Thursday higher if pivot holds

The Hoot 
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• Thursday higher, low confidence..
• ES pivot (M contract): 1389.08.  Holding above is bullish..
• Friday bias uncertain technically.
• Monthly outlook: bias up.
• ES Fantasy Trader standing aside.

Recap

Last night I was thinking we'd see a small-range doji today, possibly ending lower.  Well we got the small range, but the Dow finished higher, though by only 16.4 points on something like a fat little star, so that's pretty close.  But that's still in the ballpark for a follow-on to a big up day.  The question now is, will the uptrend continue or are we topping?  Read on...

The technicals

The Dow: Today's little tail perched on top of yesterday's dramatic rise was just about what might be expected.  Closing entirely outside the upper BB though is worrisome.  History says that from here we could go any direction, but with the upper BB hit, down is more likely than up.

The VIX:  Today's 3.45% move higher in the VIX was the confirmation I was looking for last night   The pattern is reminiscent of a morning star and with a stochastic just about to execute a bullish crossover, I have to think the VIX is going higher Thursday, which would be a bad sign for stocks.

Market index futures: Tonight we switch over to the "M" contracts and at 12:55 AM EDT, all three are running higher, with ES up a quarter of a percent in a steady uptrend since about 5 PM.  This, at least for now, is not confirming today's small doji as a reversal indicator.  And we remain solidly inside the latest rising RTC, so that's good too.

ES daily pivot: Tonight the pivot rises from 1382.67 to 1389.08.  However, with the steady upward drift of ES in the overnight, we are still above the new number and that's a good sign.

Dollar index: While yesterday the dollar touched its upper BB, today it closed on it.  We didn't get the reversal I thought might happen today, but now it's looking for likely for Thursday, which would be good for stocks.

Morningstar Market Fair Value Index: Yesterday the index rose to 0.97, tying its highest level of the year.  It will be bullish if we can push this number higher, otherwise bearish.

History: According to The Stock Traders Almanac, both Wednesday and Thursday are historically quite bullish.

     And the winner is...

While there was an inkling of a bull case in the charts last night, the same factors are in play tonight, only stronger.  Unfortunately, we've got some mixed messages in the charts again, with the Dow and VIX looking negative, but the dollar and futures looking positive.  Whenever that happens, I tend to lean in the direction the futures are running, since they seem to be a pretty good predictor.  This week is also historically a good one and that should never be discounted.  However, I do think a rising VIX will eventually catch up with us, so that might come into play early next week.  But for now, assuming ES doesn't break below its pivot  before mid-morning I'm going to call Thursday higher.  Keep an eye on 1289.08.

ES Fantasy Trader

Tonight we're standing aside again, because although I do think the market's going higher Thursday, I also think most of the gains in ES have already been made.  I normally enter trades sometime after midnight, but the ideal entry here would have been earlier this evening.  Oh well, the stock market is like the bus, as they say - there's always another one coming along soon.

So for now the account remains at $114,750 after 21 trades (15 wins, 6 losses) starting from $100,000 on 1/1.