Thursday, August 1, 2013

Thursday higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Thursday higher, low confidence.
  • ES pivot 1683.50.  Holding above is bullish.
  • Friday bias uncertain technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader remains short at 1643.00.

So on Wednesday the market was holding its breath until the Big Bernank spoke.  Then then market was up, then it was down, then it was up some more, etc., etc., until by the end of the day, we were down all of 21 points on the Dow.  Big whoop.  After all this anticipation, we're pretty much left right back where we started.  Is there any further guidance in the charts tonight/  Beats me - let's find out.

The technicals (daily)

The Dow: OK, so now we've got an amazing nine reversal candles in a row on the Dow.  None of which have amounted to a hill of beans.  The3 most we can say is that the Dow is now pretty clearly in a shallow downtrend - descending RTC with a Pearson's of 0.890.  The indicators also continue their decline, now off overbought.  Wednesday's candle was an impressive inverted hammer, possibly distorted due to the Fed news.  All we can really deduce from that is that we remain, ahem in a shallow downtrend.  So this chart just looks vaguely bearish tonight.

The VIXAnd on the VIX we now have three reversal candles in a row, Wednesday's being a spinning top on a minor 0.45% gain.  And although the indicators are now overbought, I suspect none of this means a damn thing.  FWIW- VVIX is headed lower, so I'm doubtful we'll see a significantly higher VIX any time soon.

Market index futures: Tonight all three futures are higher at 1:00 AM EDT with ES up by a significant 0.49%.  Wednesday saw a big inverted hammer, however, this was largely driven by the Fed announcement so I'm not reading too much into it.  The overnight gain on the other hand, is currently breaking above recent resistance at 1688.  This also distances us somewhat from the most recent descending RTC and also caused RSI to briefly dip into oversold territory.  And notably, the stochastic has just formed a sweeping rounded bottom bullish crossover.  So this chart is looking pretty positive to me tonight.

ES daily pivot: Tonight the pivot inches up once again from 1683.50  to 1684.92.  And for the third day in a row we have a similar pattern  of ES drifting higher after the close to keep us above the new pivot.  In fact, the spread is increasing a bit so this remains a bullish sign.

Dollar index: After breaking over the 200 day MA on Tuesday, the dollar broke right back down again on Wednesday, losing 0.46% on a big bearish engulfing pattern and its largest move since June 19th.  So I was wrong about this one and now it looks more like it's going lower again on Thursday.

Euro: And of course I was wrong about the euro too, as instead of moving lower it took a big pop on Wednesday to close at 1.3339, its highest level of the month.  That negates the previous three dojis in a row.  However, the euro is coming back down big time in the overnight, now 0.47% lower.  The larger uptrend remains intact, however.  But with indicators continuing to come off overbought, I just have to believe that the euro is going lower on Thursday.

Transportation: Here's a divergence - the Dow was down 0.14% on Wednesday but the trans were up a non-trivial 0.62%.  This was also the bullish trigger off the descending RTC.  And with indicators now having bottomed on oversold, I'm thinking the trans go higher from here on Thursday.

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        3      4      6           4        0.636     85

June       6      5      6           0        0.545    543

July      10      2      4           4        0.875    486

     And the winner is...

Thursday is the first day of a new month, and while August is not particularly strong, this effect cannot be ignored.  Also notable is the fact that the market basically shrugged off Wednesday's Fed announcement.  The charts as a whole seem to be looking bullish tonight, perhaps in anticipation of positive jobs and ISM numbers on Thursday, with the futures leading the way higher.  This is not the sort of action I want to stand in front of so I am going to have to 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.  I'm getting ready to pull the plug on this loser.

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