Thursday higher if ES pivot holds

The Hoot 
Actionable ideas for the busy trader delivered daily right up front

• Thursday higher only if ES stays above its pivot, else lower..
  
• ES pivot 1688.42.  Breaking above would be bullish.
• Friday bias uncertain technically.
• Monthly outlook: bias higher.
• ES Fantasy Trader standing aside.

Recap

Well it turns out that ES made three attempts to break above the pivot on Wednesday, around 3 AM, 9 AM, and finally 11 AM.  And after those three strikes, it was out and we finished the day lower.  So the losing streak is now extended to five, the most so far this year.  Will Thursday make it six?  The charts just might have something to say about that, if you ask nice.

The technicals (daily)

The Dow: On Wednesday the Dow remained in its falling RTC as the indicators approach oversold.  The stochastic %K line began flattening out suggesting a bullish crossover is in the works, maybe i a few days.  But for now this picture remains bearish.

The VIX:  The VIX continues to act peculiarly, falling 0.50% even as the Dow was down 0.40%.  But while the latter is in a steep descending RTC, the VIX just continues to consolidate around 14.15.  It took another stab at its 200 day MA on Wednesday and this was rejected again.  So the VIX continues to look for its mojo as it seems unable to get anything going here.  I don't expect much different on Thursday.

Market index futures: Tonight all three futures are finally higher at 12:39 AM EDT with ES up by 0.13%.  ES has been in a very steep (Pearson's = 0.992) descending RTC for five days now, so this move higher in the overnight is significant as it is forming a bullish RTC setup.  The indicators are also now close to oversold ad the stochastic has gone quite low so a bullish crossover may be in the works in a day or two.  I definitely would not be shorting ES right now. 

ES, 5 min. bars

ES daily pivot: Tonight the pivot falls from 1693.67  to 1688.42.  We were below the old pivot most of Wednesday and had a shot at breaking above right at midnight, but instead ES caromed right off the new pivot like a Minnesota Fats bank shot.  This is worth a picture - check this out.  But, as I write this, ES seems to be showing some interest in taking another look at the pivot.  A break above would be bullish but for now it remains bearish.



Dollar index: On Wednesday the dollar completed a bearish evening star by gapping down 0.31%.  But with fresh support just below and indicators remaining oversold, it's not clear how much downside is available.  While this pattern is bearish, I'd take this particular instantiation of it with a grain of salt..

Euro: Ah, that tricky euro fooled me.  It looked set to go lower on Wednesday but instead put in a great big bullish engulfing marubozu to end at 1.3525, right back in the middle of late last week's range.  The gain was big enough in fact to jump out of the descending RTC for a bullish setup.  But the indicators remain pretty overbought so it's not clear how much upside is left here.

Transportation: The trans continued lower on Wednesday but even after four down days, they remain overbought, though now only by a little.  There's a modicum of support just below us around 6590 but I'm not sure that will hold on Thursday as this chart continues to look bearish.

Sentiment: Once again it's time for the latest weekly TickerSense Blogger Sentiment Poll.  We continue to track the poll to see how well it performs.

Wk.# Week   % Bullish  % Bearish  NightOwl Poll SPX  Accuracy Poll

  1  12/31      40         48        -      -   1402   0/1

  2  1/7        47         30        +      +   1466   1/2

  3  1/14       52         15        +      +   1472   2/3

  4  1/22       50         21        +      +   1486   3/4

  5  1/28       44         26        +      +   1503   4/5

  6  2/5        40         36        +      +   1513   5/6

  7  2/11       43         25        +      +   1518   6/7

  8  2/19       21         43        -      -   1520   6/8

  9  2/25       30         52        -      -   1516   6/9

 10  3/4        29         39        -      -   1518   6/10

 11  3/11       41         26        +      +   1551   7/11

 12  3/18       41         37        +      +   1561   8/12

 13  3/25       31         38        +      -   1557   8/13    9/13

 14  4/1        38         38        +      x   1569   9/14    9/13

 15  4/8        32         50        -      -   1553   9/15    9/14

 16  4/15       33         50        +      -   1589   10/16   9/15

 17  4/22       19         63        -      -   1555   10/17   9/16

 18  4/29       33         58        -      -   1582   10/18   9/17

 19  5/6        50         31        +      +   1614   11/19  10/18

 20  5/13       37         37        +      x   1634   12/20  10/18

 21  5/20       50         25        +      +   1667   12/21  10/19

 22  5/28       37         33        +      +   1650   12/22  10/20

 23  6/3        29         38        -      -   1631   13/23  11/21

 24  6/10       38         38        +      x   1643   13/24  11/21

 25  6/17       32         40        +      -   1627   14/25  11/22

 26  6/24       13         46        -      -   1592   14/26  11/23

 27  7/1        25         42        -      -   1606   14/27  11/24

 28  7/8        42         29        +      +   1632   15/28  12/25

 29  7/15       48         22        +      +   1680   16/29  13/26

 30  7/22       42         19        +      +   1692   16/30  13/27

 31  7/29       39         17        +      +   1692   16/31  13/28

 32  8/5        46         27        +      +   1710   16/32  13/29

 33  8/12       32         41        -      -   1691   17/33  14/30

 34  8/19       23         54        -      -   1656   17/34  14/31

 35  8/26       23         50        -      -   1664   17/35  14/32

 36  9/3        21         54        -      -   1633

 37  9/9        35         30        +      +   1655

 38  9/16       40         28        +      +   1688

 39 9/23        52         36        +      +   1710  

Again, the SPX number is the closing price of the S&P on the Friday before each new poll comes out.  The "NightOwl" column is how I voted.  The "Poll" column is how the majority of participants voted.  Since the poll is for 30 days out, after the first four weeks we're able to see how well we did.  This week we see that both I and the majority of the poll voted bearish four weeks ago, so once again we were both wrong.  Therefore we continue the year with an accuracy of 17  for 35, or 49%.   The poll as a whole drops to 14 for 32 or 44% - it continues to be a tough year for the poll so far.


This week I voted bullish again for the third week in a row.  And I had some new company as the bullish fraction of the poll rose to 52%.  This ties the record, set way back on January 14th for bullish sentiment this year.  And point to note - back then, the Dow  then went on a two week tear straight up.  Oddly enough, bearish sentiment also rose this week, and by almost as much, to 36%.


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
August    11      3      6           2        0.813    687
September  7      3      3           2        0.750    356

     And the winner is...

The charts remain pretty bearish tonight with the exception of the futures.  Also, Thursday is historically a fairly bullish day in an otherwise poor week.  However the SPX Hi-Lo index at 93 isn't ready to signal a rally and the NYAD line did not follow through on Tuesday's gains.  Further however, in the time it took me to write this paragraph, ES has just broken above its pivot so it looks like another conditional call is in order.  If ES can hang onto this and remain above its pivot by mid-morning Thursday we'll close higher, else lower.

ES Fantasy Trader

Portfolio stats: the account remains at $110,000 after 16 trades (12 for 16  total, 6 for 6 longs, 6 for 10 short) starting from $100,000 on 1/1/13.  Tonight we stand aside once again  waiting for the next trend change.