Thursday, September 19, 2013

Thursday higher

The Hoot 
Actionable ideas for the busy trader delivered daily right up front
  • Thursday higher, low confidence.
  • ES pivot 1711.42.  Holding above is bullish.
  • Rest of week bias higher technically.
  • Monthly outlook: bias higher.
  • ES Fantasy Trader remains short at 1695.50.

Wow - I'm sure glad I called Wednesday as "uncertain" because I never expected that Uncle Ben was going to take the long-awaited taper, that has been the number one topic of conversation since May, off the table.  Not that I'm complaining mind you, as my account which is heavy on REIT's had its best day in months, up two and a quarter percent.  But it could easily have gone the other way - there's a thin line between hero and zero on the Street.  So how does this change the picture?  Let's warm up the iron to attack this latest wrinkle in the charts.

The technicals (daily)

The Dow: After some indecision on Tuesday, the Dow had a Fed-fueled shot of nitrous that left the bears in the dust with a 147 point rocket ship for a new record close.  That keeps the rising RTC strongly in place and puts all the indicators out of commission, pegged at overbought.  With a chart like this, there really isn't anything bearish to say about it.

The VIXThe VIX made a feeble attempt to get past its 200 day MA on Wednesday until the Fed put a big nail in that coffin and it sank 6.47% breaking support at 13.83 and killing a nascent rising RTC almost before it had a chance to get going.  But with the lower BB nearly touched, I think the downside is limited from here, though I'm not expecting a major advance on Thursday.

Market index futures: Tonight all three futures are higher at 1:02 AM EDT with ES up by 0.09%.  Es remains solidly inside a rising RTC back to September 3rd and the indicators are all useless, stuck on overbought like everywhere else.  And despite a close six points above the upper BB, we're continuing higher in the overnight.  I can't really call this chart lower for Thursday.

ES daily pivot: Tonight the pivot pops from 1695.25  to 1711.42.   And even with that move we remain above the new pivot, so that's bullish.

Dollar index: The dollar reacted strongly to the Fed on Wednesday, suffering its biggest loss in months, down 1.14% on a big reg marubozu that crashed through support at 55.20 and then the lower BB at 55.10 before finally stopping at 54.85.  This drove the indicators to extreme oversold levels (RSI is now nearly zero).  While a DCB is not out of the question, with o support til 54.44 now, it's not inconceivable that we could be headed there next.

Euro: And of course it was up, up and away for the euro on Wednesday with a big gain to  close above its upper BB at 1.3509 in a move that made last weeks rising RTC exit look like a fake-out.  The indicators are now broken at extreme overbought but there's nothing bearish above these candles.  And the overnight is continuing higher, up another 0.19% already so it's looking good for the euro on Thursday.

Transportation: The trans did even better than the Dow on Wednesday, up 1.54% to the Dow's 0.95% for their own record close.  That keeps their rising RTC intact and this chart remains quite bullish.

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  5      2      2           1        0.750    279

     And the winner is...

This is a tough one, as is any day when the market gets a big jolt, either positive or negative.  There's always a chance for a Fibonacci retracement on profit-taking.  But for the life of me, I just don't see that happening given the overall gestalt of these charts.  Therefore I just have to follow what I see and that is Thursday higher.

ES Fantasy Trader

Portfolio stats: the account remains at $108,500 after 15 trades (11 for 15  total, 6 for 6 longs, 5 for 9 short) starting from $100,000 on 1/1/13.  Tonight we remain short at 1695.50.  Well this is one of those times I'm glad this is just paper trading because this trade was effectively torpedoed by the Fed.  I guess we'll just hang on until some mean-reversion kicks in, as it must eventually.

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