Thursday, October 4, 2012

Thursday higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Thursday higher, low confidence..
  • ES pivot 1443.00 Holding above is bullish.
  • Friday bias uncertain technically.
  • Monthly outlook: bias uncertain.
  • ES Fantasy Trader standing aside.

Well I finally got one right.  It was touch and go for a while, but the Dow eventually finished up by all of 12 points.  But I'll take it.  What's more important is how this sets us up for tomorrow so let's get right to it.

The technicals (daily)

Dow daily
The Dow: Take a look at this chart.  I've zoomed in on something interesting.  We seem to have a developing symmetrical triangle in the last three candles.  With the three preceding candle lower than that, I'd expect the exit to be on the up side.  The other point is that the black line defining the lower edge of the triangle isn't part of it at all - it's actually the central  trend line of a rising weekly RTC that started way back in June.  This rising line has been acting as support ever since then.  Today's candle was a small spinning top reflecting the indecision around the shrinking triangle.

The VIX:  Next we have the VIX which dropped again today, this time down 1.78% on a spinning top.  But the lack of nearby support and indicators only just having left overbought levels makes me think that the VIX could go lower again on Thursday.

Market index futures: Tonight all three futures are up at 1:17 AM EDT with ES higher by a solid 0.47% in the overnight.  That's actually a bigger gain than we had in the regular session.  It's also good enough to keep us inside the new rising RTC, create a bullish three white soldiers pattern and keep the indicators rising steadily from oversold.  Everything on this chart points to higher on Thursday.

ES daily pivot: Tonight the pivot bumps up from 1439.75 to 1443.00 even.  We were above the old number and with ES continuing to drift higher in the overnight we remain above the new level, in fact by even more - all good signs.

Dollar index: The dollar remained in its rising RTC today - just barely, gaining 0.29% on a small green gap-up marubozu.  I'll simply note that in the last eight times the dollar gapped up on the daily chart, it was lower the next day.

Euro: And the euro fell just a bit today but has completely retraced that and is now trading higher at 1.2938 in the overnight.  That's enough to break the resistance at 1.2928 and remain inside the latest rising RTC.  With indicators solidly rising, the euro looks ready for more gains tomorrow.

Transportation: I think I was wrong to suggest that the RTC had failed here.  After a bullish setup four days ago, we got a bullish trigger but on a big down candle.  The next two days went nowhere until today, pop - the trans jumped 1.17%, stopping right at resistance at 4966.  But with rising indicators and rising volume, this chart seems ready to go higher again on Thursday.

Accuracy (daily calls): 

Month    right  wrong  no call  conditional  batting   Dow
                                            average  points

April      7      9      2                    .438
May       10      7      3           2        .632
June       8      6      6           1        .600     632
July      11      2      6           1        .857     917
August     8      6      8           1        .600     -78
September  8      6      5           0        .571     -19

October    1      2      0           0        .333     -97

     And the winner is...

The overall pattern tonight seems bullish, though it may be a bit distorted by what appears to be a debate-related pop in ES that occurred right at 10:20 PM when the show ended.  Or at least when I guess it ended.  The Night Owl did not watch this event because politics just give me a giant pain.  I take it that Romney emerged victorious though and that was good for about four ES points.  But anyway, even modulo the debate I still think it looks like we're going higher again on Thursday.

ES Fantasy Trader

Portfolio stats: the account still remains at $180,875 after 65 trades (50 wins, 15 losses) starting from $100,000 on 1/1/12.  Tonight we stand aside once again, this time because I think the best entry point was spoiled by the debate.  Something to remember for the next debate.  Anyway, I'd have bought ES at 1447; I'm not willing to buy 1452.  But I'm also definitely not shorting anything right now.  So we'll just throw the line back into the ol' fishin' pond, lean back, relax, and wait for the next promising nibble to come along.

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.  Act accordingly.

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