Thursday, June 28, 2012

Thursday maybe higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Thursday higher, low confidence.
  • ES pivot 1322.00.  Holding above is bullish.
  • Friday bias higher technically.
  • Monthly outlook: bias down.
  • ES Fantasy Trader goes long at 1326.25.

There certainly were enough positive signs in the charts last night.  Looking back on it now, I can't figure out why I was so indecisive.  In any case the Dow gave us an impressive 92 point gain for the second green candle in a row.  Can we go for three?  Let's take a look.

The technicals

The Dow: Today's tall green candle was enough to take us decisively out of the descending RTC for a bullish setup.  We'd need to close below 12,437 Thursday to not get a bullish trigger.  That kind of drop doesn't seem likely.  And the stochastic is ever so close to making a bullish crossover now.  I had to look at the numbers, not just the lines to even tell.

The VIX:  Today the VIX dropped again as I suspected, though not by much, losing 1.37% on a gravestone doji that signals a possible reversal higher.  The futures support this idea, having gained 0.84% today.

Market index futures: Two strong back-to-back green candles in ES completely retraced Monday'sbig dump, and the overnight is just barely hanging on as all three futures are ever so slightly in the green at 1:446 AM with ES up just 0.09%.  Nevertheless, today's action traded entirely outside the descending RTC for a bullish setup (almost looks like a trigger) and the bullish stochastic crossover is now complete.  There's nothing in this chart to suggest a move lower.  Technically that is.

ES daily pivot: Tonight the pivot jumps from 1312.25 to 1322.00 even.  We're still above the new number, but by a lot less now as ES continues to basically flat-line in the overnight.  But so far no indication that ES is planning on taking a dive, so this is cautiously optimistic.

Dollar index: The dollar painted a somewhat different picture today.  Yesterday's bearish engulfing pattern was rejected and the dollar actually went up by 0.33%, so it remains in a shallow uptrend.  Look for the dollar to get jerked around by the euro on whatever news comes out of this European summit on Thursday.  No point trying to predict this one.

Transportation: Meanwhile the trans gained today too, though decidedly less than the Dow.  But they did cross right back up over the 200 day MA which now becomes support again, so that's encouraging.  And this close also took us out of the descending RTC for a bullish setup.  And lastly, the indicators have finally hit oversold levels.  Momentum, money flow and OBV have actually started moving back up, a bullish sign, and the stochastic is ever so close to a bullish crossover.  This chart looks more likely to go higher than lower.

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    7      5      6           1            .615        379   +$182 

     And the winner is...

Well I think Thursday is going to be one of those funny days where news from Europe could jerk the markets around.  Technically though we're actually not looking too bad, so I'm going to go out on the limb again and ever so cautiously call Thursday higher.  But keep one finger on the "sell sell sell" button and watch out for any attempt by ES to break under its pivot.  A word to the wise from the wise old Night Owl.

ES Fantasy Trader

Portfolio stats: with no trade last night the account remains at $135,000 after 47 trades (36 wins, 11 losses) starting from $100,000 on 1/1  Tonight in the absence of any bad news and in view of charts that appear to be at tradeable extremes, we go long at 1326.25.  Reminder: you can track these trades live on Twitter @nightowltrader.

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.

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