Actionable ideas for the busy trader delivered daily right up front
- Thursday higher, low confidence
- ES pivot 1652.25. Holding above is bullish.
- Rest of week bias uncertain technically.
- Monthly outlook: bias higher.
- ES Fantasy Trader standing aside.
The parade just keeps on rolling along as the Dow showed more strength than I 'd been expecting on Wednesday to finish up yet another 60 points after breaking out of its trading range on Tuesday. So is there more on the way? Let's consult Dr. Charts for a quick checkup on Mr. Market as op-ex week marches on. Say ahhh!
The technicals (daily)
The Dow: Wednesday's gains kept the Dow squarely inside its rising RTC. Even more impressive is the weekly chart which shows a strong three white soldiers pattern, now apparently being joined by a fourth. So despite the record levels and overbought indicators, technically I see nothing but higher here.
The VIX: While the VIX has moved higher, sort of, in the past three days, it's hardly a convincing trend - more of some bouncing around a new range of 12.50 to 13.20. In fact, the past five days have featured candles with tall upper shadows suggesting that every time the VIX tries to get moving, something drags it back down again. Clearly the VIX has lost its mojo and so I'll just expect some more sideways action until we get a breakout - whenever that might be.
Market index futures: Tonight the futures are mixed once again at 12:51 AM EDT with ES down by 0.08%, YM down 0.05% but NQ up 0.07%. ES's mostly sideways movement in the overnight isn't exactly bearish and the overall trend in fact remains quite bullish. We're still in a solid rising RTC and the upper BB is now at 1666. I see no real signs of a reversal here.
ES daily pivot: Tonight the pivot jumps from 1641.08 to 1652.25. Even with this gain, ES remains above the new pivot, though now it's only by one point so we need to watch for any signs of breaking under, which would be bearish.
Dollar index: Last night I predicted 57.80 for the $USDUPX by the end of the week. That may have been a bit premature, for while the dollar did post yet another gap up gain, this time 0.30% on Wednesday, it was a red evening star sitting just above the upper BB. This is the first real reversal sign I've seen on this chart since the current run began a week ago, so I'll claim that the dollar may be headed lower on Thursday.
Euro: Last night I wrote "I wouldn't be surprised to see the euro continue lower on Wednesday" and on Wednesday the euro indeed continued its march down the lower BB, sinking further below the 200 day MA to close at 1.2877 and staying firmly in its descending RTC. And the fall continues in the overnight, drifting slightly lower and holding below the pivot. So despite oversold indicators, there's really no sign of a reversal here and no support until 1.2783.
Transportation: The trans continue to outperform the Dow, up another 0.84% on Wednesday to the Dow's 0.40%. So after a brief respite last week, we're back to climbing the upper BB. And once again, nothing bearish at all to speak of on this chart.
Accuracy (daily calls):
Month right wrong no call conditional batting Dow
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 2 4 4 0.714 26
And the winner is...
Last night I reviewed a bunch of positive technical signs but chickened out because of some economic news coming out on Wednesday and settled for an "uncertain" call. Tonight all of the same factors remain in play so this time I am going to assert my convictions and call Thursday higher, given the lack of bearish signs.
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 just because I don't want to get caught in one of these infrequent but nasty bolts from the blue.