Thursday higher if ES stays above pivot

The Hoot 
Actionable ideas for the busy trader delivered daily right up front

• Thursday higher only if ES remains above pivot, else lower..
  
• ES pivot 1625.08   Holding above is bullish.
• Friday bias lower technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

Last night's call was for "one more day of small gains in store" and that's just what we got Dow up 49 and SPX up 9.  So now the game of nerves goes on.  Which party-goer will be the first to subtly edge themselves out the nearest exit door leaving the rest of the crowd to their fate?  The charts will reveal all, so read on.

The technicals (daily)

The Dow: Tonight's Dow chart is virtually identical to last night's and all the same factors are in play - overbought pegged indicators, a rising RTC, and green candles that continue to climb the upper BB.  So until I see something change, this chart remains bullish.

The VIX:  Once again, the VIX refused to fill in last week's gap as it fell 1.33% on Wednesday to establish a new trading range around 12.64 - 12.96.  With a close at the bottom of that range and a stochastic that's in very close to forming a bullish crossover, I'd say that the VIX has a good shot at moving higher on Thursday.

Market index futures: Tonight the futures are mixed again, like last night at 1:00 AM EDT with ES down by 0.05% but both YM and NQ up 0.03%.  Call it basically flat.  But there was nothing flat about ES's recent run which saw the three white soldiers joined by two more.  We now have a whole squad of white soldiers marching ever higher.  And like the Dow chart, it's deja vu all over again here.  Until I see a reversal sign, any reversal sign, I logically cannot call this chart lower.

ES daily pivot: Tonight the pivot rises again from 1617.17  to 1625.08 and once again ES remains above the new pivot by about three points just like last night.  So once again, this indicator remains bullish.

Dollar index: On Wednesday the dollar surprised me by staging a 0.47% gap-down drop to end with a hammer.  However, its stochastic is about to form a bearish crossover and I'd weight that higher than the candle at this point.  But with a conflict like this, I'm taking a pass on this chart tonight..

Euro: I did get this one right when I mentioned last night that "a breakout may be coming soon" because of a symmetrical triangle.  This one often works very well and the euro gained big on Wednesday, hitting its upper BB intraday before falling back a bit to close at 1.3162.  That was good for a bullish stochastic crossover.  We're pretty much flat in the new overnight but with a newly completed bullish stochastic crossover, I'd say more upside is possible on Thursday, possibly muted by the size of Wednesday's advance.

Transportation:The trans made it five in a row on Wednesday though the 0.22% gain was the smallest of the series.  Also, this candle was a hanging man.  So with overbought indicators and a stochastic starting to curve around for a bearish crossover, we now at least have the suggestion of a move lower on Thursday.  However, with such strong momentum this pattern requires confirmation.


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      7      5      5           3        0.667    328
May        1      0      1           4        1.000     49

     And the winner is...

Although things look pretty much tonight like they did last night, I hesitate to make an outright bullish call.  First I note that the VIX looks ready to move higher, and the same goes for the TLT.  We also have a reversal warning from the trans.  But with ES remaining above its pivot and seemingly showing no interest in moving lower, I also hesitate to make an outright bearish call.

Therefore I'm going to punt once again with a conditional call: if ES can stay above its pivot by mid-morning Thursday we will close higher.  If it falls down and can't get up, we press the red button and close lower.  Things are subtly starting to feel toppy, but I'm not convinced the end is at hand just yet.  That's all, she wrote.

ES Fantasy Trader

Portfolio stats: the account remains at $107,750 after 11 trades (9 for 11 total, 4 for 4 longs, 5 for 7 short) starting from $100,000 on 1/1/13.  Tonight we stand aside again because of the conditional call.  I'll admit I'm getting impatient to put on a trade here because it's been a while, but in this game patience is a virtue, and a big one.