Thursday, April 11, 2013

Thursday uncertain

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Thursday uncertain.
  • ES pivot 1576.08. .  Holding above is bullish..
  • Friday bias uncertain technically.
  • Monthly outlook: bias lower.
  • ES Fantasy Trader standing aside.

Ha - I should listen to my own advice.  Last night after noting a bunch of reversal signs that all required confirmation, I decided to ignore all that and call Wednesday lower anyway.  So naturally the Dow jumped 129 points for its best day in over a month and another record close.  That's what I get for trying to be the heroine and picking the top.  But since I'm always net long, I made money anyway so I can't complain.  We now move on to Thursday where I will try to be a bit more conservative.

The technicals (daily)

The Dow: The Dow has had a great three day run, leaving all that wishy-washy indecision from the second half of March in the dust.  In fact, Wednesday closed above its upper BB of 14,730.  This also brings the RSI into overbought territory although the stochastic has a way to go before even beginning a bearish crossover.  So the candlesticks are pretty bullish but I'm concerned about closing above the upper BB and the fact that we're now fairly extended from the Dow's pivot of 14,663.  Still, I'm not going to repeat last night's mistake by calling the Dow lower before seeing a good reversal sign, and I don't see one yet.

The VIXOn Wednesday the VIX didn't just break support at 12.74, it jumped right under it, gapping down for a 3.74% loss to put it below last month's consolidation range.  The VIX now has a steep descending RTC going and still isn't oversold.  And with the lower BB at 11.33 there's still a lot of room to run lower.  Only thing is that where we stopped on Wednesday is another support line - 12.36.  Still, without a reversal candle, I'm not calling the VIX higher yet.

Market index futures: Tonight the futures are mixed at 1:13 AM EDT with YM up 0.05%, NQ down 0.12% and ES dead even.  On Wednesday ES simply pulverized its upper BB at 1573, and the overnight continues to trade above the new BB at 1578.  The conventional wisdom is that upon hitting the upper BB, a chart will reverse.  But one only has to look back one month to see how ES crawled up its upper BB for six straight days before peeling off.  And with so much positive momentum and indicators that still haven't even hit overbought, I'm not ready to call ES lower just yet.

ES daily pivot: Tonight the pivot pops from 1562.58  to 1576.08.  Although that jump cuts into our distance from the pivot, ES remains comfortably above the new number so that's a positive sign.

Dollar index: Last night I warned of a possible reversal for the dollar and on Wednesday we got the confirmation I was looking for as the dollar bounced off its lower BB and gained 0.27%.  In fact this leaves us with a fairly good morning star pattern so with indicators looking to have bottomed at oversold, I'd say odds are good for more upside here on Thursday.

Euro: After hitting its upper BB on Tuesday, the euro touched it again on Wednesday before retreating to form a classic bearish inverted hammer in harami position.  It's sort of wandering in the overnight but with no real follow-through to the upside and the overbought indicators, I'd say there's a good chance of a move lower on Thursday, which squares with my call for a higher dollar.  Oh, and right now at 1.3073 we're right on the edge of the rising RTC.  Any lower and it's a bearish setup.

Transportation: The trans continued their winning ways on Wednesday, outperforming the Dow once again with a 1.79%  pop to remain inside a nice rising RTC.  With indicators having only just left oversold,I see nothing here preventing more upside action on Thursday.

Accuracy (daily calls):

Month     right wrong  no call  conditional  batting   Dow
                                             average  points

January    5      7      6           3        0.533   -101
February   3      4      5           6        0.692    131
March      5      7      5           2        0.500    121 

April      3      2      1           0        0.600    149

     And the winner is...

The pattern lately has been for big up days to be followed by some consolidation.  And with a continuing absence of any real bearish signs, I can't really call the market lower at this point.  But we may need a breather here so I'm expecting a doji day.  Accordingly, I can only call Thursday uncertain.

ES Fantasy Trader

Portfolio stats: the account remains at $94,000 after 9 trades (7 for 9 total, 3 for 3 longs, 4 for 6 short) starting from $100,000 on 1/1/13.  Tonight we stand aside yet again because of the "uncertain" call.

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