really just the opening 15 minutes, we not only broke the 12K resistance but  punched back through the 200 day MA at 11,949 as well.

That said, the normal market pattern, and the pattern all this year so far except for one, is for any really large jump up to be followed by either a very small doji or hanging man, or else a profit-taking leg down.

Market index futures: The futures are basically unchanged tonight at 2 AM EST.  NQ is up 0.09% while ES is down just 0.12%.  These are the smallest moves at this hour I've seen in quite a while.  The fact that profit-taking has not immediately set in is encouraging in itself.  In fact, something set off a little mini-rally around 11:35 this evening.

This all leaves us in a quandary because while the Dow popped over its 200 day MA today, ES did not.  At 1244.25, it is still 11 points shy, and that number, 1255.46 is still resistance here.

ES daily pivot: Now becomes 1225.25.  Even after taking a big jump, we're still well above this number, so that's positive.

     And the winner is...

Hmm, a tough one.  I'm going to say the bears, mostly on historical comparisons.  We ran too hard, too fast for my comfort today.  I can't see much more upside available on Thursday, though I do think we're headed for a retest of the Dow's 12,170 resistance in the next week or so.  I note also that J-Trader's system is going short and he's been really good lately.  But I don't think we're going to see a major crash tomorrow either.

And yet again, I have to point out that it's all going to hang on what those pesky Europeans say or don't say.  And that's all I have to say.

ES Fantasy Trader

After going long at 1270.50 and regretting it ever since November 9th, I finally decided to use today's gift to dump that dog of a trade at 1244.00.  That leaves us with a 26.5 point loss, and I feel lucky to get that.  It was worse, much worse for a while there.

Portfolio stats: the account now $160,250 after 36 trades (26 wins, 10 losses) since inception on 8/18 with $100K.

Tonight we're going to stand aside and see how things develop Thursday before jumping in again.