Thursday higher

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

• Thursday higher, low confidence.
• ES pivot 1364.00.  Holding above is bullish..
• Friday bias higher technically.
• Monthly outlook: bias down.
• ES Fantasy Trader remains trapped long.

Recap

As sometimes happens, I was right, but just one day early.  We got the bounce I was looking for today to the tune of 89 Dow points.  As I was looking for, we saw ES break above its pivot in the wee hours of Wednesday morning, when even the Night Owl is sleeping, and it was all uphill from there.  So was today a one-off sucker trap for the bulls, or are we resuming an up-trend?  Few are foolish enough to even attempt to answer that question, but I figure what the hey, I'll give it a shot.

The technicals

The Dow: Today the Dow retraced close to but not quite half of yesterday's losses.  It is now >< that close to executing a bullish stochastic crossover.  And both momentum and money flow have now hooked up from depressed levels  RSI remains oversold at 20.55.  On that alone, I'd have to say there's more chance of the Dow moving higher than lower on Thursday.  If we do a Fibonacci retracement of the recent selloff, we see that we're still not even up to the 0.25% retracement at 12,855.

The VIX:  Ah, all hail King VIX!   The VIX today did go lower as I expected, but only by 1.81%.  And it did it on a green candle.  But - that was a pretty good bearish harami, a pattern you don't see too often.  In addition, it remains above its upper BB and its indicators are now highly overbought.    I'd say the VIX is more likely to go lower Thursday than higher, and that's good for stocks.

Market index futures: At x AM EDT all three futures are up, though not as much as last night at this time.  ES, NQ, and YM are all up exactly 0.2% at 1:04 AM EDT.  I'm actually liking the looks of the ES daily chart more than last night.  The developing candle is just touching the right edge of the descending RTC, ready for a bullish setup.  And all of my Fave Five indicators have bottomed at very oversold levels and are now rising, also a good sign.  Whereas two days ago there was no sign of an end to the pullback, now there are several.

ES daily pivot: Tonight the pivot nudges up from 1363.42 to 1364.00.  The old number served as support all day and we're still three points above the new value in a roller coaster overnight session.  As long as we can stay above this level, that's a good sign.

Dollar index: Today the dollar gave us some more clarity compared to last night by way of dropping 0.13% and forming a descending triangle which, coupled with overbought indicators implies more downside to come Thursday.  And that would be good for stocks.

Transportation: Today, after a big two day sell-off, the trannies pretty much emulated the Dow, gaining 0.91%.  They are now quite oversold and  three of my Fave Five indicators have now bottomed.  From here, I'd say its more likely they go higher than lower.


History: According to The Stock Traders Almanac, Thursday is historically fairly bullish.

Accuracy:

Month right  wrong

April   3      3

     And the winner is...

After a run of several bad days, especially when they involve big drops there's always a tendency to be gloomy about the future.  I'm reading a lot of that kind of talk in the blogosphere right now.  But for the short term anyway, which for me means tomorrow, I have to say I'm not really seeing any technical reasons to be pessimistic.  In fact, all the charts I watch seem to be in agreement, so I'm going to claim there's more room to run and we're in for a higher close Thursday.

ES Fantasy Trader

Portfolio stats:  The account remains, for the time being, $137,750, after 28 trades (22 wins, 6 losses) starting from $100,000 on 1/1  Tonight we continue to remain long from last Wednesday's trade.  Patience may pay off in the end.  In this case, not caving yesterday proved to be the right decision as we made back some of our (unrealized) losses.