Thursday, February 28, 2013

Thursday higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Thursday higher, low confidence...
  • ES pivot 1508.33.  Holding above is bullish.
  • Friday bias higher technically.
  • Monthly outlook: bias lower.
  • ES Fantasy Trader going long at 1517.50..

Well so much for the sequester and the Italian elections, I guess eh?  It took all of two days to erase Monday's big dump and then some.  In fact, after appearing to break down out of February's trading range, we've now suddenly broken out to the upside.  My conditional call played out nicely as ES  never seriously threatened its pivot Wednesday morning and once the market opened it was just up up and away.  Will the raging bull keep charging on Thursday?  Let's wave a red flag in front of the charts to find out.

The technicals (daily)

The Dow: After Monday's extraordinary move down on Monday, we have now made an extraordinary move up, going from the lower BB to the upper in just two days.  And today's close at 14,075 also cleared 14K again as well as the resistance at 14,012.  It also broke out of the descending RTC for a bullish trigger and completed the bullish stochastic crossover.  But even after two big up days, the indicators are still nowhere near overbought, so it looks like the Dow sitll has room to run higher from here.

The VIXAnd the VIX, which on Monday crashed through its 200 day MA going up, crashed right back down through it on Wednesday, ending up very nearly where it began the week.  And with a bearish stochastic crossover, the 200 MA behind us, overbought indicators, and three consecutive lower closes, the momentum seems to be to the downside for the VIX.  And that is of course good for stocks.

Market index futures:Tonight all three futures are higher at 1:11 AM EST with ES up by 0.12%.  ES put in a big green marubozu on Wednesday to totally retrace all of Monday's losses and bring us convincingly out of the descending RTC for a bullish setup.  The overnight seems to be continuing that with no sign of wanting to retrace the gain.  That notion is supported by the indicators which are close to oversold and by the stochastic which just completed a bullish crossover.  With no resistance now until 1527, this chart is looking good.

ES daily pivot: Tonight the pivot jumps from 1491.00  to 1508.33.  We were way above the pivot all day Wednesday and remain comfortably above the new number, so this is definitely bullish.

Dollar index: On Wednesday the dollar completed a bearish evening star by dropping 0.33%. .That was enough to finally bring the indicators down from extreme overbought so it looks like there's still lower to come here.

Euro: Meanwhile, the euro confirmed Tuesday's doji with a nice green marubozu.  And the developing overnight candle is continuing that with a 0.11% gap up so far.  With the euro still oversold and just coming off its lower BB, there definitely seems to be a lot of room to run higher here.

Transportation:And finally, while the Dow gained 1.26% Wednesday, the trans put in a turbo-supercharged nitro-fueled 2.91% explosion for their biggest gain since March 2012.  And with a now-complete bullish stochastic crossover, declining RTC exit and indicators having bottomed, it looks like the trans still have the gas to move higher again.

Accuracy (daily calls):

Month     right wrong  no call  conditional  batting   Dow
                                             average  points

January    5      7      6           3        0.533   -101
February   3      3      5           6        0.750    152

     And the winner is...

Overall tonight the charts are looking rather bullish.  My only concern is the tendency of the market often to take a break following big one day moves up.  And also both the last day of February and the first day of March are historically weak.  But there seems to be a lot of positive pressure driving things right now so the logical call is for Thursday higher.  I've not expecting another triple digit day, but I'd be surprised to see a big loss on Thursday.

ES Fantasy Trader

Portfolio stats: the account remains at $99,125 after 6 trades (5 for 6 total, 2 for 2 longs, 3 for 4 short) starting from $100,000 on 1/1/13.  Tonight we're going long at 1517.50.

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