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- Thursday higher, low confidence..
- ES pivot 1589.92. Holding above is bullish.
- Friday bias higher technically.
- Monthly outlook: bias lower.
- ES Fantasy Trader going long at 1597.75.
I love it when the technicals work, and they sure did, nicely nicely, on Wednesday as the stochastic and RTC alerts paid off with a 150 point bump in the Dow.. The underlying reasons are almost immaterial - the point is they worked. So as the week, the month, the quarter and the half wind down, we move on to see what Thursday might have in store.
The technicals (daily)
The Dow: On Wednesday, the Dow increased its gains by another 1.02% with a bullish RTC trigger. The stochastic bullish crossover was consolidated and despite the jump we're still oversold so this chart continues to look bullish for Thursday.
The VIX: Last night I wrote "the VIX is headed lower again on Wednesday." and so it did, dropping another 6.82% on a gap-down almost-gravestone doji. But with a new downward RTC established, indicators still just coming off overbought and no support until 16.61, I'm seeing nothing here to suggest a move higher on Thursday. I'll note that VVIX is now sitting on its lower trend line from which bounces have occurred before - but the indicators were much lower in those cases, so that supports the idea of a lower VIX.
Market index futures: Tonight all three futures are higher at 1:09 AM EDT with ES up by 0.19%. ES posted another strong green candle on Wednesday for a bullish RTC trigger. Indicators remain just oversold so they have plenty of room to run. With a clear bullish stochastic crossover now complete and no resistance until 1604, I think this chart looks bullish for Thursday.
ES daily pivot: Tonight the pivot rises from 1575.83 to 1589.92. With ES continuing to drift higher in the overnight, we remain comfortably above the new number even after that gain, so this one remains bullish.
Dollar index: OK, so I missed the dollar again. Despite highly overbought.indicators (RSI = 92) and a nominally bearish RTC trigger, this chart just keeps going up. I'm starting to think that the dollar is headed back to its upper BB (57.39), which it could reach by Friday.
Euro: I was also wrong about the euro last night. Instead of bouncing off its 200 day MA, it sank through it like a stone. That keeps it firmly in its descending RTC, and despite the oversold indicators and a 0.21% gain in the overnight, now I'm thinking we're going to visit the lower BB at 1.2943 in short order.
Transportation: On Wednesday the trans gave us a gap-up inverted hammer for a 0.78% gain. While this was less than the Dow's 1.02%, it is still a clear RTC bullish trigger to go along with a solid bullish stochastic crossover and indicators only now starting to rise off oversold so I'm inclined to believe that there's still some upside left here for Thursday.
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 3 4 6 4 0.636 85
June 5 5 5 0 0.500 429
And the winner is...
Once again, I'm not seeing any bearish signs in the charts tonight and Thursday is historically the best day of a bad week so I'm going to go with the logical call, and that is for Thursday higher.
ES Fantasy Trader
Portfolio stats: the account remains at $108,250 after 13 trades (10 for 13 total, 5 for 5 longs, 5 for 8 short) starting from $100,000 on 1/1/13. Tonight we go long at 1597.75 based on what looks like a confirmation of an end to the downtrend along with a developing turn-around. Reminder - you can follow these trades live on Twitter @nightowltrader.