Thursday, June 21, 2012

Thursday lower

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Thursday lower, low confidence.
  • ES pivot 1348.33.  Holding under is bearish.
  • Rest of week bias lower technically.
  • Monthly outlook: bias down.
  • ES Fantasy Trader going short at 1344.00.

Yup, yesterday they bought the Fed rumor.  Then today they sold the news.  Then they bought the news.  And then they sold it some more.  And finally bought it again.  And when this tale told by an idiot was finally over at 4 PM, nothing was signified as the Dow had moved all of 13 points to the downside.  Can you blame me for not trying to call today's action?  It was one of those days where the scalpers had a field day, the day traders got whipsawed good and the swing traders were left going, huh?  Never a dull moment on Wall St.

The technicals

The Dow: While the Dow remains in its rising RTC, today's roller coaster took it just over the right edge for a bearish setup.  And the candle was a tall tomahawk (a hanging man with a little upper shadow).  We saw another similar setup two days ago, but this time the overall gestalt is weaker and the indicators are even more overbought.  Like storm clouds gathering on a hot and hazy summer afternoon, I'm thinking something's going to break here soon.

The VIX:  This VIX put in its third day bumping down the lower BB today on a tall inverted hammer.  That's not a great reversal candle but three days is a long time for the VIX to go down the lower BB without reversing.  Thing is though, the futures are quite oversold now but I see no reversal signs there at all yet, so a big VIX pop isn't necessarily imminent.

Market index futures: No mixed markets tonight - all three futures are running in the red at 1:39 AM EDT with ES down by 0.48%.  Today's tall doji bearish warning seems to be getting confirmed in the overnight, so far at least.  And the indicators have now all peaked at overbought levels, a good sign of a top.  I also note that this is now the third day that ES has faced resistnace at 1350 and been unable (so far anyway) to break above.

ES daily pivot: Tonight the pivot ticks up from 1348.00 to 1348.33.  But with ES in a downtrend since 6 PM, we actually broke under at 9:55 PM and haven't been able to come back since then - not a good sign.

Dollar index: The dollar today closed outside its long descending RTC for a bullish setup with a 0.18% gain.  And its indicators have all hooked up off oversold levels.  And with a euro chart at its upper BB for four days now, I'd say the dollar's going higher Thursday

Transportation: Like the Dow, the trans today gave us a hanging man right off their upper BB.  And the stochastic just formed a bearish crossover.  And RSI at 85 is even higher than it was just before the nasty May downturn.  This chart too is looking ready to roll over.

Accuracy (daily calls):

Month right  wrong  no call  conditional  batting average points trade
April   7      9      2                        .438
May    10      7      3           2            .632

June    4      4      5           1            .500        -44   +$89

     And the winner is...

I'm feeling kind of shell-shocked right now.  Sunday night I said the market would go higher, so it went lower.  Monday I said it would go lower Tuesday, so it went (a lot) higher.  Arrrgh!  So tonight I'm going to call Thursday lower and head for my foxhole.  I know this feels like, what's the opposite of catching the falling knife - grabbing the helium balloon?

But with Chinese PMI numbers down (and if the Chicoms say something is bad, it must really be bad), a bunch of overbought and oversold extremes on the charts, Dr. Copper putting in a dark cloud cover today, and Uncle Ben offering nothing more encouraging than Let's Twist Again (like we did last year), "down" simply seems the more logical direction right now.  And I'm nervous about saying it, but sometimes that's a good thing.  It seems like my worst calls come when I'm the most confident.  We'll see how this one plays out.

ES Fantasy Trader

Portfolio stats: with no trade last night the account remains at $124,125 after 44 trades (33 wins, 11 losses) starting from $100,000 on 1/1  Tonight we go short at 1344.00.

CUA (Commonly Used Acronyms)

BB - Bollinger Bands
DCB - Dead Cat Bounce
MA - Moving Average
RTC - Regression Trend Channel
YTD - Year To Date

Disclaimer: (My lawyer made me do it) This blog is not trading or investment advice, account management or direction.  All trades listed here are presented only as examples of the author's personal trading style.  Investing entails significant risk and trading entails even greater risks.  Deal with it.


  1. Thank you for the analysis. Lets see how today plays out. We are overbought, so I suspect some kind of pull back. Market sentiment is mixed right now.

    1. Well it's still only noon on Thursday, but I'd say there's a pretty good chance we're closing lower today.

  2. Very very good analysis and good trade with the ES going short. I did not trade today due to work and glad I didn't!! Cause I am sure I would have went long. LOL

    I am starting to follow the /DX closely as an extra indication. Good job and thanks.

    1. Thanks! I think I nailed every call last night - Dow, VIX, futures, dollar, and trans :-)

  3. Yes, you did! LOL Dollar took off like rocket.


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