Actionable ideas for the busy trader delivered daily right up front
- Thursday higher, low confidence.
- ES pivot 1687.42. Holding above is bullish.
- Rest of week bias lower technically.
- Monthly outlook: bias higher.
- ES Fantasy Trader remains short at 1643.00.
Well the market continued to lose ground on Wednesday, pretty much as I had been thinking. However, Wednesday's candle was markedly different from Tuesday's. Let' s consult the charts to see how this may affect the health of Mr. Market. Say ahhh ...
The technicals (daily)
The Dow: So we look at the Dow and conclude - three black crows - or do we? Wednesday's candle is pretty close to a hammer. And if you look at the Dow, you'll notice that 1/3 of the stocks there were actually up. We also have some support just below us at 15,455. Nevertheless, the indicators continue to fall and we remain in a descending RTC. So at best we've got a flashing yellow caution light signaling a potential end to the decline, but one which would require confirmation on Thursday.
The VIX: Now then - this is where the VIX comes in. Looke3e here - we've got a 2.04% gain on Wednesday but it came in the form of a really classic gap-up inverted hammer. Now does this trump the bullish stochastic crossover? Much as I love the latter, I think it might. And a big gravestone doji on the VVIX really support that idea. Bottom line, I'm giving better than even odds of a lower VIX on Thursday.
Market index futures: Tonight all three futures are higher at 12:34 AM EDT with ES up by 0.31%. Wednesday's ES candle was a pretty good hammer and while the indicators are only about halfway to oversold, the overnight does seem to be confirming the reversal. A move above 1694 would also mark a descending RTC exit for a bullish setup. And as I write, that's just half a point away. So this chart is now looking more bullish than last night.
ES daily pivot: Tonight the pivot steps down again from 1695.42 to 1687.42. This fall, plus the overnight drift higher in ES means we broke above the pivot right at the changeover at midnight. So this indicator now becomes bullish.
Dollar index: Last night I wrote "I expect another down day on Wednesday" for the dollar and that's what we got, off another 0.41%. But this four day losing streak may be nearing an end as the lower BB is now very close at 55.54. So although we remain in a descending RTC, I'm going to guess we might see a reversal day here on Thursday, like a hammer or some such..
Euro: I gave up on calling the euro last night but it moved in the direction its bullish candle would have suggested on Wednesday anyway, closing just shy of resistance at 1.3340. The overnight is exactly flat so tonight is even harder to call than last night. Therefore I'm skipping this one again.
Transportation: The trans continued their slide on Wednesday, down another 0.72% on a gap-down hammer. With action that's looking increasingly parabolic to the down side, I'm thinking that a reversal is now close at hand, if not Thursday, then even more likely on Friday.
Accuracy (daily calls):
I don't really have any FAQ's, but I do have some OAQ's (occasionally asked questions) and one of them is "what use is your "Dow points" column" every day?" Well simply this - if you did MOO and MOC orders before the open based on my daily calls, for DIA when I called an up close or DOG when I called a lower close, that's the profit you would have obtained. QED.
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 10 2 4 4 0.875 486
August 5 0 0 0 1.000 345
And the winner is...
Tonight we're seeing some definite and clear reversal signs, more in the candles than the indicators, which have yet to reach oversold extremes. Now I always absolutely hate catching the falling knife but we do have some positive economic news coming out of China this evening, and as far as I know we might make it through a whole day with no one on the Fed yapping about tapering. And note that three days is the longest losing streak the Dow has had all year. So I'm going to go out on a limb and call Thursday higher.
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.