Actionable ideas for the busy trader delivered daily right up front
- Thursday higher, low confidence.
- ES pivot 1741.92. Holding above is bullish.
- Friday bias lower technically.
- Monthly outlook: bias higher.
- ES Fantasy Trader standing aside
Logic prevailed and the market did go lower on Wednesday as I had expected, so persistence paid off. Nothing earth-shaking but it did change the picture a bit. Let's see how this alters the technical view of the charts.
The technicals (daily)
The Dow: On Wednesday the Dow opened down and that was pretty much that. We gave back most of Tuesday's gains with a candle that's almost a dark cloud cover that stopped right on the edge of the rising RTC - call it a bearish setup. Indicators are now clearly trending lower off overbought, so I'm thinking the top may be in now.
The VIX: After bumping around the 13 level for three days the VIX put in a small 0.68% gain on Wednesday but did it on an inverted hammer. Still, that's enough to set up a new rising RTC and with indicators all just off oversold, it looks like the VIX is gearing up to test its 200 day MA at 14.39 soon. But it may not be on Thursday as VVIX was actually significantly lower Wednesday.
Market index futures: Tonight all three futures are higher at 12:35 AM EDT with ES up by 0.26%.
ES daily pivot: Tonight the pivot steps down from 1746.67 to 1741.92. The main effect of that is to put us back above the new pivot once again, so this indicator flips back to bullish. On Wednesday ES gave back about half of Tuesday's gains but the overnight is heading back up again. This is forming a nice symmetrical triangle so that is a bullish sign even though the indicators appear to have peaked two days ago on overbought. I wouldn't count this chart out just yet.
Dollar index: The dollar actually eked out a tiny 0.05% gain on Wednesday though you'd never know it looking at the candles. It's just a blip at the bottom of Tuesday's action as the dollar pretty much remains in the toilet now at a two-year low.
Euro: Last night I refused to call the euro lower based on a developing doji and it's good I held off, since that's just how Wednesday ended - with a perfect star. That doesn't seem to be getting confirmed in the new overnight though as the euro remains solidly in its rising RTC and is now up another 0.07%. So still no bearish signs here either.
Transportation: In a bit of bullish divergence, the trans were up 0.69% on a Dow the Dow lost 0.35%. That green marubozu keeps them solidly inside their rising RTC as we continue climbing the upper BB further into record territory.. With the indicators all still broken on overbought, there's no bearish signs here tonight.
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 10 2 4 4 0.875 486
August 11 3 6 2 0.813 687
September 8 3 3 3 0.800 485
October 5 4 6 1 0.600 506
And the winner is...
The market continues to look toppy to me candlestick-wise but I see enough positive signs in the trans, the currencies, the futures, and the VIX to call Thursday higher. I'm not so sure about Friday though.
ES Fantasy Trader
Portfolio stats: the account remains at $110,625 after 17 trades (13 for 17 total, 7 for7 longs, 6 for 10 short) starting from $100,000 on 1/1/13. Tonight we stand aside.again.