Actionable ideas for the busy trader delivered daily right up front
- Thursday lower, low confidence.
- ES pivot 1673.92. Holding below is bearish...
- Friday bias lower technically.
- Monthly outlook: bias higher.
- ES Fantasy Trader remains short at 1643.00.
I called Wednesday as "uncertain" and I'm glad I did because I wouldn't have expected such a muted market reaction to Uncle Ben's speech on Wednesday. Still, a sideways move can be as important as one up or down and the charts will bring it all into focus, so let's begin our investigation into where Thursday is headed.
The technicals (daily)
The Dow: With Wednesday's inconclusive candle complete, it's clear we're now in a period of congestion. But the resolution isn't looking so good. 15,500 is proving to be a tough nut to crack and we've in fact been putting in slightly lower highs for three days now. We also just traded entirely outside the rising RTC for a bearish trigger, supported by the continuing overbought readings on the indicators. I'd say this chart is now looking rather bearish.
The VIX: Just when it seemed that the VIX was ready to rally, it plopped right back to its recent support line at 13.79. The overall gestalt of this chart remains bullish from here but the VIX is certainly taking its time getting into gear.
Market index futures: Tonight all three futures are lower at 12:25 AM EDT with ES down by 0.13%. Sideways action on the daily continues here as ES is just not able to crack 1680. With the bearish RTC exit complete, indicators finally starting to come down off extreme overbought, and the new candle forming as a dark cloud cover, I'd say this chart is now looking bearish.
ES daily pivot: Tonight the pivot inches up from 1672.42 to 1673.92. The failure of ES to advance in the overnight means we finally broke under the pivot right at midnight, so this indicator now becomes bearish.
Dollar index: On Wednesday the dollar gained 0.25% on a wide-ranging bullish harami that brought the stochastic right into position for a bullish crossover. With oversold indicators, this chart looks in good position to move higher on Thursday.
Euro: And the euro was indeed unable to break above 1.3172 on Wednesday, giving back half of Tuesday's gains to end at 1.3115. With the overnight continuing lower, now down another 0.11%, and pretty overbought indicators, it's looking likely that we go lower on Thursday. And that, for a change, squares with my call for a higher dollar.
Transportation: The up/down streak continues for the trans. Wednesday marked the 10th straight day of alternating up and down sessions. And Wednesday's 0.78% gain was not enough to break us out of a now five day trading range. With indicators continuing to be overbought, resistance at 6475, a recent bearish RTC trigger, and yes, the fact that Wednesday was up all makes me think that Thursday's going lower.
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 6 5 6 0 0.545 543
July 6 1 1 3 0.900 467
And the winner is...
With Philly Fed and some more jobs numbers coming out, this one's a bit risky but overall the charts are looking sufficiently bearish that I believe the logical call is for Thursday lower. Simple as that.
ES Fantasy Trader
Portfolio stats: the account remains at $115,000 even after 14 trades (11 for 14 total, 6 for 6 longs, 5 for 8 short) starting from $100,000 on 1/1/13. Tonight we remain short at 1643.00. I'm expecting to start recouping some of these unrealized losses Real Soon Now.