Thursday, April 19, 2012

Tough call - Thursday maybe higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Thursday higher, low confidence.
  • ES pivot 1380.92Breaking above is bullish..
  • Friday bias uncertain technically.
  • Monthly outlook: bias down.
  • ES Fantasy Trader going long at 1381.25.

Oh well - another wrong call.  At least I did mention that I had little confidence in this and that I wasn't going to take a long position in ES on that basis.  Good thing too, since the Dow dropped 83 points as we continue this crazy game of retracing the retracements.  For over a week now it has literally been a case of two steps forward, one step back.  The Dow has been up, up, down, then up, up, down.  Does this mean Thursday will be up again?  Let me see if I can figure it out.

The technicals

The Dow: It may not feel like it, but even after today's loss, the Dow remains in a rising RTC, and one with a fairly robust Pearson's coefficient of 0.959 going back to the 11th.  And the indicators continue to rise, so there's no reversal warning there either.  I'm feeling pessimistic right now, but there's nothing on this chart to support that viewpoint.

The VIX:  Today the VIX gave us another hammer pattern to gain just under 1%.  And in so doing, it appears to be forming a symmetrical triangle.  These resolve about three quarters of the time in the same direction as the entry.  In this case, that would be higher, which would be bad for stocks.  But who knows - the VIX has been characterized by some crazy choppy action for two months now making it difficult to tell which way it may be going next on a daily basis.

Market index futures: At 1:08 AM all three futures are up by some decent numbers, with ES rising 0.22%.  After a small range day today, it looks like ES is forming an ascending triangle.  Coming at the end of a downtrend, this is a bullish reversal pattern.

ES daily pivot: Tonight the pivot rises from 1377.17 to 1380.92.  With ES meandering about aimlessly in the overnight, so far we're now just below that number and it looks like ES is getting ready to launch an attack on it.  It will be interesting to see how this plays out.

Dollar index: In another weird chart, the dollar gained 0.06% today but did it on a  red candle in a dark cloud cover position relative to yesterday.  It looks like the dollar wants to go lower and just need a bit of encouragement here.  In any case, this is not a really bearish looking chart for stocks.

Transportation: Interestingly, the $TRAN has a much smaller drop than the major averages today - just 0.12%.  But it put in a doji doing it, warning that the last two days of gains may not continue.  Still, in an environment like this, one requires confirmation of these things first, so all we can say is that we need to wait and see what happens on Thursday here.

History: According to The Stock Traders Almanac, Thursday is historically essentially neutral.

Month right  wrong  no call
April   5      4      1
     And the winner is...

Now I'm not so sure I was wrong about today or just a day early as I seem to be on occasion.  But with a number of dojis and triangles appearing on the charts, it looks like the market is winding up for a move pretty soon.  Up or down remains to be seen.  I'm going to go out on a limb tonight and claim that it's going to be up, for a higher close Thursday.  I'm not really seeing any convincing signs of a move either way just yet though.  This is yet another difficult one to call.

ES Fantasy Trader

Portfolio stats: the account remains at $130,125, after 30 trades (23 wins, 7 losses) starting from $100,000 on 1/1  Tonight we stand aside again.  Reminder - you can now follow these entries and exits live on Twitter @nightowltrader.

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